2. A Challenging Economy: Financial Considerations for Go-to-Market Executives
During a recession, market leaders often feast on weaker competitors. Against this
onslaught, mere cost-cutting is an insufficient defense. Instead, companies with winning
products or services should look for real leverage.
One area of significant potential leverage is go-to-market investment. Duplicate and
ineffective processes and systems often abound. Expensive sales channels waste scarce
capacity on low yield activities, like cold calling and opportunity nurturing. These
and other go-to-market problems occur because far too many companies lack end-to-
end financial and operational metrics to clearly identify and correct problematic areas.
Instead, management must rely on anecdotes and feelings, poor tools in a bear economy.
The stakes are high. The sales and marketing investments typically represent 20 to 40
percent of company-wide spending. Moreover, that spending directly affects revenue
production. As such, modest improvements in go-to-market efficiency can increase
Identifying go-to-market inefficiency is not easy, unfortunately. Cause and effect are
often blurry. Part of the challenge is that sales and marketing each invest considerable
resources generating demand and then educating and qualifying prospective customers.
Even post-sales operations participates in these activities. As a result, the potential
for uncoordinated cross-functional redundancy and waste are high. The complexity of
organizational buying behavior and the constantly expanding go-to-market capabilities
only compound the problem.
Fortunately, an objective yardstick exists to help B2B companies identify areas of
potential go-to-market inefficiency. That yardstick is the Business Buying Cycle.
Looking at sales and marketing investments against this universal organizational buying
behavior can illuminate areas ripe for resource reallocation and process improvement
and result in much more scalable go-to-market operations.
thE BuSinESS Buying cyclE and go-to-markEt
rESourcE allocation and EfficiEncy
Figure 1: The The Business Buying Cycle is
Business Buying predictable. This predictability
Cycle is a universal is important to understand and
yardstick for to leverage. The most critical
aspect of this predictability is
allocation and the probability of purchase. At
resource efficiency. any given point in time, there
are far, far more prospects
in the early stages of the
Business Buying Cycle than in
the final stage when they are making a purchase. Some prospects investigate a solution
and realize the fit is not good. Others postpone the decision for internal reasons. Still
2 (877) 575-5515 | www.PipeAlign.com
3. A Challenging Economy: Financial Considerations for Go-to-Market Executives
others in the market “just like to keep up” with products and services in a category “just
in case.” Understanding this probability in the market can provide a framework for
improving go-to-market efficiency through more effective resource allocation. In short,
the volume and probability factors in the first two stages of the Business Buying Cycle
make the use there of high cost and scarce sales resources problematic. This buying
behavior also provides a framework for end-to-end metrics of complex and cross-
functional go-to-market operations, making continuous improvements possible.
uncovEring currEnt ExpEnditurES
Because sales and marketing both generate demand and then educate and qualify
prospective buyers, the first step in improving efficiency is determining how much
money a B2B company already spends in these areas. The answer is often eye-opening.
Of course, a large portion of the marketing budget addresses these functions. But so does
a significant portion of the sales budget. Even post-sales operations invest resources in
these areas. Quantifying this investment should be a critical component of go-to-market
planning and budget allocations.
Arguably, a B2B company uses the entire marketing budget to generate demand and
to educate and qualify prospective buyers. Brand advertising, promotional advertising,
the corporate website, event marketing, PR, and collateral all serve this purpose. Even
market research and channel marketing indirectly support these objectives.
In sales, representatives typically cold call and network to generate demand and
to identify companies planning to purchase something in the category. In fact, the
less effective marketing is at generating demand, the more direct salespeople must
pick up the slack. It’s a sort of teeter-totter effect. Salespeople also qualify and
nurture prospects. Qualifying and nurturing prospects is a critical component of lead
management. If even five percent of the sales budget is allocated to this demand
generation and lead management activity, a lot of money is involved. And in many
companies, the percentage is much higher.
There are generally two key scenarios in post-sales affecting demand generation and
• Often, especially early on in their investigations, customers and prospects may not
want to speak to a “high pressure” salesperson and so attempt to gather information
from customer service or product support representatives;
• In the course of servicing a legitimate post-sales need, customer service and
(especially) product support personnel can educate and qualify customers enough
to generate interest or simply identify an existing level of interest that may not have
come to the attention of the sales channels.
Those are both “presales” activities in a post-sales world.
The existence of this demand generation and lead management activity in sales,
marketing and post-sales should prompt B2B executives to ask four key questions:
www.PipeAlign.com | (877) 575-5515 3
4. A Challenging Economy: Financial Considerations for Go-to-Market Executives
• How much does a B2B company really invest in demand generation and lead
• What is the return on these resources?
