HBR's 10 Must Reads on Strategic Marketing

1. Marketing and sales must align for business success

When sales are disappointing, Marketing blames the sales force for its poor execution of an otherwise brilliant rollout plan. The sales team, in turn, claims that Marketing sets prices too high and uses too much of the budget, which instead should go toward hiring more salespeople or paying the sales reps higher commissions.

Misalignment hurts performance. When marketing and sales departments are out of sync, it negatively impacts corporate performance. This disconnect can lead to longer sales cycles, higher market-entry costs, and increased cost of sales.

Benefits of alignment. Conversely, when marketing and sales work well together, companies see substantial improvements in key performance metrics:

• Shorter sales cycles
• Lower market-entry costs
• Reduced cost of sales

Case study: IBM's success. IBM demonstrated the power of integration by creating a new function called Channel Enablement, which combined sales and marketing groups. This integration addressed several issues:

• Salespeople focused on fulfilling product demand rather than creating it
• Marketers failed to link advertising spending to actual sales
• Poor coordination led to ill-timed product announcements

By aligning these departments, IBM was able to capitalize on marketing efforts and improve overall performance.

2. Understanding the evolving marketing-sales relationship

As companies become larger and more successful, executives recognize that there is more to marketing than setting the four P's: product, pricing, place, and promotion.

Marketing's evolving role. As businesses grow, the nature of the marketing function changes significantly:

1. Small businesses:

   • No formal marketing group
   • Marketing ideas come from managers, sales force, or advertising agencies
   • Marketing equated with selling

2. Growing businesses:

   • Add marketing personnel to support sales force
   • Marketers conduct research, choose markets, and develop collateral materials
   • Marketing seen as an adjunct to sales

3. Larger companies:

   • Marketing becomes an independent player
   • Focuses on segmentation, targeting, and positioning
   • Competes with sales for funding

Shifting dynamics. This evolution can lead to disagreements between sales and marketing, as their missions diverge. Salespeople may want marketers to focus on long-term strategy, while marketers begin to work more closely with other departments like Strategic Planning and Product Development.

3. Overcoming economic and cultural conflicts between departments

The economic friction is generated by the need to divide the total budget granted by senior management to support Sales and Marketing.

Economic conflicts. Friction between sales and marketing often stems from budget allocation issues:

• Pricing: Sales prefers lower prices for easier selling, while marketing aims for revenue goals
• Promotion: Sales views large advertising budgets as wasteful, preferring investment in sales force
• Product features: Sales focuses on individual customer needs, while marketing seeks broad appeal

Cultural differences. The two functions attract different types of people with distinct approaches:

Performance evaluation disparities. Sales success is easily measured through closed deals, while marketing's impact on long-term competitive advantage is harder to quantify. This difference in performance evaluation can exacerbate tensions between the two departments.

4. Four types of marketing-sales relationships: From undefined to integrated

The relationships change as the companies' marketing and sales functions mature—the groups move from being unaligned (and often conflicted) to being fully integrated (and usually conflict-free)

Relationship spectrum. The marketing-sales relationship typically falls into one of four categories:

1. Undefined:

   • Departments grow independently
   • Limited knowledge of each other's activities
   • Ad hoc meetings focused on conflict resolution

2. Defined:

   • Established processes and rules to prevent disputes
   • Clear boundaries between departments
   • Common language development for potentially contentious areas

3. Aligned:

   • Flexible boundaries between departments
   • Joint planning and training
   • Sales uses marketing terminology
   • Marketers involved in key accounts

4. Integrated:

   • Blurred boundaries between departments
   • Shared structures, systems, and rewards
   • Marketing focuses on strategic tasks
   • Shared metrics and flexible budgeting

Progress towards integration. As companies mature, they tend to move along this spectrum towards greater integration. However, full integration is rare and not always necessary for every organization.

5. Assessing and improving marketing-sales alignment

We designed an assessment tool that can help organizations gauge the relationship between their sales and marketing departments.

