Is revenue flat or heading south? Time to invigorate the sales force with the latest sales techniques, right? New head of sales takes the reins with the job of transforming the revenue engine. Time to bring in the sales trainers, right?

Maybe yes. Maybe no.  Upon closer examination your revenue problem may not be due to a lack of sales skills.

The pros at MathMarketing (for whom I am a certified Funnel Coach in North America) can point to case study after case study of clients who approached them for sales training (they also provide Miller-Heiman training in Australia) only to see that what they really needed was something very different.

Try asking yourself three questions.

1. “Is our revenue problem the result of Sales not being able to close opportunities effectively and efficiently?” If the answer is yes odds are good that sales training is the ticket.  But, try asking two more questions.
2. “Is the root cause of the revenue problem related to either  lead quality or lead quantity?”  If a brutally objective evaluation of your revenue engine revealed that lead quantity and quality are not adequate, what you should consider is Marketing training,  not Sales training.  I’m not talking about the 45-minute-free-webinar-on-email-marketing type of training either.  For an example of black belt marketing training visit Funnel Academy. Now for the third question.
3. “Is there a lack of efficient and effective progression of  names, prospects and opportunities  through the sales funnel?”  Two good indicators of this issue are an elongated sales cycle and a growing number of prospects who drop out of the funnel.

Don’t be surprised if upon closer evaluation you decide that #3 is the root cause of your problem. Many companies come to this conclusion.  What’s usually behind this performance-killer is a lack of a clear, measurable action plan that tightly aligns the tactics of Sales and Marketing throughout the funnel.

MathMarketing has a rapid methodology for guiding companies to close the gap between strategy and revenue results. It has worked wonders for companies  large and small on four continents. We call it Funnel Camp. It aligns Sales and Marketing in a way that dramatically improves revenue generation efficiency and effectiveness.

Sales training will move the needle for your organization if the root cause of your revenue generation headache is a deficiency in closing skills.  But, look deeply into the cause before deciding to go down the Sales training path.

The above post first appeared on my other blog, The Sales Funnel Fanatic.

With my conservative-realist hat squarely placed upon my shaved head I ask you to consider that the economic environment we are seeing today (August 2009), specifically the unemployment rate, is what we’re going to see for many, many months to come.

I’m not going to be misled by politicians telling me just prior to 2010 elections that the days of  milk and honey have returned.  I know that the shaking we feel beneath our feet isn’t an earthquake; it is the vibration from countless business plans going through the shredder. There is fear and uncertainty in the land, but we must move forward even if on a different path with a different view of our business model.

Our economic world has changed–big time. I’m not an economist so I can’t and won’t talk about what the change means. I just know the business environment in which I need to succeed and help my clients succeed is very different from the one I was operating in prior to 2009.

What does this mean if you are a CEO or a marketing executive?

I believe that companies are going to be more and more reluctant to hire permanent marketers. Instead, companies will look to fill their needs on demand. They’ll augment skeleton marketing departments with interim and contract talent as they need it.

There is too much uncertainty in the land to confidently invest in a strong and capable marketing department. There is too much volatility in the marketing programs budget to justify a fully staffed marketing department. Better to keep fixed labor costs to a minimum and bring in the rock star interims for a few months as needed. No long-term commitments, no health insurance concerns, just the perfect skills and knowledge applied to the opportunity or problem for a season.

In past years, in a different economic climate, a high percentage of executives in the U.S. would scoff at the idea of relying on interim talent in marketing. Those same executives have no choice  now but to seriously consider the interim option. They can’t stop marketing or else their companies will fall prey to the competition. However, they should think twice before burdening the operating budge with a fully-staffed, permanent marketing department.

Here are two sobering stats from The Financial Forecast Center.

They forecast the U-3 unemployment rate in the U.S. to be 11% in February 2010. (A group of economists surveyed by the Wall Street Journal estimated the unemployment rate for December 2010 will be 9.5%.) We’re looking at 10% unemployment for at least the next 16 months, if you wish to belief these sources.

The other sobering forecast is the GDP. The Financial Forecast Center shows the GDP improving from -3.8% in June 2009 to zero GDP growth in February 2010. I like seeing the numbers heading north, but we can’t expect much, if any, growth for the foreseeable future.

Low growth GDP and 10% unemployment is the new business environment for the U.S.

Those who adapt to the new reality will succeed. Those who manage with an eye in the rearview mirror will stumble.

Let me know directly if you’d like to discuss what an interim marketing solution might look like for your organization.  To learn more about interim management within the marketing and sales function check out my book, “Leadership On Demand: How Smart CEO’s Tap Interim Management to Drive Revenue.” It’s also available through Amazon and other online book resellers in paperback and eBook formats.

There’s a lot of talk about aligning sales and marketing. I’ve given speeches on the topic and have written numerous posts.  Company executives know it’s an issue, but what are the costs associated with misalignment?

If our car is out of alignment we know that the tires are going to wear out faster; we are more in danger of the car wandering out of our lane into on-coming traffic; the ride isn’t as smooth; and the car is harder to steer. We know the cost of replacing tires and in our mind we can calculate the risk of an accident. That’s pretty easy.

