A Marketing and Sales Blind Spot?

By Tim Riesterer, Chief Strategy Officer

August 17, 2017

Are companies so focused on early stage demand generation that they’re missing big opportunities to drive revenue in other key moments across the customer lifecycle?

Whenever marketers and salespeople are aligned on something—anything!—our natural tendency is to hail it as a victory—a rare moment of concord between two not-always-friendly factions.

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” actually 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 a) which area of the customer lifecycle had the most impact on driving revenue; b) which area they dedicate the most resources to; and c) which area they need the most help with. The responses reveal that marketers and sales pros agree that early stage demand generation matters most across all 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 charts below shows just how closely the responses from marketers and salespeople track with each other in the questions we asked them. The trend lines were remarkably similar across all questions.

Seeing the Same Thing, Missing the Same Thing?

The overwhelming emphasis on early stage demand generation makes you wonder: Are marketers and salespeople so focused on the same thing that they’re also missing the same thing—in this case, the opportunity to ensure revenue growth by adding more messaging strategy to other key moments across the customer lifecycle, such as customer retention and expansion efforts?

Put another way: 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 and giving them a compelling reason not to leave.

Blind spots: Detected 

The heavy emphasis on early-stage demand generation is clear. The question is, what blind spots is that creating around other major opportunities to maximize growth?

  • Blind spot #1: A one 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—and need for—your solutions. As it pertains to expanding lifetime value, this finding speaks to the importance of communicating price increases effectively—in a way that’s supported by research and that responds to how buyers actually behave in the moment when you’re trying to convince them to pay more.
  • Blind spot #2: A five percent increase in renewals increases profits by 25 percent. Bain & Company determined this impressive statistic, demonstrating that customer renewals are not an area you want to take lightly from a structure and strategy standpoint, particularly as many companies evolve to more of a products-as-a-service experience. This puts more pressure on securing the next agreement to drive growth and increase profitability. Unfortunately, skimping on the messaging rigor appears to be the norm when it comes to customer retention as four out of five companies say they want more strategy and structure around price increase messaging, according to a previous Corporate Visions industry survey.
  • Blind spot #3: Acquiring a new customer is anywhere between five to 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 want or need to place on the various moments in the customer lifecycle?

Marketers and salespeople may be in lockstep when it comes to perceiving the importance of early stage demand generation efforts. But don’t undermine those efforts by taking an ad hoc approach to some key growth-driving moments that occur later in the customer relationship, as that will only make it harder to retain customers and drive more value from your partnerships.

For more insights into what it takes to add more structure and strategy to the key moments highlighted above, check out our State of the Conversation Report.

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