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Top 10 Findings from the Sales and Marketing Alignment Study

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  • Welcome and introductions to Jon and Hugh (who? Erin?)Background (why we did this)Top 10 findings7 Recommended stepsQ&A
  • 500 businesses from around the worldAll B2B (we stripped out the consumer companies)Stripped out companies with fewer than 10 employees (alignment is less of an issue)Looked at 33 possible causes and 18 possible consequences, to find 10 solid lessonsWe’ll detail the specific improvements available from applying each finding, but across the board we found ways toLift closure rates by 67% (21% to 35%)Improve lead acceptance rates by 108% (from 36% to 75%) andLift Marketing’s contribution to revenue by 209% (from 9% to 28%)
  • Whether looking at training, process, structure, tactics etc. we looked at their affect on closure at 3 stages, and lead acceptance rates, and revenue and retentionTwo notes:Don’t try to compare yourselves with the averages – use the measures to compare yourself this year over nextIf we went looking for a conclusion, and the data was not strong enough, we didn’t report on it
  • We wanted to know what affect training would have on those measures (closure rates for leads, opportunities and proposals). We did find you could use training for these, but not where you would expect
  • We expected to find that increasing marketing training would improve lead acceptance, and increasing sales training would improve lead closure. We were wrong
  • The average days of training for a marketer are 3. We looked at what happened when you over-invest.Lead acceptance rates didn’t twitchBut the probability of those leads closing improved by 67%And the probability of a proposal closing lifted tooWhy? Marketing learns how to create leads that close, not those that open.
  • And we expected Sales closure rates to improve when you train more, but found no evidence of thatWe did find that well-trained sales people are more willing to accept leads from MarketingThere was a nice lift in retention (loss of churn) also
  • Suping up the training on both sides of the house lifted new business % and marketing’s contribution to revenue
  • Like training, processes produced results, but not where we expected. We also found a sequence in how businesses added processes successfully.
  • Adding robust Sales processes didn’t lift closure rates enough to be believable, but did list lead acceptance rates. A clear sales process makes it easy for Marketing to get their leads followed up. Despite that, there was no improvement in Marketing’s contribution to revenue
  • Marketing processes didn’t lift that same ratio – the lead acceptance rate, but did improve the probability of a proposal closing. Now you might think Marketing has no impact on closure rates late in the cycle, but there are a number of key decisions WHOLLY in Marketing’s control that do impact closure: segment, campaign, pain point, solution design, top of funnel tactics all have big impacts on the chances that a lead, once worked to offer stage, will close.That was enough to lift Marketing’s contribution to revenue by 59%
  • And then we looked at single process and saw both lead acceptance and marketing’s contribution lift. So adding a marketing process on its own doesn’t impact lead acceptance, but a shared process does. Makes sense, right?…it’s like a relay – a shared process means fewer dropped batons
  • So we saw a real step-wise process here:Sales process to make a willing sales forceMarketing process to make those leads worth focusing onSingle process to lift Sales’ willingness to focus on those closable leadsImprove throughput by kaizen-like refinements to that single processBFO!Aggregate effect is 108% better lead acceptance, 126% better contribution to revenue, and a reduction on lost customers along the way
  • Next we looked at planning: who led it, how long it took, and the link between these levers and the closure outcomes we were tracking
  • If Finance are at the helm, they have great new business but horrible retention
  • If Marketing leads planning, leads get accepted, but they are rubbish: unclosable and small, we lose too many customers and Marketing makes limited contribution as a result
  • Sales keeps customers if they drive the planning, but forget why they were hired: low closure, studiously ignore everything Marketing does, and don’t get many new customers
  • Don’t let production anuwhere near the planning process. They keep customers, but are hopeless at adding new ones
  • Opps is no better.
  • CLEARLY, we need to leverage the strengths and find a way to mitigate those weaknesses.Joint planning lifted closure of Marketing’s leads, had more of them accepted, and so new business revenue soared.There might have been a small cost in terms of more training days
  • How long should planning take? 1-4 weeks. Longer or shorter dropped the contribution from Marketing rapidly. Marketers need feedback to know what to change
  • We found lots of good news for Marketo, but not where we hoped to find itCompanies which have already automated marketing do not enjoy Any measurable improvement in deal quality, as measured by proposal closure ratiosNor are their SQLs more likely to close. Not even their MarketingQualified Leads (MQLs) are more likely to close as a result of automated marketing.
  • Those who had gone whole hog saw Marketing’s contribution to revenue soar: 153% more than for those without automation. Even the process of planning for automation had an impact.
  • Retention, like acquisition, improved dramatically. Again, even the planning process lifted retention.
  • But ignorance is bliss. Those without automation (and with low contribution from Marketing as a result) were fabulously happy with their marketing departments. They were the most confident, and the least successful.
  • Some of you may know that when I coined the term ‘the buyer’s journey’ in 2003, it felt a bit too mung beans and tofu for most of the marketing community, but we’ve all become very comfortable with that idea. So we wanted to find out how important the names that companies used for their CRM and MAP stages were
  • Changing the stage names from those out of the box to your own proprietary sales process yielded a 46% lift in the chances of an MQL closing. And changing those stage names to buyer stages, not seller stages, yielded an ADDITIONAL 28% improvement in MQL closureSQL closure rates also lifted, kind of step-wise, but the improvements were less.
  • Who reports to whom?
  • Well it seems that Sales won’t work for marketing, but marketing will for Sales, or the big boss. But forget about a combined head of Sales and MarketingWhy? Mostly, head of Sales and Marketing is a sales dude and the function of marketing gets short shrift.
  • What do we measure, and what effect does it have?
  • As measurement shifts from leads to appointments, proposals, and eventually sales, all ratios improve, ultimately delivering anuplift of 23% to MQL closure, 12% to SQL closure, 16% to the proportion of revenue attributed to marketing leads, 10% to newbusiness as a proportion of total revenue, and 18% to retention.
  • Marketers love branding and sometimes get less excited about heavy-lifting demand. How hard should you push that lever?
  • Let me just briefly explain EM / DG / CR.Well the average DG is 45%
  • Our 2004/5 study found the ideal allocation to demand was 40%. We actually found in this study that the chances of closing a proposal peaked when demand generation budget was 35% of the total Marketing budget
  • We wanted to know whether the choice of tactics had much impact on closure rates, and found that they did, but only to a point
  • SEO and referrals were much better ways to find new names than Social media…But…
  • Social, including blogging, were great for positioning. In fact, 40% better than traditional positioning tactics
  • Just for fun, we looked to see if any of the stereotypes played out, and found that they did. Kind of. This is really just a bit of light hearted fun, and not something we’d spend any time on in strategy days
  • Americans are 32% better at closing than Belgians, but 39% behind their Australian Marketing counterparts at generating quality leads (ones that close). Australians are great at starting the conversation (aka ‘Marketing’), but Marketing contributes 147% less of the total revenue than for Canadian businesses – perhaps an opportunity to push harder? The Brits have the highest confidence in their Sales and Marketing teams of all countries, but this appears misplaced, with low closure rates at every stage in the funnel. They nonetheless manage to have the highest focus on new business out of all countries represented in the study. Belgians aren’t great at closing, but maintain a ‘steady’ performance through the funnel and no real individual weak spots other than a low proportion of revenue from new business. Canadians are deeply concerned about alignment, but seem to be the best at it (is there a link?). They enjoy a 21% higher closure rate for MQLs than Americans, and Sales is 48% more likely to accept those leads, resulting in the highest proportion of revenue coming from Marketing and best customer retention by a mile.
  • We’ve got 7 steps for you.1 - Start at the top and make this a leadership issue2 – get a single process together, but make it buyer=centric, not seller centric3 – get a half dozen key measures and fixate on the: output measures like MQL acceptance and closure, marketing contribution to revenue, and input measures like lag and leakage
  • Sweat your sales guys on how they open, not how they closeGet the strategy, tactics and overall process built by your combined leadership team, and do it quicklyAutomate buyer progression, not batch and blast emailsTrain for gaps. If in doubt, sales on opening and marketing on closing
  • Erin: So that’s it. We’ll get an email out to you shortly with this presentation, and the full report. So look out for it. Let’s now move to … (Q&A)

