Sales and Marketing are frequently mentioned in 1 breath as if they are inseparable. We think this is not entirely true. The division of roles between the 2 functions can be very clear:
- Marketing attracts customers
- Sales converts customers
Despite this clear line between the functions most companies have trouble dividing their commercial budget between the 2 functions. They struggle with the following dilemma:
As in most dilemmas organizations have a tendency to compromise. They do a bit of both. What is the most effective way to really break out of the dilemma?
In theory there are 2 directions to a real solution:
- Find a way to attract new customers through sales.
- Convert customers out of marketing.
- [And ideally both in parallel.]
So how can we define a process in which both forces work in parallel? It requires a strategy in which a new customer, attracted through marketing has a high spontaneous conversion rate. He starts buying instantly as soon as he learns about the offering. And it requires a mouth-to-mouth effect from 1 customer to another, because then a newly converted customer through sales wil attract additional new customers.
This implies that marketing should be measured on Traffic and Spontaneous Instant Conversion whereas Sales should be measured on Secondary Conversion and Referral Percentage of existing customers. With this set of performance indicators the two functions are rewarded for their alignment. A budgetary compromise is no longer necessary. Both functions can be attributed additional budget when their measured performance goes up, because it will contribute to the bottom line, assuming the company has a positive net margin on its commercial activities. If that is not the case Sales and Marketing are not the blame. Then the company faces a bigger and strategic challenge.