Most companies fail or fall short of their potential, not because of bad strategies, but because of a failure to successfully implement good ones, according to a study by the Economist and the Project Management Institute (PMI).
High growth companies are better “aligned” than most companies , according to numerous third party studies. Achieving better alignment between Sales and Marketing is often touted as the way to increase your revenues, but will that investment drive accelerated revenue growth?
If you are looking to become a high growth company, focusing on internal organizational alignment may be a red herring. It is a symptom, not the root cause, of your revenue growth problem.
The Primary Barrier To Becoming A High Growth Company
The root cause for lackluster growth is insufficient external alignment with your target market.
Most company executives claim that they are already aligned with their target markets, and at a “30,000 foot” level, it may look that way. However, where the rubber meets the road, it looks quite different.
While your target market may be the same as it was five or ten years ago, the buyers within that market have changed their purchasing process, dramatically. Thanks to rapid changes in internet, social and mobile, the buyer’s team has access to all the information they need to determine their short list of possible vendors, without calling any Sales group.
Has your company adjusted its go-to-market revenue process enough to stay aligned with the evolving purchase process of your target market buyers? Most companies have not.
The reality is that the buyer has fundamentally changed their purchase process during the past five to ten years: Each of your revenue functions have responded to it to different degrees, but none of the functions have fundamentally changed their go-to-market plans in response to the fundamental changes the target buyer has made, and continues to make. So you need to tweak the company’s alignment to your customer.
Aligning Your Company To Its Target Market Customers
When it comes to achieving alignment with your customers, small and midsize companies have an advantage over much larger companies.
A company’s revenue generating engine consists of a lot of moving parts in terms of product, process, people, partners and technology. The bigger the company, the more moving parts there are, and the more difficult it is to simply “fix it”.
Regardless of company size, you cannot have a high performance revenue team if each of the team members are executing outdated or different strategies. Nor can you maintain functional alignment to the customer, and to your company’s revenue strategy, without the right key performance indicators (KPIs) throughout your revenue generation process.
Your goal as CEO, at this point, should be two-fold:
- You need to give your strategy implementation a “tune up”, not a complete overhaul. Just identify the top 2 or 3 roadblocks that need to be tweaked to get the company revenue growth going in the right direction, and
- You need to prevent significant “alignment” issues in the future. You want sustainable growth with increasing profits.
To accomplish this, focus on these three aspects:
- Revenue Strategy: You need to have a concise, clearly documented company revenue strategy to get your functional leaders on the same page. This is the document that should anchor the functional strategies, operations plans, and budget of your revenue generating groups: Sales, Marketing, and Product Management.
- Revenue Process: As CEO, you need to personally pay close attention to any cross-functional and cross-silo revenue processes to ensure that they are sufficiently aligned with company revenue strategy in terms of systems, organizational structure and incentive compensation.
- Revenue System Management: You need to understand how the revenue strategy is performing on a quarterly basis and be able to make appropriate changes as your marketplace continues to evolve.
Your goal is to achieve alignment from the C-suite, through the various levels of the company, to the point of engagement with the customer. The clearer you can define the company revenue strategy, then the clearer your functional leaders can define their supporting functional strategies and processes, then the clearer their various departments can define their work plans, and so forth down through the various management layers of your company.
1/ Ensuring Your Functions Are Aligned To Your Company Revenue Strategy
Each of the functional revenue-generation strategies must dovetail into the company revenue strategy.
- Company Revenue Strategy should include the product strategy, pricing strategy, distribution strategy (e.g. online, direct salesforce, resell partners, alliances, OEM) and promotion strategy.
- Sales Strategy should include the ideal target customer, product launch sales strategy, customer retention and new business growth strategy, new logo business strategy, organization structure (e.g. inside sales, product specialists, channel specialists), geographic deployment, sales process and incentive (commission) compensation.
- Marketing Strategy should include pricing and positioning strategy, ideal target customer and conversion strategy, distribution channel support strategies, promotion strategy and incentive (bonus) compensation.
- Product Management Strategy should include product strategy and the product launch impact to company revenues from existing and new logo business, impact to channel support and Sales enablement, impact to margins and launch team incentive (reward) compensation.
If your target buyers are deciding their vendor short list based upon information they find online, versus information presented by your field salesforce in a face-to-face meeting, then you need to confirm that the Sales, Marketing and Product Management groups have adequately adjusted their go-to-market with this new “digitally connected” reality.
Here is an example of how a CEO at a high-growth company might confirm that the revenue functions are aligned with his company’s revenue strategy and profit targets.
- Company Revenue Strategy. All revenue generating functions maintain cross-functional alignment to corporate target markets, the target buyer teams within those markets, and the target buyer’s purchasing process. We use the most cost-effective sales, marketing and product techniques to attract, nurture, win and retain our customers.
- Company Target: “18+%” growth rate with “improving” profit margins (e.g. study by AAM)
To confirm functional alignment at a strategy level, focus on direct linkages to the corporate strategy and critical dependencies that foster cross-functional teamwork, for example:
- Sales Strategy demonstrates an increased focus on online selling skills, lower-cost sales channels and sales performance metrics. They have a well-defined sales process that mirrors the prevailing buyer purchasing process, a detailed plan to effectively leverage online social selling at appropriate stages of the sales process, and plans to increase inside sales to respond to increased new business leads from Marketing plus increased focus on retaining/growing the existing customer base.
- Sales Target: “18%+” annual increase in Sales with reduced cost per sale (e.g. study by Sales Management Association).
- Sales Dependences: Sales will need more leads from Marketing and compelling products from Product Management to make their goal.
