The publication of the Chartered Institute of Marketing’s (CIM’s) “Marketing and sales fusion” paper (Thorp, 2012) may provide a catalyst for a sensible and strategic discussion of the role of “sales” within the UK business community and, in particular, the relationship of this key customer facing function with marketing. It certainly should do as it is long overdue and David Thorp (the CIM paper’s author) should be applauded for putting his head above the parapet. The fact that many marketers have taken a pot-shot at his paper suggests to me that he is on the right tracks. “Sales” and thus the primary interface with the customer, is far too important to be left to ivory tower marketers.
Other than the advent of sales force automation tools (since hi-jacked by marketing and turned into CRM (customer relationship management) systems – except they are usually not)! very little corporate time and effort has been expended on moving the salesforce into the 21st Century. There a number of reasons for this:
- Most FTSE 100 CEOs or Chairman are accountants (Way, D, 2010) and therefore have little to no idea what sales people do or how they operate. They would generally not understand that “The salesforce can be a rich source of market intelligence and a key vehicle for implementing marketing strategy” (Lyus, et al., 2011, p. 39)
- Most marketers have never been sales people and also have no idea what sales people do. As marketers have tried to make their discipline more scientific (Schmitt, 1999) so the “marketing department” has stood in the way of a market or customer orientation (Gronroos, 1991) and the relationship management aspects of sales have been looked down upon as “soft” and therefore of little managerial validity (Lings, 1999).
- The CIM and marketing academics still teach sales as simply another promotional tool. Even Kotler lumps sales alongside advertising in the first “European” edition of his book “Marketing Management” (Kotler, 2009).
- Most papers in business journals are written by American academics (Adler, 1997) and their view of the role of sales people is even less advanced than that of UK academics (with some exceptions like Doyle, McDonald, Ryals and Piercy (Piercy, 2009)).
- The term “sales” – particularly in snobbish Britain – has often been superseded by terms like “account management” or “customer relationship manager” – even though fundamentally the role is still focussed on increasing revenue. Davies and Ryals call this “renaming parts” and have discovered that this can lead to two years of wasted opportunity (Davies & Ryals, 2009).
- The quarterly reporting madness of the stock market (Kay, 2012) focuses businesses, and therefore salesforces, on unrealistic short term revenue targets.
- With the honourable exception of Lynette Ryals and her team at Cranfield, most business school academics conduct no research on and produce few papers about the sales organisation. Sales articles also tend to receive fewer citations compared to marketing articles (Avlonitis & Panagopoulos, 2010).
Why should we care?
Dead simple – whatever a CEO decides to call the people that are the primary interface with the customer – these people own the relationship with the raison d’etre for the entire organisation and are therefore the lynchpin in delivering superior customer value. And as Doyle stated “this formula – customer value creates shareholder value – is the fundamental principle of capitalism” (Doyle, 2003) so a lack of understanding of what makes the salesforce tick, will inevitably lead to a sub-optimal working environment. Indeed some recent research indicates that highly integrated sales and marketing departments “will be better at reacting to market dynamics…and implementing effective strategic responses” (Lyus, et al., 2011, p. 39).
The ability of the salesforce to work with marketing is therefore key to the delivery of corporate strategy and “The sales / marketing interface has a direct and significant impact on customers and the revenue earning potential of the firm” (Le-Meunier FitzHugh, et al., 2011, p. 1161). There is also some evidence that “the effective management of the sales/ marketing interface is possibly of greater importance in improving business performance and organisational success than any other internal interface…particularly within business to business firms” (Le-Meunier FitzHugh, et al., 2011, p. 1161). A CEO’s positive attention to the sales team, its degree of movement towards a KAM orientation (Davies & Ryals, 2009) and it’s collaboration with marketing should therefore be a priority.
You can have the best strategy in the world but if it doesn’t involve and motivate the primary customer interface, it has little chance of success (Martin, 2010) (Brownlie & Saren, 1991). Further, as noted by Le Meunier and Piercy; “Sales and marketing are visible to the customer, and this interface affects the effectiveness of other functions in maintaining a market focus within the organisation” (Le Meunier-FitzHugh & Piercy, 2011, p. 287) so a CEO or CMO that fails to realise this and act upon it, has the potential to seriously destroy customer and brand value.
And now that, belatedly, Brand Value can appear on a balance sheet (Chartered Institute of Marketing, 2005) intangible value added should be hitting the radar screens of all C suite senior managers so that they start to transform “the salespeople into ‘value merchants’ …selling value not product” (Piercy, 2009). The relationships created by such a salesforce can make as significant a contribution to Brand Value as the more high profile expenditure on advertising.