Transcript

  • 1. Hugh Macfarlane Jon Miller Founder & CEO MathMarketing Co-founder & CMO Marketo
  • 2. You are far from average …and… if we don’t believe, we won’t tell
  • 3. 1 Investing heavily in training produces a positive lift to both performance and alignment, but only if you view the system as a whole, and are open to some ‘odd’ logic.
  • 4. 2 Sales processes improve marketing outcomes, marketing processes improve sales outcomes, and shared processes improve both.
  • 5. 3 Planning jointly, quickly and often lifts the performance of the ‘engine’.
  • 6. 4 Marketing Automation delivers scale and affordability, but not confidence.
  • 7. 5 Naming CRM stages after buyer’s journey stages improves the quality of early-stage leads.
  • 8. 6 Marketing needs to report to the CEO, or to Sales, but not to a divisional or shared boss.
  • 9. 7 Holding Marketing’s feet to the fire works.
  • 10. 8 Demand is more important than brand, but only to a point.
  • 11. 9 Marketing tactics early in the journey have more effect on closure rates than sales tactics later in the journey (which is why search beats social, blogging beats traditional, and it doesn’t matter what tactics the sales team uses).
  • 12. Search Beats Social for Finding New Names
  • 13. Blogging Beats Traditional Positioning Tactics by 40%
  • 14. 10 Alignment and effectiveness vary wildly between countries.
  • 15. Look out for our email…