Improving Sales and Marketing Collaboration

Avinash Malshe, Wim Biemans

• Publisher: Business Expert Press
• Year: 2014
• Print ISBN: 9781606498026
• eBook ISBN: 9781606498033
• Topic: Business
• Subtopic: Sales
• Index: Business

Sales and marketing are two primary business functions that focus on creating satisfied customers. Due to their complementary orientations and objectives, these two functions are ideally positioned for a fruitful, synergetic collaboration. UnfortuÂnately, the practical reality in many companies is far removed from this utopia. Sales and marketing personnel fail to communicate effectively, resulting in misunderstandings, frustration, and sometimes sabotage. Instead of supporting each other in creating superior value for customers, they often fight tiresome internal battles that are a drain on profits, efficiency and customer satisfaction. Improving Sales and Marketing Collaboration offers the first comprehensive perspective on the functioning of sales-marketing interfaces in business to business (B2B) companies. We explore their complementary roles in creating superior value for customers, problems that occur, the underlying causes of these problems, and potential solutions. These solutions are accompanied by a series of tools that managers can use to diagnose their sales-marketing interface and develop appropriate approaches to improve this relationship. Additionally, the book discusses a number of challenges that companies encounter and the impacts on their sales-marketing interfaces. The discussions and tools presented in this book provide managers with a deep underÂstanding of this critical interface, allowing them to apply these insights to improve their sales-marketing interface, which helps them create superior value for customers.

Chapter 1

Working Together to Create Value for Customers

B2B Companies Must Contribute to Their Customers’ Success

Ever since the marketing concept was coined, companies are urged to put themselves in their customers’ shoes. But what does that really mean? Many sales and marketing personnel have interpreted this advice as taking the customer as a starting point to figure out which products they need to offer them. In B2B markets, this is exemplified in the concept of derived demand, which uses the demand for end products to work back to the demand for components, raw materials, and even capital equipment. But in practice, all too often this means that sales and marketing personnel still use a product perspective: They worry about how they can grow their company by making their products more successful.¹ Of course, in their minds, they are very customer-focused and they will vehemently emphasize this. After all, they know exactly which products their customers need to run their businesses.

For instance, manufacturers of golf carts need a large number of ­products to manufacture these golf carts, such as engines, shock ­absorbers, batteries, chassis, braking systems, steering assemblies, wheels, body ­panels, and transmissions, and also machinery for ­welding, roll forming, automatic assembly, and painting. Numerous companies sell the ­components and manufacturing machinery that are needed to ­manufacture golf carts. Many CEOs in these companies are driven by a product perspective and typically focus on their own organizational competences and look for ways to use these competences to create ­better and more successful ­products. And the customer’s perspective is only employed to get a reliable estimate of future demand. But this is not what is meant by the exhortation to put yourself in the customer’s shoes!

In contrast, companies that really put themselves in their customers’ shoes possess a deep understanding of what drives their ­customers and use these insights to create superior value for them. Their decision-making uses a value perspective, which is based on the ­premise that customers are not interested in buying products, but in hiring ­products to get a job done. This means that the core of B2B marketing is not to deliver products to customers, but to solve their problems and offer the best solutions for the jobs they are trying to do—in other words, to create and deliver superior value to them. The CEOs in these companies ask themselves: “How can I help my customers become more successful?” This was expressed several decades ago by management guru Peter Drucker, who stated that “There is only one valid definition of a business purpose: To create a customer.”² Without customers there is no company and if your customers become successful because of your products or services, you will be successful as well. But to help your customers become successful, you need to understand what makes them tick.

