Sales & Marketing

Marketing’s Big Disconnect

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A sales force is all about improving top-line performance. So is Marketing. But it’s not their only job. Marketing is also about messaging, public image, product management, customer advocacy as well as other activities that influence sales, but only indirectly. Their differing charters can lead to their easily falling out of alignment and ending up with lost leads, resentment, and lack of cooperation between these two essential teams.

In my experience as chief marketing officer at two major technology companies, the prevailing pattern is that Sales considers leads generated by Marketing as nothing more than lists of unqualified names; Marketing looks down at Sales as being ineffective in following up on the good leads they were given. In my experience, they both have a point. Even though you have metrics to show how many leads were actually converted, Marketing is still reluctant to take ownership of the fact that most of their leads are not high-quality leads. And Sales really does tend to dismiss Marketing’s leads.

Although Sales and Marketing are complementary functions, their tools are different, and so are their cultures. Marketing listens; sales talks. Marketing is done at a distance; Sales is generally up close and personal. Marketing is focused on satisfying buyers; Sales is focused on pleasing sellers. But the root of disconnect is not just their different charters and methodologies, it’s the way the two are compensated.

All together now

In companies where Sales and Marketing are well aligned, Marketing’s performance bonuses include two elements: a quantified marketing-generated revenue objective and a longer-term qualitative marketing goal. Marketing staff need to accept the fact that directly producing revenue really is a central part of their job, even it is not their only responsibility. And their compensation plans need to reflect those responsibilities.

But to make the new system work, Marketing’s contribution to revenue goals, as reflected in its performance bonuses, needed to be both measurable and time-bound. That required connecting every Marketing function to its impact on revenue. So Sales and Marketing had to agree on the impact each marketing function had on company revenue, and then set realistic objectives for each. With a shared understanding of those objectives, the stage was set for tying marketing compensation to the company’s revenue performance and for institutionalizing the alignment of incentives between the two.

The compensation metrics would differ somewhat depending on a company’s own sales cycle, product life cycle, product pricing, its marketing functions and other variables. For us, the metrics included product revenue pipeline, close rate, product revenue booked versus planned, and others.

Do the math

So in the case of our product managers, we concluded that 75 percent of the performance bonus should be based on achieving these revenue metrics; the remaining 25 percent was then based on measures reflecting market perceptions and field readiness.

For Marketing’s sales/channel enablement function, the performance bonus was structured with 75 percent based on the percent of sales quota achieved, and 25 percent based on the Sales organization’s satisfaction with the enablement function.

Seventy-five percent of the bonuses for demand generation and field marketing activities were based on achieving a specific dollar volume of Marketing-generated pipeline leads within a specified time period; the remaining 25 percent was based on Marketing objectives related to campaign effectiveness.

Finally, we based 50 percent of the bonuses for channel marketing on the actual amount of Marketing-generated channel revenue pipeline, with the remaining 50 percent based on channel partner satisfaction and other channel strategy objectives.

Most people who try this approach find, as we did, that the initial reaction of Marketing teams toward this new compensation model is one of hesitancy. After all, Marketing professionals have not historically thought of themselves as extensions of the sales closing process, nor do their more recent responsibilities, which are increasingly remote from Sales, appear as factors in these pay calculations. But it is precisely because of today’s mushrooming responsibilities of the Marketing function that its priorities need to become more firmly anchored in the company’s ultimately delivery of product to the marketplace.

Christine Crandell has more than 20 years of executive management, marketing and business development experience in technology and sits on several advisory boards including Coupa and SDForum. Most recently, she served as Executive Vice President of Global Marketing, Alliances and Business Development and Chief Marketing Officer at Egenera, and Vice President of Marketing at Ariba responsible for all marketing activity and global OEM relationships. She is a frequent speaker and writer with articles published in Forbes, B2B Marketing, Investor Business Daily, CMO.com and others. Learn more at www.christinecrandell.com.

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