• Is there a more efficient use of these resources?
• What kind of return would a more efficient deployment of resources yield?
In aggregate, the dollars invested by sales, marketing, and post-sales operations
represent a significant percentage of expenditures. Moreover, these investments can
increase or decrease sales production. Assessing these costs and their effect on revenue
warrants periodic, cross-functional executive analysis and ongoing executive oversight.
After assessing the cross-functional investment levels in demand generation and lead
management, B2B companies should identify areas of potential inefficiency in sales,
post-sales, and marketing.
Sales Channel Inefficiencies
Most companies ask direct or indirect sales channels to generate demand and nurture
opportunities. How efficient is this investment of this scarce, expensive, and hard-to-
scale set of resources?
Inefficiencies with Corporate Sales Teams
Anyone who has read the leading books on selling to businesses knows that those tomes
spend a great deal of time teaching salespeople how to cold call to generate demand.
Those books also teach salespeople how to ask questions that help prospects connect their
problems to whatever the salesperson is selling. Clearly, setting up appointments and using
various questioning techniques to generate interest are mission-critical skills. The question
is how much time salespeople should invest in these demand-generation activities.
Cold calling can be very demoralizing and counterproductive. It takes a lot of time to
reach decision makers, and, no matter how skilled the representative, the percentage of
these decision makers who buy in the near term is generally low. Motivating salespeople
to face this barrage
Figure 2: Looking at of rejection and
resource allocation even rudeness is a
in your sales key aspect of sales
the lens of customer
buying behavior can
of this activity is
sales resources. that even good
set up calls with
rather than spend
more time cold
calling. So some
sales calls are
4 (877) 575-5515 | www.PipeAlign.com
5. A Challenging Economy: Financial Considerations for Go-to-Market Executives
with prospects who are a long way from a decision. Others are with prospects with
a low probability of purchase. Others still will place small orders that an inside sales
representative could handle more efficiently. Sure, sales occur as a result but at what
cost? The questions executives must ask are how much of this low-yield activity exists
and how much of it the company can replace with higher yield activity?
Looked at in this light, the potential for business sales channels to increase revenue
production is almost always considerable. Even in highly efficient sales channels, a five
or ten percent increase in production is often possible if the channel receives a sufficient
volume of qualified leads.
Inefficiency with Indirect Sales Channels
Many people believe that a company “pays” for indirect channels to create demand
through margin discounts. While indirect channels will generate demand, there certainly
needs to be a critical mass of demand that the manufacturer brings to the table. That’s
the ante for getting into the game. Without these table stakes, B2B companies must
overinvest in channel management.
The reason is simple. Unlike Figure 3. Insufficient
a corporate sales team, demand increases
most indirect channels the cost of channel
have choices. They can management in
focus on other solution indirect channels.
areas or even competitive
solutions. So, when a B2B
company does not generate
sufficient demand to support
indirect channels, the sales
organization must invest in
more channel recruitment
(due to attrition and low partner conversion rates), more training, more joint sales calls,
and more post-sales support.
Summary of Inefficiencies in the Sales Organization
Determining the true sales capacity of both direct and indirect channels, then, should be
a fundamental objective of enterprise go-to-market planning and resource allocation.
There are really two key areas of inefficiency relative to post-sales:
• Post-sales operations rightly identify prospects for sales channels who then ignore
• Post-sales doesn’t solicit or even identify existing customers on behalf of sales and
Customer service and product support people often complain bitterly about salespeople
not following up with prospects handed off by post-sales. The reasons for this behavior
by sales channels, however, are actually not that mysterious.
www.PipeAlign.com | (877) 575-5515 5
6. A Challenging Economy: Financial Considerations for Go-to-Market Executives
First of all, too many of the prospects identified by post-sales are not sufficiently qualified
to warrant sales engagement. Some are a long way from making a decision. Others are
not even in the market. Others still are a bad fit for the products or services in question.
Second of all, post-sales routes a high percentage of the prospects to the wrong
salesperson. Sales organizations in larger B2B companies are very complex and
dynamic, and getting a prospect to the proper salesperson is not simple. Prospects routed
to the wrong sales representative are ignored or otherwise mishandled because the
salesperson has no incentive to route leads or because the salesperson doesn’t know who
should handle the prospect.
Additionally, because many companies who rely on indirect channels do not know
where all their customers are, these operations can help greatly with this ongoing
customer identification, both in terms of sites and the contacts at those sites.
In theory, marketing can generate demand and educate and qualify customers much
more cheaply than sales channels can. After all, marketing has scalable methods of
mass-customized contact. Moreover, because of the improvements in technology, these
methods are improving every day. In practice, these investments do not always yield the
revenue and profit that is reasonably possible.