In his recent book, Tilt: Shifting Your Strategy from Products to Customers, Niraj Dawar explains how most companies insist on investing in upstream activities and processes, such as building better products and improving manufacturing, while a company’s competitive advantage is determined within the interactions between the company’s immediate customers and downstream entities (that is, customers’ customers). “The starting point for any exercise to build competitive advantage in the downstream is to uncover your customers’ hidden pain points, and offer them the best possible solutions. Three questions help enumerate these pain points: (1) What are the hidden costs that your customers incur in buying and using your product or service? (2) What are the hidden risks that your customers incur in doing business with you? and (3) Why do potential customers not buy from you (in other words, what are the hidden costs and risks that prevent potential customers from doing business with you)?”³

The differences between using a product perspective and a value ­perspective are significant. Using a product perspective, a B2B ­vendor asks which products the customer needs to manufacture his own products. Using a value perspective, a B2B vendor uses his insight into how the immediate customer creates superior value for downstream customers to identify opportunities to help the immediate customer become more successful in this value creation. Successful sellers of components for golf carts understand both the needs and requirements of golfers (the downstream customers) and also what is needed to make golf cart manufacturers (the immediate customers) successful, and translate these insights into superior value offered to golf cart manufacturers. The key differences between the product and value perspectives are summarized in Table 1.1.

Moving away from a product perspective to a value perspective requires a company’s focus to shift from selling products to helping customers get their job done. Harvard Business School marketing professor Theodore Levitt told his students in 1960s that “People don’t want a quarter-inch drill, they want a quarter-inch hole!” You may think that you are selling products and services, but the customer does not look at it that way. The customer has a problem to solve or a job to get done. Customers do not buy products or services, but hire them to get a job done. Designers hire CAD-software to create product designs, metal workers hire lathes to cut threads and worm gears, and machine operators hire lubricants to reduce friction and prevent corrosion.

Table 1.1 Product perspective versus value perspective

	Product perspective	Value perspective
Strategy	Selling products to immediate customers	Helping customers to be successful
Customer focus	Immediate customers; new customers	Current immediate and downstream customers
Objective	Increase market share	Increase customer profitability
Customer knowledge	Products sold by customers	Customer’s business needs and issues, including its key success factors
Customer contacts	Product buyers	Product users, decision makers and influencers
Organizational structure	Product divisions with P&L	Customer groups with P&L
Key processes	New product development	Customer relationship management and solutions development
Sales approach	Transaction selling, focused on products	Relationship building, focused on improving the customer’s business
Metrics	Revenues, market share, new product performance	Customer share, customer retention, customer experience, customer lifetime value
Pricing	Cost-plus pricing, based on manufacturing costs	Value-based pricing, based on perceived value

The focus on contributing to your customer’s success is exemplified by Jeffrey Immelt’s conclusion, back when he was still Vice-President and General Manager of GE Plastics, that GE Plastics’ most important product is “customer productivity:” “Selling is dead. These days, account managers have to be customer-productivity experts. That’s what we’re really selling.”⁴ Similarly, Swedish Tetra Pak proclaims succinctly on its website: “Our business is making your company more profitable.”⁵

Sales and Marketing Possess Customer Knowledge … But They Lack Jointly-Derived Customer Insights to Create Superior Value!

Since customers are not interested in your product, but in the value it delivers to them, an in-depth understanding of customers is one of the key drivers of repeat sales to loyal customers. It lays the groundwork for companies to develop and deliver superior value to customers that they are willing to pay for.

Given the customer-facing nature of sales and marketing within a company, it falls upon these two functions to understand what jobs periodically arise in their customers’ lives for which they might hire products the company could make.⁶

Many sales and marketing personnel are quick to proclaim that they really understand their customers. After all, they have been doing business with them for years and not without success! But do they really understand why their customers do business with them, rather than one of their competitors? A marketing manager at a medical device company may proudly claim that she knows exactly how the market segments in the Midwestern United States differ from those on the West Coast, or how surgeons may respond to a specific piece of communication from the company. Similarly, sales managers at the same ­company may be generally quick to produce quantitative facts about their ­customers such as the number of target customers in the region, how big their installed base is, or how many supplementary products and services customers bought over the last three years and at what prices. It is our experience that when it comes to deeper-level customer insights, sales and ­marketing personnel are simply not as conversant as they are with their respective fact-based knowledge. Questions such as “What do our customers look for in our product?” “How do they make their buying decisions?” “Who else in their company is involved in the buying ­decision?” “How do the customers employ our products while serving their end-users?” “How do our products fit in the ecosystem of other products and services they employ?” Or “What are the wants and needs of the final users of our product?” often evoke ambiguous responses from sales and ­marketing personnel. At the root of this ambiguity is usually a significant lack of jointly-arrived tacit insight into what really drives the decision processes of these customers. Hence, it is imperative to investigate why neither sales nor marketing can successfully capitalize on their respective knowledge bases and jointly arrive at the tacit ­customer insights that would help them to develop, deliver, and ­communicate optimal ­customer value.

