While the U.S. economy has dodged the bullet of an economic recession multiple times in the last few months, many businesses now feel that American consumers are becoming more careful and more selective about how they spend their money. Moreover, a look at the current inflation numbers, OPEC’s announced production cuts, the continuing war in Europe, and a banking crisis of which nobody knows whether it is truly under control. This leaves little doubt that a recession will not be kept at bay in this country in 2023.
CEOs are responding to recession fears by asking their CMOs to double down on demand generation, the latest Chief Outsiders Survey of CMOs tells us. CMOs are (or should be) well-equipped to lead their teams in this effort, but they will be significantly hindered when marketing and sales teams do not work in tandem. The alignment between both groups is also essential in “peacetime,” of course, but the need is even more urgent in the scenario of an economic downturn.
In a recession, both consumers and businesses find themselves strapped for cash. Companies need to present their value proposition in a way that makes their customers not focus on the price but on the value of the goods and services sold. Since businesses are also short on cash, their marketing effort has to be undertaken in the most economically efficient way possible. Those marketing tactics that delivered a so-so return on investment in the past are abandoned, and whatever has proven to work well receives additional funding.
Communication, Collaboration and Accountability
The renewed focus on efficiency can only bear fruit when marketing and sales are well aligned. When both teams talk to one another, the marketing team will tell sales what it will cost to generate leads. Then based on the revenue that the company is pursuing, the average lifetime value of a transaction, and also based on the knowledge that the sales team has of what the conversion rates through the funnel look like, the sales team will be able to tell the marketing team exactly how many leads are needed to achieve the company’s revenue objectives.
The marketing team then builds a marketing plan that is geared towards generating the leads needed (within budget), and the sales team builds on that with its plan on how it will keep its end of the deal, turning a sufficient amount of leads into opportunities and sales. This is the only sensible way businesses can align their sales and marketing efforts across all B2B and B2C industries.
Sales and marketing should not only agree on objectives but also exchange insights about what they observe on top of the funnel (marketing) and down the funnel (sales). Marketing needs to receive (honest!) feedback from sales on what they are hearing from customers. Marketing needs to provide sales with information on what the target market looks like regarding the changes in demographics, economic conditions, and anything happening in the market that customer surveys can provide information on. Finally, there also needs to be shared responsibility and accountability for execution.
The effort we are talking about is primarily one of process design and culture. Technology in the form of powerful CRMs can play a facilitating role, but it is optional. Most companies that struggle with alignment do so because different teams need to communicate with one another, not because they need the right software.
Unlocking Revenue Growth through Collaboration
Everything just said about the need for alignment might seem like a massive open door to some, but the reality is that, sadly enough, most companies do not have their house in order. For example, in HubSpot’s State of Marketing Trends Report 2022, one can discover that only 28% of salespeople say marketing is their best source of leads. Still, it gets worse: only 7% of salespeople believe the leads they receive from marketing are very high quality.
When sales and marketing align well, the revenue growth engine of the company kicks into high gear. One study from LinkedIn found that when sales and marketing teams work together, they can generate 200 percent more revenue due to their collaboration. Whoever said that communication was a “soft” skill of which the successful application was challenging to measure?!
What is at stake with the alignment of sales and marketing cannot be understated. While coordination between the two is of great importance when the economic outlook is rosy, once the economy cools and businesses and their customers need to tighten their belts, alignment between sales and marketing becomes critical to the company’s continued success. Communication between the teams, where both agree on the same objectives, exchange insights on customers, and share responsibility and accountability for execution, is the only pathway to continued growth.