But, what is the cost if  a company’s  revenue engine is out of alignment? Believe me, it’s costing you more than a set of new tires.

I want to open this discussion up and let the ideas flow.  I have a thesis. I think most companies have been driving in a misaligned state for so long they are settling for sub-par results and resigned to trying to solve the problem. Misalignment is the default situation in most B2B companies.

Here is an excellent reason why an outside executive serving in an interim manager capacity at your firm, or as a consultant is best able to get you out of the rut.  They bring objectivity and the knowledge that there is indeed gold at the end of the rainbow.

What is the cost of misalignment? If, as business managers, we can’t put a number to the cost we’ll hesitate to invest in a solution, and that is the way it should be.

Here are a few areas in which misalignment is costing your company.

1. Low conversion rates – your proposal to close ratio is static or falling. Research has shown that misaligned companies have a lower conversion rate. What would be the impact if you reduced your cost of customer acquisition by 10% , 20% or more?
2. Missed revenue forecasts – unpleasant budget surprises at quarter end when actual sales are significantly below budget.
3. Lost customers – research has shown that misaligned companies are not as good at keeping and growing profitable customers. What is the lifetime value of a customer? If you lost 10% or 20% fewer customers each year what would than mean to the top line and bottom line?
4. Slow reaction to market dynamics – when marketing and sales have difficulty agreeing on direction and tactics there are delays in action; opportunities are missed. What is the value to you in beating the competition to a market opportunity?
5. Internal strife – It’s not fun or productive to work in a company in which marketing and sales are at odds (or at war).  Soon egos and politics rule the decision making rather than a focus on progressing buyers through the sales funnel.  The cost here, besides low productivity, is employee turnover. What are your recruitment and training costs in sales and marketing?
6. Do-overs – programs are often created and never implemented  because there is disagreement about what should be done and how. What is the cost of programs that never see the light of day, or what is the cost of do-overs?
7. Loss of momentum – the most effective revenue generation plans are those that have coordinated strategies and tactics where sales and marketing are pulling forward together. A dog-sled team is a good metaphor. When the dogs are running out of step or in different directions the sled is not going to progress at optimum speed.

Those areas will give you a start. I’m sure I’ve overlooked a few.  Once you’ve identified the cost areas you’re ready to get out your calculator and compute what the chaos is costing you.

Give it a shot. Bring out the calculator, look at your current financial statements and budget. Don’t be shocked if the total cost is 5% or more of your total sales and marketing budget.

Think small if you like. What would a 5% improvement in any area look like? Think big. What would a 20% improvement in any area look like? What would a 5% improvement in all areas look like?

I look forward to reading your comments and  sharing more on this topic soon.

I was speaking with an executive the other day who repeated the concerns of her management team that their existing market was too small to sustain their growth.

Expanding into new markets may look enticing, but there are large risks and costs associated with this strategy.  As it turned out in this case I was able to show the company that their market was large enough to provide growth opportunities for the next 3 years.

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One of the first duties of an interim marketing executive starting a new engagement is to assess the marketing budget.  How much is being spent on what activities and what is the expected result?

Within the marketing programs budget there should be three categories of investment: Environmental, Lead Generation and Channel Readiness.  Research has shown clearly that B2B companies that invest at least 42% of their budget on Lead Generation grow revenue faster than companies in their industry that spend less than that level.

The definitions are straight-forward.

Environmental programs are for branding and letting  the market know your company is in a particular category.

Lead Generation are programs that place buyers into the funnel.

Channel Readiness programs are those that make the direct and in-direct sales channel effective.

The research (1400 companies around the world) didn’t reveal any patterns in the sample for spending in the Environmental and Channel Readiness categories, but it was clear that spending too much in Environmental or Channel Readiness at the expense of Lead Generation was harmful to revenue growth.

Before making changes to a marketing budget the smart interim marketing executive will first assess for each product the stage of the market (per Geoffrey Moore), what the appropriate go-to-market strategy is for each market, and then what percentage of budget should be allocated to environmental, channel readiness, or lead generation activities to support that go-to-market strategy.

Take a look. Are you spending less than 42% of your marketing programs budget on lead generation? If so, this is probably restricting your revenue growth.

As an interim marketing executive I consider myself a part of the revenue-generation team of my clients.  In this role, together with the sales executive, I frequently have conversations with the company CFO about the sales  forecast and resource requirements within the marketing and sales departments.

I’ve found that in companies where a sophisticated revenue funnel is in use for planning and performance management, and the CFO is very familiar with the model and its metrics, these conversations about forecast and resources are shorter, smarter, and frankly, less contentious.

On the other hand, in companies where a sophisticated funnel model is not in use and the CFO is not privy to the metrics and assumptions that drive the model . . . well, let’s just say the meetings aren’t much fun.

The revenue funnel isn’t the sole domain of sales or marketing. CFO’s should be as familiar with their company’s funnel structure and metrics as any sales executive or marketing executive.  Here’s why.