Perhaps the ambiguity stems from how the roles of sales and marketing have been conceptualized and practiced over the years in companies. Let’s take a closer look.

The Role of Marketing

In a large number of companies, marketing is primarily responsible for understanding markets and customers, developing effective marketing strategies, translating them into marketing plans and tactics, and maintaining the company’s marketing capability. Marketing takes an aggregate look at markets and customers and uses market segmentation techniques to distinguish between groups of customers with similar needs and similar buying behaviors. Based on a segmentation of the market, marketing selects target customers and assigns priorities to customer groups. Identifying the company’s target segments is one of the most important decisions companies have to make. It determines where and how a company is going to compete and who its main competitors will be. Next, marketers develop compelling value propositions for each target segment. A company’s targeting (who to target?) and positioning (what to offer?) decisions are closely related. Companies select target customers because they are able to provide them with superior customer value. And they develop the value to be offered to customers based on these customers’ needs and wants. Eventually, marketing develops a value proposition for each identified group of target customers. Although many companies formulate value propositions as simple lists of benefits or favorable points of difference (compared with the competition’s offerings), the most effective value propositions focus on the one or two points of difference that deliver the greatest value to target customers.⁷

The value propositions are implemented through activities such as developing the right products and services, selecting and motivating the right marketing channels, developing and implementing the right communications, and determining the right pricing methods and levels. In addition, it is marketing’s task to develop and maintain the ­company’s marketing capability and customer focus. For instance, marketing ­represents the voice of the customer during product development meetings to make sure that new products address relevant customer needs.

The Role of Sales

Salespeople perform many different tasks, which can be condensed into four key areas: (1) provide information and sell, (2) manage relationships, (3) collect market information and disseminate it within the company, and (4) coordinate the sales team. The salesperson’s primary task is to sell the company’s products by providing customers with the information needed to advance them along the buying cycle. A second, increasingly important, task of salespeople is to develop and maintain relationships with customers. B2B customers increasingly want long-term relationships with sellers, built on trust and information sharing. This relationship management task includes identifying key customers, developing relationships with all key decision makers, developing trust, identifying opportunities to improve product usage, analyzing unmet customer needs and problems, and suggesting solutions. Because of their regular contacts with customers and prospects, salespeople are ideally located to collect market information. Information about unmet customer needs, experienced problems with products, suggestions for product improvements, and activities announced by competitors are important inputs for product development and marketing planning. Salespeople must not only collect this information but also disseminate it within their organization. A final sales task is to manage sales teams. Many companies use sales teams to match the buying centers used by customers. Such a sales team typically consists of representatives from several departments, such as marketing, sales, R&D, and engineering, and is headed by an account manager. The account manager coordinates the activities of the sales team and employs people where and when needed.

The allocation of a salesperson’s time across these four sales tasks depends on the ...

Table of contents

• Cover
• Title Page
• Copyright
• Abstract
• Contents
• Preface
• Introduction
• Chapter 1 Working Together to Create Value for Customers
• Chapter 2 Sales and Marketing Don’t Always Get Along
• Chapter 3 Taking a Look Under the Hood of the Interface
• Chapter 4 Mending the Rift Between Sales and Marketing
• Chapter 5 Assessing Your Sales-Marketing Interface
• Chapter 6 Challenges to Your Sales-Marketing Interface
• Appendix The Sales-Marketing Huddle: Workshop Template
• About the Authors
• Notes
• References
• Index
• Adpage
• Backcover