To avoid heightened complexity and a disjointed allocation of resources in an expanding marketing environment, companies need a blueprint for consistent processes, tools, and performance-management systems.
All too frequently, a company’s responses to expansion undermine consistency, coordination, insight, and decision making. New brand, channel, and segment groups focus on increasingly disparate parts of the market and are often poorly integrated with the rest of the sales and marketing organization. They also give rise to unintended and severe consequences, such as reduced sales yield, channel conflict, rising customer acquisition costs, inefficient pipeline and an inability to allocate marketing dollars consistently to the most valuable opportunities, resulting in lower ROI.
To understand these dynamics, consider the experience of a PLM software company dealing with the following three aspects of expansion:
- The commoditization of their flagship product, where transaction price has plummeted from $110,000 to $45,000 in 18 months and the launch of a new enterprise-wide solution with a target transaction price of $500K.
- The increased importance and proliferation of VAR channels.
- Web expansion by the competition and the end-user community. The company’s responses were reactionary and disconnected; it launched a new brand, a variety of different segmentation strategies, an increased emphasis on selling at the CXO level vs. traditional product development management, and added several layers of complexity to its marketing efforts.
As a result, the company’s marketers had increasing difficulty identifying and pursuing opportunities in a coherent way, assigning accountability and tracking performance. For example, while business development managers were investing in marketing communications to position a brand in the premium category, the sales organization was discounting that brand for value-oriented customers. These uncoordinated efforts eventually diluted the brand, resulting in a steep drop in revenue and profits, reduced market cap and eventually a new Senior Management team.
The solution to these problems was for the PLM software company to create what we call a business development platform—a blueprint for consistent sales and business development in the two or three functional areas (such as value proposition, price –performance, brand positioning, market segments, channel strategy, and major account management) that are most closely linked to a company’s strategic priorities. Most business development platforms have four well-integrated components:
- Consistent processes that incorporate principles of LEAN and 6-Sigma to enable best-in-class performance and an optimized business development model.
- Leading-edge tools and frameworks to guide decision making.
- Clear responsibilities, skill requirements, and talent development for sales and business development professionals in pivotal roles.
- Consistent metrics and performance-management systems that reinforce the organization’s processes, methodologies, and talent management.
Although these elements might seem like standard attributes of any well-functioning business development and sales organization, they are in fact far from common, as well as challenging to put in place and integrate. As a result, many companies have been disappointed by disjointed efforts to apply standard tools without clarifying who will make what decisions using the information the tools provide. Other companies redesign processes without linking them to measurable outcomes that matter to customers or improve skills without improving processes to take advantage of the new capabilities.
The inconsistent, poorly coordinated business development execution brought on by expansion has severe consequences. Quality, efficiency, effectiveness and speed suffer when companies allow myriad disconnect, go-to-market, brand positioning, market segment, and channel initiatives bloom.