As a first step then, look for duplicate process and systems. The duplication can involve
internal or outsourced functions: multiple telemarketing functions, multiple direct
response agencies, multiple repositories of disconnected marketing data, duplicate
marketing automation functions, and so on. While some duplication may be warranted,
generally this overlap simply raises overhead costs and prevents true scale. Plus, the
uncoordinated results are almost always suboptimal for many reasons.
After identifying duplicate processes and systems, examine the current operational
and financial metrics. The truth is few companies can accurately quantify the impact
of marketing expenditures on revenue or sales productivity. This problem occurs
because marketing lacks the proper end-to-end pipeline metrics. Without those
metrics, identifying many critical sales and marketing pipeline inefficiencies is almost
impossible. For that reason, creating a go-to-market pipeline that maps to the Business
Buying Cycle and measures a few key milestones along the way can really clarify where
inefficiencies are. In this context, then, there are six key areas of measurement, with the
last two involving the sales
Figure 4: A go-to- organization:
market pipeline that
maps key sales • Solicitations (or
and marketing impressions) aligned
milestones to the with market yields;
• The conversion of
Cycle will help
clarify areas for marketing solicitations
improvement. (regardless of medium)
into expressions of
interest (i.e., inquiries);
• The conversion of
6 (877) 575-5515 | www.PipeAlign.com
7. A Challenging Economy: Financial Considerations for Go-to-Market Executives
those who express interest into those who are willing to have a live conversation
(typically with a well-trained telemarketing representative);
• The conversion of those telemarketing opportunities into qualified leads;
• The conversion of qualified leads into a quantifiable revenue stream; and
• Sales production.
A low yield at any stage will result in suboptimal results overall.
Some segments of the market will yield a better return than others. Customers yield
more than prospects. Larger accounts yield more than smaller accounts. Certain verticals
yield more than other verticals. Without a media strategy that hones in on these factors,
the resulting sales pipeline will suffer. In this context, the most lucrative segments
should receive the greatest level of proportional investment.
Solicitation Conversion Ratios
Until customers and prospects identify themselves as having some interest in investigating
a solution, there is no chance of a sale. So, measuring the conversion of solicitations into
expressions of interest is the second key pipeline metric. There are two aspects to this
challenge. One is to motivate customers and prospects to take an action. The other is to
identify them when they do.
Interest Conversion Ratios
As every salesperson knows, Figure 5. This
there is a big difference simplified sales and
between an expression of marketing contact
interest and a qualified lead. strategy divides
While the odds are low that
in a way that avoids
these customers or prospects duplication of effort.
are ready to buy, the long-
term probability of purchase
is still much, much higher
than those in the marketplace
who have expressed no
interest. So investing
marketing resources to
educate and qualify prospects offers a better return than soliciting similar customers and
prospects with no expressed interest. The goal here should be to cost-effectively convert
inquiries into prospects willing to speak to a well-trained telemarketing representative
who can function as a lower cost proxy for the sales organization. Low-cost methods
of contact like email/web, personalized digital printing, and one-to-many vehicles like
webinars and seminars can all play a major role in this conversion process.
Telemarketing Conversion Ratios
As prospects move down the Business Buying Cycle, the actions upstream and
downstream can affect the efficiency of a given function. For example, if too many
unqualified prospects enter the telemarketing operation, then the conversion of those
opportunities into leads might be very low and the cost of telemarketing too high.
Likewise, if sales people do not follow up on the leads from telemarketing, the
www.PipeAlign.com | (877) 575-5515 7
8. A Challenging Economy: Financial Considerations for Go-to-Market Executives
conversion will also be low. But by measuring and benchmarking key milestones, B2B
companies narrow the range of possible factors if the yield is too low.
Lead Conversion Ratios
Closing the loop is never easy. Doing so requires ongoing executive commitment and a
“contract” between sales and marketing. In return for following up and reporting on leads,
the sales organization will want marketing to deliver a quantity of truly qualified leads, a
quantity that will measurably improve sales productivity profitably. This critical element of
the go-to-market pipeline, however, ultimately will enable marketers not only to measure
pipeline conversion ratios but expense-to-revenue ratios at each stage. With the right end-
to-end pipeline metrics in place, B2B companies can identify and correct inefficiencies and
embark on a path of continuous, incremental improvement in go-to-market operations.
Of course, the ultimate goal of these investments should be to reduce the expense-to-
revenue ratio of sales and marketing. To that end, these investments should improve sales
productivity and managers must view any modification of the resulting lead system through
this ultimate lens.
