The New B-to-B Fundamentals (1,907 words)
By John M. Coe
... Or How to Sell More by Spending Less
For decades, sales and marketing communications groups coexisted as complementary but separate silos in most B-to-B companies. Marketing was responsible for advertising, collateral, public relations and trade shows. Sales was responsible for following up on leads generated by marketing, and selling the product or service to prospects and customers. The twain rarely met.
In the 1990s companies began to qualify leads more aggressively, deploy outbound telemarketing, build marketing databases, and install sales and marketing software systems. Since sales revenues continued to grow and grow, we assumed that real progress was occurring in the integration of marketing and sales.
Boy, were we wrong! While some progress in productivity was being made, what actually happened was the boom times of the 1990s covered up the lack of real progress in improving sales and marketing efficiencies.
The boom times are over and so are the false assumptions of how much integration actually occurred between sales and marketing. Here are the hard facts of today's B-to-B landscape:
1. For most companies, sales revenue is not growing, but sales and marketing costs are. The net result is that the percentage of revenue devoted to sales and marketing costs is increasing, often in the range of 20 percent to 25 percent of total revenue. Generally, companies have responded by cutting the marketing budget and decreasing the sales headcount, thus further limiting the capacity to generate top-line growth.
2. Sales efficiency, as measured by the number of sales calls per day, has dropped significantly over the last 10 years. Sales & Marketing Management magazine reported several years ago that the average number of calls per day had fallen from the old standard of four down to three. Many estimates now place this average even lower, largely due to the increasing resistance of buyers to see salespeople. It's no wonder that the average cost per sales call has skyrocketed to well over $500. In fact, a major chemical company reported recently that its cost per call was $3,000.