Misalignment of sales and marketing functions saps an organization of efficiency, leading to missed revenue goals, anemic profits, high sales costs and unhappy customers.

Over the past few years, many companies have drastically increased their spending on services marketing. The trend has been to grow service marketing spending as much as 50 percent per year. The next wave of expansion is the addition of service sales forces that only sell services. This is wonderful, in my opinion, but there is often a serious lack of alignment between service marketing and sales including product sales, service sales specialists and reseller channels. Alignment should be a no-brainer, right? Sales and marketing are pretty much the same thing, aren't they? They certainly play on the same team, right? Well, maybe, but then again, maybe not. The most frequent reason for the failure of new service programs is lack of support from the sales force—a huge indication that problems are all too common between service sales and marketing.

Similarities and Differences
Let's start with some discussion of the similarities and differences. Strictly speaking, sales might reasonably be considered a subset of marketing. Put more positively, marketing can be a superset of sales. In addition to the sellers who deal with customers in a persuasive manner and induce them to purchase services, marketing is responsible for service product design, pricing, promotion (marketing communications) and channels. That is a lot more than just sales. The range of marketing tasks is referred to as the "marketing mix" or the "4 Ps" of marketing: products (service, in our case), price, promotion and place. This last P, place, confuses most people. It actually refers to distribution channels, but 3 Ps and a D or a C would not have been as easy to remember as 4 Ps, so there you go.
     My colleague Michael Sisavic, who has a Ph.D. in international marketing and teaches at Portland State University in Portland, Oregon, believes that sales rightfully belongs under the promotion part of marketing, along with advertising and direct mail marketing. In actual practice, however, we don't often see sales as part of the service marketing organization (with the possible exception of telesales). In a hardware or software company, sales of services are usually performed by product salespeople. Since their primary function is selling product, they are typically a powerful field organization on their own. For the small but growing number of companies that have a separate service sales organization, it often reports to field service operating managers or has its own reporting structure.

Personality Styles
In any case, service salespeople are typically concerned with getting orders, while marketers are involved with a far greater number of tasks. Further complicating the ability to achieve alignment between the two is the fact that the functions tend to attract opposite personality types. Sales is a right-now tactical business that attracts outgoing personality types that rely on their strong natural people skills to be persuasive. Marketing is more strategic and tends to attract longer-range analytical thinkers. Sales personalities often regard marketers as cold and unfeeling, or bloodless nerds. Sales types are sometimes criticized for their ready-fire-aim approach whereas marketers can suffer from analysis–paralysis. Suffice it to say that they mix about as well as cats and dogs. Too bad, as their personalities and skills are naturally complementary.
     Having made the case for the difficulty in aligning these two groups, what, you may ask, is the need for alignment? About the same as for having a pair of skis as opposed to one ski and one boot or two different types of skis. Sales and marketing really need each other. In an ideal world, marketing performs the planning and other supporting activities that allow sales to do its job of connecting services to customers. Marketers, on the other hand, need sales to use its persuasive people skills to put its plans into action. They are alter egos. Alignment, while often less than perfect, can produce leveraged benefits in terms of increased revenues and profits. Without alignment, sales has no tools to identify the best prospects or communicate the benefits of services. Without sales, marketers have no direct links to prospects and customers. Misalignment saps an organization of efficiency. Sales targets the wrong prospects, sells the wrong services and discounts indiscriminately to try to force the sale. This leads to missed revenue goals, anemic profits, high sales costs and unhappy customers who drive operating managers crazy and are vulnerable to competition.

Aligning Along The 4 Ps of Marketing
How, then, can we align these two disparate organizations? To best illustrate, I will use the aforementioned 4 Ps of marketing, starting with the product, or, in our case, service. The service is designed with the needs of a specific set of customers in mind. Direct customer research is used to segment the market into different groups with each segment possessing a very similar profile of service needs. These needs include different hours of coverage, differing response requirements, etc. We might use mission-critical as one segment and relatively non-critical as another.

 

