One of the key distractors to achieving Sales and Marketing Alignment (SMA) is having misaligned goals between Sales and Marketing. It has been estimated that “most companies spend 30-40% of their revenue on Sales and Marketing” [Marketo]. With a spend that high it is imperative that these two functions be moving in the same direction and be able to assess what success looks like. If they are not able to set goals on the same metrics then there is no incentive to work together nor the ability to hold colleagues accountable. This is a dangerous combination for any business.
Most companies spend 30-40% of their revenue on Sales and Marketing –Marketo
There has been a significant change in how customers buy. With the proliferation of information and influence of social media, customers are more savvy than ever about products/services and don’t engage Sales until much later in the buying process. The image above shows the shift in how the buying process has changed. With that being said, it becomes more important to focus on the customer journey to purchase and making that path as seamless as possible. Where many organizations struggle is the hand-off between Sales and Marketing. Many potential customers will fall out of the funnel for any number of reasons. And, unfortunately in today’s market there exist fewer opportunities to re-engage customers once they have had a poor buying experience. This makes it more important than ever for Sales and Marketing to be aligned through all touch points with potential customers and ensuring that they are getting the attention they require, are presented with the relevant information they seek, and are able to make a purchase when/where/how they want to. This can only be achieved when Sales and Marketing are in-sync.
Of course, there are going to be different metrics that each function tracks that uniquely impact their business. However, performance for the organization should start with looking at an agreed upon and unified dashboard that includes those KPIs that both Sales and Marketing should be held responsible for and need to keep top-of-mind as they go about their business. Leaders must establish a clear set of metrics that both Sales and Marketing leaders are aware of, track on a regular basis, and routinely use to make strategic business decisions. This will also allow sales and marketing colleagues to have a North Star when they are executing their assigned tactics. The question should be…”does what I’m doing help us achieve our goal of XYZ”.
“The goal of Sales and Marketing Alignment (SMA) is to create “Togetherness” where both functions are completely committed to make generating revenue the #1 priority.”
So what exactly should be those imperative metrics that organizations need to be looking at to ensure SMA is achieved? Of course, this can be challenging for any organization because the way Sales and Marketing look at their business is fundamentally different. Marketing usually takes a long-term strategic view while Sales is more focused on short-term milestones and quota attainment. However, the one metric that should be consistent for any organization focused on SMA is – Generating Revenue. End of story. Close the book.
The key metrics used to evaluate SMA performance should be broken down to reflect the Buying Funnel (i.e. top of funnel, middle of funnel, bottom of funnel). This ensures that you can see multiple data points throughout the system and leads to a clearer picture of where bottlenecks may exist.
The Sales and Marketing Alignment dashboard must haves:
Percent Attainment to Target Revenue – All conversations should start with the review of where the organization is in regard to attaining the target revenue goal.
Lead Generation Metrics – These metrics should be focused on top of the funnel activities to ensure that the team is getting the attention of high-quality leads. Metrics should include: Increase in SQLs (MoM), Increase in total SQL volume (QoQ), % of leads per marketing channel.
Service-Level Metrics – These metrics should be focused on the middle of the funnel with the objective of getting leads to convert to purchase as quickly and efficiently as possible. Metrics should include: Lead Response Time, % of Leads that exit the Buying Funnel w/o Purchase, Average # of Follow-ups to SQLs.
Revenue Generation Metrics – These metrics should be focused on the bottom of the funnel and the ability to convert leads to purchase. Metrics should include: Average Sales Deal Size, Average Marketing Deal Size, Average Sales Cycle Length, Cost of Sales/Marketing to Revenue Ratio, Average Lead to Customer Close Ratio.
By focusing on metrics that are strong indicators of revenue generation, Sales and Marketing can start to increase the importance of shared goals that will make a difference for the organization. Then by promoting these shared goals throughout the organization the incentives of both groups will become more aligned and team member’s actions will begin to reflect this alignment.