A Marketing and Sales Blind Spot?

Tim Riesterer, Chief Strategy and Research Officer, Corporate Visions

Are marketers and salespeople so focused on early stage demand generation that they’re missing other big opportunities to drive revenue?

When marketers and salespeople align on something —  anything! — our first instinct is to celebrate it as a victory. Not so fast.

Findings from a new Corporate Visions survey provide a snapshot of marketing and sales “alignment” that provides more questions than answers. Why? Because sometimes, “consensus” has a downside. Sometimes the extreme alignment of priorities that marketers and salespeople appear to share could actually imply a missed opportunity. We asked marketers and salespeople to rate:

  • Which area of the customer lifecycle has the most impact on driving revenue
  • Which area they dedicate the most resources to
  • Which area they need the most help with

Marketers and sales pros agree that early-stage demand generation matters most across all of these areas. Meanwhile, key post-purchase discussions, such as “ensuring ongoing renewals” and “expanding lifetime value,” finished near the bottom across all measures, often by significant margins.

The accompanying chart shows just how closely responses from marketers and salespeople track with each other in the revenue question.

Seeing the same thing, missing the same thing?

The overwhelming emphasis on early-stage demand generation makes you wonder: If everyone in the commercial operation is focused on the front-end of the business, who is making sure you’re driving profitable growth from existing customers while giving them a compelling reason not to leave?

Blind spots: Detected

We know early-stage demand generation commands a lot of focus. What blind spots does that create around other opportunities to maximize growth?

Blind spot #1: A 1 percent increase in price gains a 9 percent increase in operating margin.
That finding from McKinsey & Company is especially relevant to two pricing-sensitive moments that are potentially being neglected: maximizing
deal profitability and expanding lifetime value.

As far as maximizing profitability during the deal, this stat underscores the importance of using specific messaging techniques that allow you to expand the scope and size of your discussions. For salespeople in deal-stage negotiations, that means introducing unconsidered needs to create pricing uncertainty, which expands the value of your solutions. As it pertains to expanding lifetime value, this speaks to the importance of communicating price increases in a way that responds to how buyers actually behave in the moment.

Blind spot #2: A 5 percent increase in renewals increases profits by 25 percent. Bain & Company determined this impressive statistic, demonstrating that renewals are not an area you want to take lightly from a strategy standpoint, particularly as many companies evolve to a products-as-a-service experience. This puts more pressure on securing the next agreement to drive growth and increase profitability. Unfortunately, four out of five companies say they need more strategy and structure around price increase messaging, according to a previous Corporate Visions survey.

Blind spot #3: Acquiring a new customer is between five and 25 times more expensive than keeping an existing one. Cited in a Harvard Business Review article, this stat isn’t so surprising when you consider that high startup and support costs can mean customers have to be an active account for months, even years, before they become fully profitable. Does this mean your budget needs to be allocated to better match the emphasis you need to place on the various moments in the customer lifecycle?