If sales and marketing are properly aligned, sales efforts will be efficiently targeted at the right customers for different services. Prospects that have a need for the higher performance of a mission-critical service offering will readily respond to the feature sets, and higher prices, of offerings designed for them. If sales tries to sell these same services to customers that place a high priority on low price and don't regard fast response time or around-the-clock coverage as necessary, a mismatch occurs. These prospects might be better served by a low-cost offering of Internet-based support. Alignment occurs when sales targets the prospects that marketing designed the service to fit. If this sounds easy, the real world is filled with examples of marketers who failed to do their homework properly before launching a new service, and with salespeople who struggled to sell the services to the wrong prospect.
     Another P, price, is used by marketers to capture the value of different services and to help to differentiate them from each other. If the marketers have correctly assessed both competition and the customer's willingness to pay, it should be easy to sell at the planned price. This is a very common bone of contention between marketing and sales, however. We must remember that purchasing agents are frequently measured by the concessions that they extract from vendors. They are often highly trained and skilled negotiators. In their effort to get the best deal, they may sometimes overstate the importance of price. Faced with a skilled negotiator who understands their leverage, particularly in a large sale, many salespeople will cave in and offer discounts that are too generous. If they sense that it is easier to negotiate with a marketing product manager than a tough customer, they may develop a pattern of discounting unnecessarily. At this point, we have a classic case of misalignment, with a result of missed revenue and profit goals.
     In contrast to price, which is frequently a point of contention, a third P, promotion, often can be used to assist in alignment. This P includes brochures, data sheets, Internet and intranet information, advertising, public relations, trade shows and other methods to get the word out. Many of these communications are used to either generate interest in target markets or provide sales tools to help explain services and their benefits and to generate proposals. These assist salespeople to find the right prospects and to communicate intangible services more effectively to prospects and customers. Conversely, a lack of these tools, or poorly developed tools, help enable misalignment. Services that are too hard to quote don't get proposed very often.
     The fourth P, place, really means channels to us. This is a very important issue to those of us in the service industry. Two- and three-level distribution channels are becoming increasingly popular and more important every day. They are used to reduce costs of sales and to increase the reach into more markets. The channel or channels influence the other Ps a great deal. Channels usually have their own specific services that have been designed explicitly to be sold and/or delivered by the reseller. They are usually put into packages that are bar-coded and have retail SKUs (stock keeping units) assigned for easy tracking. Resellers and distributors expect these kinds of things. Failure to meet these expectations will ensure misalignment and failure of the service. Prices have to be set to allow for margins to the reseller and, in a three-level channel, margins for the distributor as well. This easily can be 20 percent for each level, so it is a challenge to meet these needs and still have a profit left over for the manufacturer.

Promotion also is altered significantly for channels. Cooperative advertising may be made available in local reseller markets, and largely funded by the manufacturer. Since the seller is far downstream from the manufacturer, and may have multiple lines of products and services to sell, everything is streamlined in the channel to make it easier to sell the service. Videos may be distributed to help sellers better understand the services. Usually, the services themselves are designed to be very simple. Pricing schemes also must be easy to work with. Complicated pricing turns off the sellers and simply results in service being presented to the customer less frequently.

Putting Things Together
How do we put this together to improve alignment between these functions? A lot of the responsibility rests on the marketing side of the equation. First, marketers must spend more time in the field with sellers and customers. This establishes rapport, which is important, but even more significantly, it establishes understanding and credibility. Marketers who spend time in the field are treated with more respect by salespeople; they are listened to more carefully. Second, marketers must work hard to get their marketing messages to service sellers. They need to establish what type of customer the service is designed for, the pricing and positioning strategies, and the competitive issues. They must also explain the service itself, and, finally, they need to sell the service to the sales force.
     In Hahn Consulting's most recent best practice study, published in February 1998 (and available at a discount to AFSMI members), we noted that the most common trend among best practice service marketing organizations was internal marketing. These world-class companies spend time and energy selling their services to internal audiences, most notably the sales force. Marketers must instruct the sales force in market structures, competition, and their strategies for winning. In the absence of significant sales training, anything goes.
     As for sales, what can they do to help? Well, let's start with attitude. They need to acknowledge that marketers are competent and have important functions, too. How much time are service marketers given at sales meetings to inform their audience? Is it 45 minutes out of a three-day meeting? If so, that is a bad sign. Sales needs to treat marketing as its partner. Among all functions in a company, these two have the most in common and stand the most to gain by working closely together. Sales managers need to lead in this regard. They need to understand marketing's strategies and make sure that salespeople are targeting the right prospects, avoiding unnecessary discounts and practicing good selling skills.
     By the way, selling intangible services requires a different sales technique than selling tangible hardware and software, so proper techniques need to be taught where appropriate. I firmly believe that a consultative selling approach is the best for selling services. This is considerably different from the show-and-tell (product demo) or feeds-and-speeds (product specs) approaches used by most product sellers. While we are on the subject of selling skills, some state-of-the-art negotiations training would be a good idea. In a recent survey, it was noted that the majority of attendees at negotiation classes were buyers, not sellers. Many salespeople are getting outgunned by new tricks and traps.
     Sales compensation needs to reflect marketing strategy as well. Salespeople need to be incented to perform in the areas that reflect the company's goals. Do product sales types have quotas and commissions for selling services? If not, don't expect much interest. How about service sales specialists? Are they measured only on meeting revenue goals? Is there any consideration for profit? Salespeople tend to be the most responsive employees to incentives, so their compensation and reward schemes need very careful planning. This includes non-cash rewards as well, such as quota club junkets. Do service sellers attend along with product peddlers? Can a product seller who makes product quota but misses their service quota attend? It sends a message, so think this through carefully. Some service organizations tend to become amazingly cheap when it comes to sales commissions. In my experience, that is tragically shortsighted. At Oracle, their software support sellers are compensated at rates that are competitive with compensation schemes of product sellers. They are world-class support sellers, bringing in billions of dollars in support revenues each year. We think they have the right idea when it comes to sales compensation.

Summary
It is common to find misalignment between service marketing and sales. In fact, misalignment is the most common reason that new service marketing programs fail. There is a case to be made for having service salespeople report to the service marketing organization, but that will not always be practical. Failing that, there is much that can be done on both sides, and the stakes are well worth it to the companies funding these organizations.

                                                                    




© 2002 Hahn Consulting. All rights reserved. *All other names and trademarks belong to their respective holders.