How to Invest Your Sales and Marketing Dollars
A prospect once came to us saying he needed more leads–80, in fact. Naturally, we wondered about the reason for such a specific number. After we learned more about his business, especially his goals and challenges, he told us: Since he hadn’t closed any of his last 80 leads, he wanted to get started on another 80.
This example, though perhaps extreme, clearly illustrates the importance of understanding how to allocate marketing and sales dollars efficiently. The prospect, who became a client, didn’t need more leads just yet. First, he needed to learn how to close the ones he was already getting. The solution we suggested helped him do just that: Invest in consultative sales training to build skills and develop a customized sales process.
Talking about how to allocate sales and marketing dollars is a natural follow-up to our last column, Sales and Marketing: Shake Hands! In that column, we wrote about the importance of the sales and marketing functions being in alignment to help each other reach organizational goals. Managing in today’s environment of rapid, even disruptive change, virtually requires it. Several readers responded that the age-old tension between sales and marketing too often begins with dividing up and optimizing the two budgets.
Clearly, no two companies have the same requirements for their “business development” budgets, which means allocations within their budget will be unique. The reasons of course have to do with buying motives, the market being sold into, differentiation from competition, and other factors.
Our experience has been that the following factors are key to building business-to-business sales–and to building sales and marketing budgets. As a result, we have developed a process that helps companies to increase the odds that they are optimizing how much they spend.
Most business leaders would agree on the importance of these factors and, of course, could contribute others based on their experiences:
| • | Developing a productive lead generation process |
| • | Being top of mind |
| • | Influencing centers of influence and referral sources |
| • | Building your brand |
| • | Training salespeople in consultative selling skills |
| • | Training salespeople in product knowledge |
| • | Developing and using a custom sales process |
| • | Identifying and implementing specific ways to boost the number of visitors to your Website, both organically and with targeted advertising on social media platforms. |
But while there is agreement on key factors , uncertainty about how to carve up budgets sparks disagreement-as it ought to. Why? To be productive, budget allocations must resolve pressing problems and make the most of opportunities–both of which are different in every company. No two companies will make the same decisions in those two areas. But they can approach the decision-making process with logic and efficiency based on data and, yes, on the dreams that created the companies in the first place.
We have created a question-based process that helps companies quickly zero in on the most productive areas in which to invest to achieve their business development objectives. (In our view, “business development” is a tent that brings marketing and sales together and enables them to work together.) Here are a few of the basic questions to give you an idea of our process and to help you think about your own company.
Does your company need to:
| 1. | Identify more opportunities to close business or to have more success in closing the opportunities you’re already getting? |
| 2. | Create more (or better) value for your markets or train your salespeople to communicate the value you already deliver more effectively? |
| 3. | Educate prospects about problems they don’t know they have or persuade them that your products or services offer the best solutions? |
| 4. | Use traditional marketing channels like outbound calling and direct mail or balance those channels with more contemporary ones, such as social and other online media? |
| 5. | Find more hunters or account managers (farmers)? |
| 6. | Add more inside salespeople or more customer service reps? |
The answers to such questions , along with a number of other questions and factors our process takes into account, go a long way to determining the best allocation of sales and marketing dollars within the business development budget. If that budget isn’t already set, they can also contribute to building it into your corporate budget as efficiently and effectively as possible.
Our process also identifies and helps to resolve more complex challenges and opportunities in allocating funds. For example:
| The customers of one of our clients in manufacturing rely on the company’s longstanding delivery of virtually no “out-of-the-box” failures. The market’s traditional decision-makers are highly risk averse and place great value on high quality and performance reliability. However, those decision-makers, long in power, are retiring. Younger–but no-less risk-averse decision-makers–are moving up. Each year our client reviews its marketing and sales “spend” with that trend in mind and adjusts it accordingly. In this case, the messages of quality and reliability don’t change, but the ways of educating and persuading often do. Naturally, budget allocations change to support revised tactics, including channels of communication, processes, and alignment of sales and marketing. |
During nearly 25 years of helping clients make their business development become more productive, we’ve found that companies can create tremendous value by allocating the sales and marketing budget much more efficiently.
A closing thought: We believe how you determine the size and allocation of your sales and marketing budget should be similar to how you determine the size and allocation of your capital budget.
Historically, firms have invested as much capital as they could raise in capital purchases until the risk-adjusted rate of return came close to their cost of capital. With good planning and data analysis the same can be done with the sales and marketing budget. Testing of what is providing a return, and what is not, will help you make adjustments with the agility needed for changing conditions as well as the foresight needed for longer term success.
Please get in touch if you’d like to discuss your company’s situation and how you’re dealing with it. Call 847-446-0008 Ext. 1 or e-mail me at pkrone@productivestrategies.com.
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