8 (877) 575-5515 | www.PipeAlign.com
9. A Challenging Economy: Financial Considerations for Go-to-Market Executives
Summary: kEy QuEStionS for go-to-markEt ExEcutivES
Without a cross-functional commitment to enterprise-wide coordination and
optimization of go-to-market resources, the chance for suboptimal results is very high.
This effort should start with a company-wide assessment and benchmarking of the
• Finance Figure 6: Efficient
- What improvement in B2B dialogue
the combined sales and occurs when the
marketing expense-to- quality of marketing
revenue ratio is possible output balances the
capacity of business
sales channels to
- What reallocations are produce revenue.
required to achieve this
• Channel Capacity and Mindshare
- What percentage of the existing sales channel budget does the company
currently use for demand generation and lead management and what is the yield
from this investment?
- What revenue capacity exists in each business channel if optimized with a
sufficient flow of qualified leads?
• Marketing Efficiency
- Are the marketing investments in solicitations in proportion to the expected
yield from each segment?
- What percentage of the current annual solicitations converts into expressions of
interest and how do these percentages compare with industry benchmarks?
- What percentage of these opportunities converts into leads and sales and at what
revenue yield and how do these percentages and yields compare with industry
- How do the existing capabilities for demand generation and lead management
compare with best practices?
- What percentage of the post-sales budget does the company currently use for
demand generation and lead management?
- What yield exists from this investment today?
- What pipeline potential exists from post-sales operations?
With the answers to these questions, a B2B company can build a roadmap for better
go-to-market ROI, even in a challenging economy.
www.PipeAlign.com | (877) 575-5515 9
10. A Challenging Economy: Financial Considerations for Go-to-Market Executives
Who We Are
The name “PipeAlign” combines the idea of a business-to-business (B2B) sales pipeline
with the concept of go-to-market alignment. A pipeline also suggests the metaphor of
our B2B Refinery® marketing methodology.
What We Do
PipeAlign and its Partner Network help large B2B companies improve results from lead
generation and lead management investments.
Why We’re Different
• We have a unique, proven lead generation methodology (see the Avaya case study,
for example) that lowers the overall expense-to-revenue (E-to-R) ratio in sales and
• We’re very fast, whether you need us to assess your existing situation or deploy
turnkey solutions; and
• We’ve structured our business model to minimize fees you pay for planning and
design, to maximize investment in implementation, and to make you self-sufficient
How We Can Help
• Assessment of your current lead generation and lead management practices and
capabilities and recommendations for improving what you are doing;
• Implementation of direct response campaigns, lead nurturing campaigns,
telemarketing operations, lead assignment and tracking systems, and database
marketing systems; and
• Improvement of your existing practices through training, quarterly or annual
budgeting sessions, and/or vendor management.
10 (877) 575-5515 | www.PipeAlign.com
11. A Challenging Economy: Financial Considerations for Go-to-Market Executives
Resources For Go-To-Market Professionals
The following resources are available at www.pipealign.com:
• The B2B Refinery®, our book describing a cross-functional
methodology for better go-to-market efficiency; To learn more about or
• A case study on a Fortune 500 client that generated a access our book, white
billion dollar pipeline in twenty months using the B2B papers, the case study, or
Refinery® Methodology; our modeling tool, go to
• Various white papers: the library section of our
− In a challenging economy, financial considerations for web site:
− Critical success factors in closing the loop; http://www.pipealign.com/library.asp?default
− Best practices in B2B telemarketing operations;
− Message and offer alignment with organizational
− The use of email and responder websites to engage customers and prospects
in a “Digital Dialogue” to generate demand and to educate and further qualify
− Key factors for gaining executive support for lead generation and lead
• A web-based modeling tool that you can use to identify areas of potential financial
opportunity within your current go-to-market operations; and
• PowerPoint slides that illustrate essential concepts of our B2B Refinery®
About The President: J. David Green
Dave Green has over 25 years of experience in all facets of lead generation and lead
management. Clients include Microsoft, Lucent, Avaya, Iomega, ADP, Symantec,
Computer Associates, and Novell.
For two of those clients, Dave designed telesales operations that significantly exceeded
first-year quota by more than 30 and 60 percent, respectively. He also wrote the
business plan and helped secure the funding for a department focused on demand
generation and global lead management for a Fortune 500 firm. He then helped recruit
the staff, select the vendors, and assisted with operational implementation that drove
over a billion dollars in pipeline in the first 20 months.
In 2001 Dave teamed with Michael Saylor to co-author The B2B Refinery®. That book
outlines the value of organizational alignment to business buying behavior and go-to-
market economics to maximize ROI on sales and marketing resources. He has also
written or co-authored numerous white papers.
www.PipeAlign.com | (877) 575-5515 11