In addition, given the dynamism of most markets (B2B as well as B2C) and the need for organisations to be more agile in their “market sensing” (Piercy, 2009), a traditional salesforce that is positioned as solely responsible for winning orders will help to drive their employers into the sidings of business history (Davies, et al., 2010).
Two recent pieces of research are worthy of particular mention in order to highlight just how prevalent and strategic an issue the neglect of the salesforce really is.
One study looked at the attention that has been given to “account management” in academic literature (Guesalaga & Johnston, 2010). Despite content analysis using multiple versions of the phrase “key account management” they found that, in 17 leading business oriented academic journals, only 64 articles had been published on the topic in 30 years! Whatever practitioners think of academics, they will influence future generations of business leaders and ignorance about your primary customer interface does not bode well for the future of British industry.
Another study looked at “the attitudes towards relationship management amongst a group of service sales people” (Davies, et al., 2010). The study drew on previous work that had covered similar ground and the primary research was conducted with a multi million £ global airline. The study concluded that, despite the implementation of a programme to transition the salesforce to an account management philosophy in pursuance of a customer relationship management strategy, the company had not achieved their objectives because:
- Instead of identifying what skills, experience and attitudes were needed by account managers and recognising that these are different to those needed by a good sales person, the company appointed its best sales people as account managers.
- The incentives, training and expectations of the new account managers were not markedly different to what had gone before. In other words, and despite the concepts of relationship management having started over 30 years ago (Ford, 1980) most academics and business people are paying lip service to the relationship management aspects of the sales team and how to transition from “sales” to “relationship” or “account” management. This view is supported by Forrester Research whose report “The state of customer experience” (Forrester, 2011) revealed that, while 86% of interviewees stated that customer experience was one of their company’s top strategic priorities;
- 46% don’t have a single set of customer experience metrics
- Only 30% had a dedicated budget for customer experience projects and
- Only 25% of respondents said that employees were rewarded for delivering great customer experiences.
While some in the UK may roll their eyes at the Forrester suggestion of appointing a Chief Customer Officer (CCO), this may go some way to aligning the sales, marketing and customer service departments. It would certainly make it easier to set superordinate goals for the departments which would at least improve cooperation, limit inter-group conflict and could contribute to superior profitability (Le-Meunier FitzHugh, et al., 2011). In his seminal HBR article Kotler posits that this alignment “leads to better productivity, reduces duplication and wastage, improves staff motivation and increases customer satisfaction” (Kotler, et al., 2006).
Given the inevitable cut in what CFOs will call “the marketing budget” (they mean promotional budget) strategic marketers must work more closely with their sales counterparts and devise strategies that maximise the relationships with customers for the benefit of the overall brand. This is not a short term issue of changing job titles. A study reported in the Journal of Marketing Management suggests that “Implementing Key Account Management…requires a lot of coordination effort and intensity” (Wengler et al, 2006 quoted in Davies, I., 2009) and the seven companies with which Davies and Ryals worked, defined a KAM transition program of more than 6 years (Davies & Ryals, 2009). A company with which the author is currently working is in the first stages of a 4 year transition program. While Davies and Ryals research focusses on the creation of a KAM programme to transition a salesforce to a specific style of account management, it would behove any senior management team to discuss precisely and honestly how its most valuable customers are being managed and, strategically, how they should be managed.
How do these challenges adversely impact companies?
Companies are loathe to change and loathe to grasp the magnitude of change in customer expectations that has occurred over the last twenty years. In most British organisations neither the sales director nor the marketing director will have sufficient influence at Board level to stimulate such a debate. A recent study (McKinsey, 2012) has shown that very few organisations align resources to support major changes in strategic direction and, given that budgeting is often in the hands of the least customer oriented function in a business, it is little wonder that insufficient focus is placed on the major structural and people changes that are needed to effectively meet the needs of business customers of the 21st century. Indeed it might be argued that the simple structural hierarchy of an organisation works against the robust re-focussing that will be needed. The politics of “functional budget envy” are addressed in the above McKinsey article and Vineet Nayar’s (Nayar, 2010) simple expedient of drawing your business’s organisation chart upside down, might start to shake the tree because few UK businesses are sufficiently bold to really put the customer – and their primary company interface – at the centre of their strategy. As Luke Johnson has said “radical suggestions tend to be crushed by consensus” (Johnson, 2012) and on most boards the radical is soon isolated and silenced.
Lack of radical thought at Board level combined with enhanced customer expectations and the explosion of data associated with customer engagement means that, without a serious debate about customer management and with so few barriers to international procurement, customers that are satisfied but not loyal (“hostages” in Piercy’s terms (Piercy, 2009)) will take their business elsewhere; to companies and countries that have fundamentally re-thought the nature of the relationship a customer wants with a supplier.