Marketing vs. Sales – A Case Study

ACME Software sells its product to other businesses.  ACME’s products allow a business to save time in their processes, resulting in a more efficient and effective operation.  Their software is licensed on a per seat basis and with service (updates) and training sells in the high 5 figure to low 6 figure range.  They sell directly to enterprises and have 8 regional sales people in the US and 3 distributors in Europe.  These are supported by 3 telesales people in HQ who process leads generated by Marketing.  To date, they have not penetrated the Asian market.

Sales have been relatively flat for the past two years as a result of the economy.  ACME has not lost any market share, but also has not gained it against its two major competitors.  In constructing the 2011 budget, ACME’s management has proposed to cut both Marketing’s and Sales’ budgets by 20%.  The rationale put forward by management is as follows:

  • For the past two years they have invested in Marketing by purchasing CRM and other automation tools
  • They have decreased out-of-pocket Marketing expenses in print advertising and trade shows, but these savings have been offset by added Marketing head count to manage the new social networking activities
  • Because of the changes in Marketing, during the first eight months of 2010, leads at the top of the pipeline have increased by 20% and “sales ready” leads have increased by 10%
  • With this positive trend the sales force will be more effective; since having potential sales closer to closing will enable the sales force to close more deals in a shorter period of time.

Neither Mary Smith, the CMO nor Brian Knowles the VP of Sales can accept this logic and fear the impending cuts will destroy their positive work over the past two years.  Mary feels that she needs a flat budget to maintain the positive trend; although the new tools have automated the process and the social networking people she brought in have “learned on the job” and are looking for other things to do.  Brian strongly believes that ACME products succeed because of a “relationship” sale and that despite getting mores sales ready leads, the number of sales per sales person is proportional to the amount of time he/she spends with the prospect.  Getting more sales ready leads doesn’t mean that the salesperson will necessarily close more leads in a shorter period of time.  That said, his newest sales person is currently ranked number 2 and has only been selling to his prospects in his region for a year and a half.

Mary and Brian have worked on a response to Management’s proposal.  Their points are:

  • A 20% cut will not allow Marketing to aggressively go after related verticals for new leads, which will help grow market share.
  • The 10% increase through August may be the result of a slight rebound in the economy.  If the economy turns down again Marketing will need all of today’s available resources just to generate enough leads to stay flat relative to market share.
  • The selling cycle of a software package costing $150K (median value) is a relationship sale, taking time and requires touching numerous decision makers and influencers.  This cannot be sped up by “nurturing” emails and blogs.  It requires face-to-face time.
  • The buying decision is being stretched out.  If ACME doesn’t have a physical presence then ACME may lose to our competitors that do.

If you had to decide for ACME, what would you say?  Can Marketing automation and social networking ease the burden/cost of face-to-face selling?  Have there been enough improvements in Marketing automation and social networking that Marketers are down the learning curve and can do more?  Has social media and networking shorten the sales cycle?

Remember, ACME management needs the saved dollars to invest in a new product to leap-frog rumored competitive inroads, so keeping funding constant will have long term implications.

Send me your thoughts.

RHM  10/28/2010

1 comment to Marketing vs. Sales – A Case Study

  • Jim Matorin

    If the new tools are utilized correctly, the amount of time/money spent on classic face to face selling can be reduced, but there needs to be a hybrid of both. Pet peeve with CRM is people tend to perform analytics and focus on the voids versus looking at what they are selling and coming up with creative ways for customers to buy more.

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