Assessment tool. The authors developed an instrument to help organizations evaluate the level of alignment between their sales and marketing departments. This tool:

• Helps managers objectively judge their organizational culture
• Allows companies to identify areas for improvement
• Can reveal differing perceptions between sales and marketing staff

Improving alignment. Once an organization understands its current marketing-sales relationship, it can take steps to strengthen alignment:

1. Moving from undefined to defined:

   • Establish clear processes and rules
   • Define roles and responsibilities
   • Create a common language

2. Moving from defined to aligned:

   • Implement joint planning and training
   • Involve marketing in key accounts
   • Encourage sales to use marketing terminology

3. Moving from aligned to integrated:

   • Redesign shared structures and systems
   • Develop shared metrics
   • Create a "rise or fall together" culture

6. Creating customer value through collaboration

Companies can take practical steps to move the two functions into a more productive relationship, once they've established where the groups are starting from.

Collaborative approach. By working together, marketing and sales can create greater value for customers:

• Shared customer insights: Sales provides on-the-ground customer feedback, while marketing offers broader market trends
• Coordinated product development: Combining sales' individual customer knowledge with marketing's understanding of broader appeal
• Unified messaging: Ensuring consistent brand and value proposition communication across all customer touchpoints

Best practices for collaboration:

• Regular cross-functional meetings
• Shared customer relationship management (CRM) systems
• Joint account planning for key customers
• Cross-training programs to build mutual understanding

Benefits of collaboration:

• More effective product launches
• Improved customer satisfaction
• Higher conversion rates
• Increased customer lifetime value

7. Adapting to market changes and consumer needs

Robust communities are built not on brand reputation but on an understanding of members' lives.

Market-driven approach. Successful companies adapt their marketing and sales strategies based on evolving market conditions and consumer needs:

• Regularly assess market trends and consumer behavior
• Adjust product offerings and messaging accordingly
• Collaborate across departments to respond quickly to changes

Examples of adaptation:

• Shifting from product-centric to solution-centric approaches
• Developing personalized marketing and sales strategies
• Creating customer communities to foster engagement and loyalty

Benefits of adaptability:

• Improved customer satisfaction and loyalty
• Increased market share
• Better positioning against competitors
• Enhanced ability to identify and capitalize on new opportunities

8. Leveraging technology and data for better integration

CRM is, ultimately, a tool for gauging customer needs and behaviors—the new customer department's central role.

Technology as an enabler. Modern tools and data analytics can significantly improve marketing-sales integration:

• Shared CRM systems: Provide a unified view of customer interactions and preferences
• Marketing automation: Streamlines lead generation and nurturing processes
• Sales enablement tools: Equip salespeople with relevant content and insights
• Data analytics: Offers actionable insights for both departments

Benefits of technology integration:

• Improved lead quality and conversion rates
• More personalized customer experiences
• Better alignment of marketing campaigns with sales goals
• Data-driven decision-making across both departments

Implementation considerations:

• Ensure proper training for all users
• Establish clear processes for data input and management
• Regularly review and optimize technology usage
• Foster a data-driven culture across both departments

9. Building a customer-centric organization

Brand communities exist to serve the people in it.

Customer-first approach. Successful companies prioritize customer needs across all departments:

• Develop a deep understanding of customer pain points and desires
• Align organizational goals with customer success metrics
• Empower employees to make customer-centric decisions

Strategies for customer centricity:

• Create cross-functional customer experience teams
• Implement voice-of-customer programs
• Develop customer journey maps to identify improvement opportunities
• Establish customer success metrics that span marketing and sales

Benefits of customer centricity:

• Increased customer loyalty and advocacy
• Higher customer lifetime value
• Improved product and service innovation
• Greater competitive differentiation

By focusing on customer needs and fostering collaboration between marketing and sales, organizations can create a powerful engine for sustainable growth and long-term success.

Last updated: August 30, 2024