What is it going to take for sales, marketing, and service transformation to pay off?
The Challenges Facing the CXO
The sales and marketing world is experimenting with new organizational forms that are intended to transform sales, marketing, and service in ways that accelerate growth and address the needs of digitally enabled customers.
Almost a third of organizations do not have a Chief Marketing Officer (CMO) according to Spencer Stuart. Instead, organizations like Coke, J&J, Kimberly Clark, Lyft and Uber are folding the marketing function into new “CXO” life forms – Chief (Growth, Revenue, Commercial, Experience, or Customer) Officers – that have a mandate to unify and coordinate sales marketing and service organizations into a high-octane growth machine.
71% of the remaining organizations claim that their CMOs are highly integrated and cooperative with their partners in sales according to the Duke CMO survey. These empowered CMOs realize that growth has become a team sport because even the most powerful CMOs must work much more closely with the leaders of sales, analytics, digital channels, product innovation, and channel partners to effect growth according to Professor Kim Whitler of the Darden School of Business.
The forces behind this reconfiguration of sales, marketing, and services are undeniable and well understood.
- Growth has become a team sport because CMOs control only a fraction of the 18 levers that grow revenues, profits and firm value identified in the Forbes Marketing Accountability Report;
- The modern growth formula now requires the orchestration of a growing variety of channel touchpoints and the over 20 different growth investments in the modern marketing mix;
- The customer buying journey has become a network of non-linear and asynchronous client, prospect and influencer interactions that defy orderly, linear and hierarchical command and control structures;
- The customer experience has emerged as the primary basis of competition as digitally enabled customers armed with better information and access are putting a premium on speed, agility, personalized content, and channel integration;
- Customer lifetime value has emerged as the primary driver of firm value as the world moves to Saas solutions, subscription service models and a sharing economy according to Peter Fader, Professor of Marketing at the Wharton School of Business.
The name of the title of the unified executive growth leader does not particularly matter. Fundamentally, all these new “CXO” roles have the mandate to deliver one unified customer journey to grow revenues, profits and firm value by maximizing Return on Marketing Investment (ROMI), the Customer Experience, and Customer Lifetime Value. Armed with advanced analytics, 7,040 marketing technology solutions, storytelling content, and value selling methodologies they must find ways to get marketing, sales and service silos working as a team against a common purpose.
There is absolutely no doubt this transformation must happen. And a new form of growth leader is needed.
But putting a new box on the organization chart might not be the best place to start. And a new job function and change in span of control alone will not facilitate the change needed to truly transform the go to market system in ways that grow revenues, profits and firm value.
The reason is that these new organizations ignore five painful truths about what it is really going to take to transform the go to market system and enable revenue growth across the enterprise. Without these five ingredients, a functional change alone will not yield scalable and sustainable growth.
1. Leadership – Successful sales and marketing transformation will require new skills and leadership approaches. Leaders must be coaches that find ways to get dogs and cats to work together. They must also understand how to use data, information and technology as a force multiplier.
2. Teamwork –A new managerial architecture for breaking down organizational silos and fostering teamwork across sales, marketing, and service at scale across the enterprise is needed. Old hierarchical command and control approaches will be too slow, culturally toxic, and introduce too many points of leakage and failures as revenue opportunities move across functions.
3. Common Incentives – Teams fail without a common purpose. There can only be one common and agreed upon scorecard for success –tied to firm value and financial performance – if all these disparate functions and armies of customer facing employees are going to work together in any meaningful way. Hierarchical, functional, funnel, and waterfall metrics based on linear sales funnels and independent functional roles will fail to either foster teamwork or address current customer behavior.
4. Horizontal Information Sharing – All customer facing employees need a fully transparent, 360-degree view of the entire buying journey available in real time if they are going to play like a team. Sharing information across the enterprise to inform and support teams from across geographies, business units, and market segments is now the key to growing revenues, profits, competitiveness and share price according to the Forbes Real Time Marketing Accountability report. Organizations must act on buying signals, location-based opportunities, or churn triggers in service within minutes instead of hours or days. For example, getting data and analytics to track results was the number one challenge and biggest skill gap facing organizations trying to implement ABM programs according to ITSMA.
5. Return on Selling Assets – These leaders need to use technology as a force multiplier and team enabler if they expect to succeed by dramatically increasing historically low levels of salesperson productivity, technology adoption and return on selling assets – content, technology, data and automation. To do so, they must find ways to use AI-driven sales tools and workflow automation to automatically enforce new sales methodologies into daily practices, input data into CRM profiles, and deploy all the expensive content, thought leadership, and playbooks created by marketing.