1. Funnel modeling tools provide the best way for marketing, finance, and sales to talk the same language during planning and reporting.
2. The variables of the funnel make up the actual metrics of the revenue engine. These variables are the levers and dials over which management has control.
3. The funnel, over time, enables the sales forecast to be made with higher and higher degrees of accuracy.
4. Requests for more resources from Marketing and Sales can in part be justified or refused based on funnel economics

CFO’s should be trained in the use of sophisticated funnel modeling tools right along side their marketing and sales colleagues.

An excellent source of this training is the FunnelAcademy(tm), which includes comprehensive training on sizing a funnel and measuring progress. It also includes the most robust funnel modeling tool I’ve ever had the pleasure to use.

I heard it again yesterday. A person mentioned that companies who are in a “crisis” or in a “turnaround”  situation should consider interim management in operations, finance, sales, or marketing.  That is a true statement, but the majority of interim engagements are not in troubled companies.

Just because a company brings in an interim manager it isn’t a sign the company is in trouble.

Most interim marketing and sales executives, for instance, are engaged by a company to address one or more of these situations:

• Revenue growth has flat-lined, or is in decline. What worked in the past isn’t working now and the management team needs objective insight, new energy and different skill sets for a season to help them point the growth curve in the right direction again.
• There’s a temporary gap in leadership, gap in skill set, or gap in bandwidth that has an unacceptably high opportunity cost associated with the gap.

There should be no scarlet letter associated with the hiring of an on-demand leader. It simply means the company is very smart about how it allocates its resources.

For any company in an economic downturn, after slashing  employees to reduce their overhead there follows a sobering moment of clarity.  “How is the work going to get done? We just let go the only people that really knew how to do this (whatever “this” is) really well!”

I propose that interim management is an excellent solution, especially when the new gap is in a highly-skilled management role (as opposed to a low-skilled bureaucratic role).

So, the company can’t afford a FTE as head of marketing. Fine. Bring in a perfectly suited interim marketing executive for a couple days a week.

I had coffee with a former client last week. He had just been laid off.  The company he had worked for needed to slash overhead due to the rapid economic decline. They let go the head of marketing and the product manager, electing to leave untouched a small department of marketing specialists. Who is managing this group, you might ask? They now report to a director of business development with no marketing experience whatsoever.

Cut backs are agonizing decisions and I’m not second-guessing the decision to swing the axe at the higher salaried managers first. However, what is to become of this very effective marketing group without skilled leadership? Imagine what just two days a week of expert marketing leadership could provide.

Something tells me this story is being repeated again and again all around the world. Interim managers, let us put on our capes and save the day.

When the going gets tough, the tough fine-tune their sales funnel processes for greater efficiency and effectiveness.

So many companies today find themselves trying desperately to succeed with fewer marketing and sales people and with less budget.  I like to think of this situation as having to step into the OK Corral with only four  bullets in my gun instead of six.  Every bullet has to hit its mark. No room for waste or ineffectiveness.

Marketers and sales people realize this, but it does raise two questions:

1. What should we be doing more of?
2. What should we be doing less of?

If a company’s sales funnel has been designed around the buyers’ journey, and if both Sales and Marketing have aligned their strategies and tactics to this journey then they will find the answers to both questions in the metrics that result from a well managed sales funnel.

If there isn’t alignment around the buyers’ journey then sales and marketing are likely working at cross purposes to one another and there is an unacceptable level of trial and error in the tactics.

Research* has proven that companies who have aligned their marketing and sales activities to the buyer’s journey win 38% more of their proposals, lose 36% fewer customers each each year and grow 5.4 points of growth more than companies who aren’t aligned.

Not all sales funnel processes are equal. Most are too simplistic or are centered on the seller’s journey not the buyers’ journey.  A rock-solid funnel model factors in lag, leakage, and recycling–there’s nothing “simple” about the dynamics of a funnel.

There is a way to mine the  sales funnel expertise of major corporations around the world. You simply need to plug into the minds that developed the processes for these global brands and built the tools to support the processes.  That is easy.  The world’s leading authorities on sales funnel management and performance are at MathMarketing. They now offer black belt workshops  that teach companies and marketers how to do this.  Known as the Funnel Academy(tm), these workshops are now available in the U.S. CEO’s should make these programs  mandatory for every B2B marketer and sales manager. For that matter the CEO’s should participate, too.  This is the best B2B marketing training on the planet.

Contact me for additional information about Funnel Academy modules and schedule.

*Source: MathMarketing alignment benchmark study 2004/2005 : 1400 professionals : 84 countries

Do you suspect that the marketing function at your company is not doing enough to help grow revenue and move the company forward? If these thoughts are in your mind don’t feel like the Lone Ranger. There exists in many B2B companies a “marketing malaise” that is a drag on company performance.

Much can be done in 3-4 months to transform the marketing function into a finely tuned and inspired machine.

I give an overview of my approach in a Flash presentation called, “Transforming the Marketing Function in B2B Companies: The Road to World-Class Performance”. View the presentation. No registration required.

Please share your comments and thoughts on the topics after you’ve seen the presentation.