Closing the Costly Gap Between Sales and Marketing
In many companies, sales and marketing have become isolated departments. Each working in isolation and without interacting with the other. The misalignment causes issues in the running of the business, and comes at a heavy cost – monetarily.
In Calculating the Cost of Misalignment between Sales and Marketing, Charles Besondy explores why alignment matters, the culture and process costs associated with it, and how to align the tires.
The impact of alignment is hugely beneficial and there’s significant research to back it. In 2013, a global study looked to shed light on the same topic of why some companies out-perform others. One statistic is particularly telling. In those companies where sales and marketing actually plan together there is a 30% higher win rate for proposals and a 62% higher contribution to new business revenue by Marketing. Planning together is one key element of alignment. What would a 30% increase in win rates do for your financial statement?
Besondy talks about the effect of the costs of misalignment,
“Until the CEO, COO and CFO understand the costs of misalignment and the potential rewards of a smoothly running revenue engine, it will be difficult to prioritize and fund an alignment initiative.
How can you go about calculating the costs, considering both hard and soft costs are at play?
A back-of-the-envelope calculation should suffice to give an initiative a green light and a preliminary budget.
To start I suggest looking at seven cost categories under Culture and seven cost categories under Processes. Look at the hard and soft costs; don’t forget to consider opportunity costs, too.
Misaligned or unaligned processes in sales and marketing cause havoc and inefficiency. Companies that are misaligned experience some or all of the situations below. The costs can be considerable. For example, what are the costs associated with chronic sales forecast inaccuracy? It can lead to people losing their jobs. If a window is missed for the effective introduction of a new product, what are the costs if a competitor beats you to market? If you’re chasing poorly qualified leads, what are the costs of the wasted time? If a campaign or website has to be redone because marketing and sales weren’t on the same page strategically, what are the costs?”