- Marketing Strategy demonstrates an increased focus on demand generation, Sales enablement and ROI. They implement cost effective multi-channel campaigns to the marketplace that are designed to move the target buyers through their purchasing stages and deliver high-quality leads to Sales. They have a well-defined content marketing strategy that creates content that is specifically designed for each stage of the buyer purchasing journey, and cost-effectively leverages it across multiple communication channels and distribution channels. They leverage multi-channel marketing techniques to retain existing customers and facilitate customer referrals, and develop new business leads. They enable the Sales process by delivering the right content and information needed by the salesforce to move the buyer team to purchase closure. They lead the cross-functional effort to understand the buyer journey and define accurate target market buyer team personas and purchasing process that can be effectively leveraged by all revenue groups.
- Marketing Target: “60%” of the company’s new business leads and referrals are generated digitally and “47%” of the Sales forecasted pipeline is generated from Marketing-generated leads with “improving” ROI. (e.g. study by Aberdeen Group)
- Marketing Dependences: Marketing will need much more cooperation from Sales and more compelling products to talk about to meet their goals.
- Product Strategy demonstrates an increased focus to deliver compelling business value to the target market buyers, and, compelling revenue and profit margin to the company. They focus on products that will increase new logo business, existing customer new business and existing customer retention. They lead the cross-functional effort to successfully launch every new and revised product into the market.
- Product Launch Target: “significant %” of sales forecasted pipeline is generated for products launched, with “improving” product margins.(e.g. study by Product Development & Management Association (PDMA))
- Product Launch Dependences: Product Management will need cost effective leads from Marketing and increased focus by Sales to make their revenue and profit goals.
If you are comfortable that there is sufficient alignment between the corporate revenue strategy and the functional strategies, then look for alignment issues in the revenue process.
2/ Ensuring Your Functions Are Aligned To Your Company Revenue Process
Each of the functions should have a detailed Operations Plan in support of their budget.
Here is an example of how a CEO at a high-growth company might look at their revenue process alignment:
- Company Revenue Process: The revenue functions will apply the most cost effective sales, marketing, and product launch techniques in an integrated process that increases revenue and profitability.
To confirm functional alignment at a operations level, look for direct linkage to the corporate revenue process, for example:
- Sales Process demonstrates increased accuracy and reliability with the addition of a Sales selling process that mirrors the buyer’s purchasing process and buyer team personas decision criteria. Quota and incentive compensation policies across the various selling channels (inside sales, partner sales, account sales) and customer purchasing processes (renewal, existing customer new business, new logo business) have been adjusted to maximize sales performance, minimize channel conflict, and reduce cost of sales. New initiatives, such as the development of new online social selling skills, are carefully measured and adjusted to ensure maximum sales performance with minimal cost of sale.
- Cross-Functional Process: There is a well-defined process to manage the service level agreement (SLA) with Marketing regarding lead generation and the SLA with Product Management regarding new product launch. All the above processes are actively managed by the head of Sales Operations.
- Marketing Process is in place to ensure cross-silo coordination of multi-channel campaign development, content development aligned to the buyer purchasing stages, lead generation quantity/quality and ROI.
- Cross-Functional Process: There is a well-defined process to manage the SLA with Sales regarding lead generation and the SLA with Product Management regarding new product launch. All the above processes are actively managed by the head of Marketing Operations.
- Product Management Process is in place to ensure that the planned product enhancements and the new product requirements deliver a compelling business value for the target market buying teams.
- Cross-Functional Process: A process to manage the SLA with Marketing regarding lead generation and the SLA with Sales regarding new product sales. All the above processes are actively managed by the head of Product Management.
Even when there appears to be sufficient alignment between the functional strategies and processes to the corporate revenue strategy, there’s still a significant roadblock to achieving accelerated revenue growth, particularly in medium and large businesses.
Cross-functional and cross-silo teamwork rarely works as well as you hoped it would. As the cross-functional leader, only you have the power to change that.
Functional leaders and their staff will always prioritize their functional goals ahead of any cross-functional goals as long as you have tied their incentive compensation to only functional performance.
Incentive compensation, based upon pay for performance, is the most powerful tool in the CEO’s toolbox to turn individuals, groups and functions into a high performance revenue teams. Right now, you must apply the right level of incentive compensation to significantly improve teamwork and accelerate revenue growth. More on compensation in future articles.
3/ Ensuring Your Functions Are Aligned To Your Company Revenue System
In most cases, there is no company revenue system! There was no need to have one.
With the change of your customers purchasing process, Marketing and Product Management will be playing a much more important role in the company’s revenue generation. You need a system to ensure all the functions remain aligned to the quickly evolving customer purchasing process.
This is another key area where the CEO must get personally involved to achieve a balance between the corporate desire to have an “all in one” system under the CIO (that can’t keep pace with rapidly changing market conditions) and the functional desire to have tactical point products under Marketing and Sales (that don’t fit into any corporate technology system strategy). More on this in future articles.
Achieve Accelerated Revenue Growth With Profitability
You will not become a high-growth company in your industry without achieving and maintaining company alignment with your target customers. You need to ensure that the company’s product, marketing and sales processes are aligned to the buyers’ new purchase process. Sales can no longer carry the revenue burden alone.
As CEO, you need to lead this cross-functional effort, particularly if you want to accelerate revenue growth within the next year. You need to have a “change agent” who can be your lieutenant to give your existing revenue processes and go-to-market plans a tune-up.
Your lieutenant could be one of the company executives, or an outside consultant, as long as the person has deep cross-functional revenue generation experience, can add value to each of the functional go-to-market plans, and will roll up their sleeves to help your team achieve increased revenue within the next 12 months.
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