Surprisingly, the loudest voices advocating organizational change are technology providers, technology analysts and early adopters of those technologies – most of whom are small start-ups with simple organizations. They hail the emergence of the Chief Growth Officer function – along with functional manifestations such as sales enablement, revenue operations, marketing operations, etc. – as the catalyst for a new era of sales and marketing transformation and enlightenment.
All this heat about Revenue Enablement ignores the long and sorted history of sales and marketing transformation and automation and the fundamental challenges of scaling teamwork in a large enterprise. CXOs need to remember:
- Humans are involved. There is little evidence that machines can replace them or change the way they behave. Unless a technology is dirt simple, super-fast, or fully automated, it’s likely not going to be adopted at scale across the enterprise.
- Historically low utilization and adoption rates of sales tools. The history of sales enablement has been characterized by extraordinarily low levels of adoption by the customer facing employees in the line. Most struggle to put new sales methodologies into daily practices, input data into CRM profiles, execute the right sales plays, and use expensive thought leadership developed by marketing in sales meetings. After nearly three decades of use and investment, reported CRM adoption rates are surprisingly low. And in actual practice probably much lower. And as long as expensive value selling methodologies, sales playbooks, demos, videos, and storytelling tools are paper based or digitally disconnected they will not be utilized at scale across the enterprise.
- New leadership skills are essential. Leading a modern growth engine will take new skills and leadership approaches. It takes a rare coach like Bill Campbell (a football coach) or General Stanley McCrystal (originally an Airborne Officer) to find a way to span cultures and disciplines and forge artists (marketers and designers), scientists (analysts) and athletes (salespeople or Navy Seals) into winning teams. Data and analytics skills are also becoming essential to leading the Sales Function as revenue leaders increasingly use advanced analytics to supplement intuition and personal relationships and boost sales productivity enable by lead scoring, micro segmentation, and predictive “most likely to purchase” engines, according to research by Micheal Dickstein who leads the Sales practice at Spencer Stuart,
- Change management is required but usually deferred. No meaningful sales and marketing transformation will happen without a top down commitment to changing compensation, incentives, culture and reengineering processes. It’s much easier to outsource the problem to a technology solution, sales training organization, or a content marketing agency than to face up to the pain. And most folks take that path, with sub optimal results.
- Someone needs to define a common financial scorecard for success. Teamwork oriented CMOs like Denise Karkos, Chris Hummel of United Rentals and Robin Matlock at VM Ware are pushing past 20th century demand unit waterfall metrics that support linear sales process, handoffs, leakage, and waste by putting sales, marketing and service in conflict with each other. Instead, these growth leaders advocate metrics focused on quantifying customer engagement, energy created within accounts, team success and customer lifetime value. “The Customer Experience is by definition a cross functional exercise that involves sales, marketing, services, and customer care,” according to Chris Hummel, the CMO of United Rentals. “The only way to get these disparate functions to collaborate is to create incentives to foster a common purpose for working together as a team to grow customer lifetime value. It’s up to leadership to use advanced analytics to derive new measures that more accurately quantify the collective engagement, energy, and customer experience our teams are creating within accounts.”
Until the fundamental issues of leadership, teamwork, common incentives, and information sharing are addressed head on progress will be slow. Results will be spotty. Experiments will fail. And people will be fired. Already, both Coke and Paypal have backed away from their “CXO” functional experiments and reestablished the CMO role. At the same time, more CMOs are getting fired and median job tenure remains at just over two years as organizations struggle to align the role and expectations of the job with the reality of how the go-to-market model is evolving.
Clearly the transformation of sales, marketing and service is in its early days. Most organizations lack experience mastering the people, process, technology and incentives that make up Revenue Enablement. Most Account Based Marketing (ABM) initiatives are only in their first year and these have proven difficult to scale to more than a few dozen accounts. And while most marketers are prioritizing AI in sales and marketing, few have really mastered it.
But the imperative of Revenue Enablement to transform sales, marketing and service is not going away.
To better understand and address this issue, I am working with growth leaders to lead a Proving the Value of Revenue Enablement research initiative to better understand and address these key points of leverage and success. I invite transformation minded CXO’s, CMOS, CSOs and CEOs to participate and share in the learnings.