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How Marketing Impacts Sales Performance

Marketing

You know the question is coming, because it comes every year. You know who is going to ask it, because they ask it every year. It’s just a matter of when, perhaps at the end of a difficult quarter, or during a mid-year review meeting. As budgets are being discussed it comes; “What are we getting from our marketing investments?”

It’s a fair question to ask, and given the size of some marketing budgets, marketers should be asking the same question. To answer the sales executive (the one usually asking the question) you must first recognize what they are really asking, which is; “what is the value of marketing to them?” Specifically, they want to know the impact marketing is having on sales performance, beyond leads.

A few years ago, we did some interesting research for a medical equipment manufacturer. Their analysis showed that they were missing opportunities but they couldn’t agree on why – was it a sales or marketing issue?

To uncover the answer we interviewed hundreds of buyers (customers and prospects) in order to rate the performance of the company compared to three competitors, at four stages of the pipeline, product awareness (unaided), consideration, proposal and win. We then constructed a quantitative model to reflect the impact of changes in performance. Two years later, we were given a unique opportunity to measure the impact of recommendations and investments.

The research yielded three key insights on the importance of marketing and how it was impacting their sales success:

1. Increasing Opportunities – without marketing support sales cannot move consideration rates. The company’s unaided product awareness rate was 62%, compared to 88% for the market share leader. The consideration rate was even worse at 46% compared to 86% for the leading competitor.

The organization had a strong sales culture. So to demonstrate the need to increase marketing activity, and not just sales coverage, we included “relationship with the sales team” as a key consideration drive, along with typical drivers such as; price, brand, and service.

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The research showed that the relationship with the sales team was not an important consideration driver. In fact, the data revealed that reps could do very little to change buyers’ perceptions relating to products and service. It also revealed a new buyer that was not being reached by the sales force.

The company increased the marketing budget and reallocated funds from events into digital marketing. They ramped up webcast, videos and built a microsite specifically for this new buyer. As a result, Awareness rose 17 percentage points to 79%, and Consideration, originally at 46% rose to 62%. An incremental 1% change in consideration rates yielded 20 new opportunities, and almost four new wins with a value of almost $2M.

2. Sales Coverage – increased marketing activity can create the perception of greater sales coverage. Buyers were asked how often they saw a sales person within a 90 day period. They mentioned seeing the company reps on average of 0.8 times, basically once a quarter, while reporting rep visits from the leading competitor at 2.5 times, almost once a month. Two years later, buyers stated seeing the company’s reps 2.4 times per quarter, on par with competitors. As a result of the ramped up marketing efforts, buyers perceived an increase in visits despite the fact that the number of reps in the segment remained the same.

3. Sales Enablement – marketing can identify shifts in buying behavior. The company’s performance had increased in all stages of the funnel except for one, existing accounts Reps had mentioned that customers had become more “price sensitive” and competitors were undercutting them. The company was the product leader in the industry and the senior management team still believed that technology innovation was the key consideration driver.

The follow up research found that the sales force was indeed right. Buyers had shifted their priorities. With changes in reimbursement, healthcare reform, and an effective competitor campaign against overbuying technology, buyers had indeed changed, much faster than anyone suspected.

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As a result, sales material and value proposition had to be updated quickly. Instead of espousing the virtues of innovation, it now needed to help buyers justify the investment. Leading to a shift from “bells and whistles” to “ROI models and product configurators.”

So, how do you communicate the impact marketing has on sales performance? Tell the sales folks that marketing can identify new buyers and influencers, increase the number of opportunities reps see, improve a buyers perception of sales coverage, and enable them with the right value proposition at the right time to win the deal. Of course, you’ll need the data to prove it.

In this case, the increased marketing investment and activities yielded $50 million in new sales over the two-year period…just as the model predicted.

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