Saturday, December 20, 2008

Creative Destruction of the Demand Chain - Part 2

The Problem with B2B Sales and Marketing

By David Bradley, MarketBridge

The new wave of innovation finds too many Go-to-Market functions lacking in readiness to exploit the changes coming. After years of making marginal cuts in Sales and Marketing budgets and limited investment in tools and technology, GTM leaders will not be able to cut costs necessary to maintain positive cash flow without seriously compromising the ability to deliver future revenues. Although there are exceptions to each of the following conclusions, taken as a whole there is a pattern of outcomes and root causes that suggest fundamental changes needed and guide where to cut and where to reinvest.

First among these is GTM organization and portfolio complexity which lead to burdens on organic growth and lack of investment in enablers of sustainable productivity. In large multi-line, matrixed companies the complexity of large portfolios and competing go-to-market priorities have led to a slow, product-centered planning system that fails to focus adequate resources on growth segments. And across the board, marketing and sales organizations continue to invest in traditional campaigns and tactics versus the structural enablers of sustainable productivity.

Second is the disaggregation of the “Four Ps” of Marketing in most B2B companies. No single go-to-market executive can drive the alignment of product, price, distribution channel and promotional tactics. In an era of maturing product markets where defining standard product-based solution bundles and aligning GTM functions to target growth segments through most efficient channels are keys to success, the shortcomings of B2B GTM governance models will become apparent.

Third is the relative lack of sophistication of B2B sales and marketing organizations in identifying and addressing increasingly small growth market segments. Product management, brand marketing, sales management and tactical demand generation marketing each manage their own market segmentation schemes which are rarely treated as part of a holistic view of market structure, much less supported by an integrated analytical and data model.

Fourth is the poor state of marketing data and performance analytics. While many companies have made progress on the basic needs to measure marketing contribution to pipeline performance, these post measures do little to inform marketers of segment-oriented performance. Very few companies have made the strategic and financial commitment to making the majority of their marketing tactics Web-enabled, with the accompanying real time analytics engines and reporting capabilities. Yet in most B2B categories the Web is acknowledged as the most important information source.

The fifth and final fundamental problem is the natural tendency of leaders to be averse to disrupting current – usually maturing – revenue streams. The pressure to maintain period revenues is very much at odds with making radical change in the GTM functions. Sales and Marketing leaders are stuck in separate silos and dated mental models for how their functions should interact. And if history is any indicator of the future, then it is clear that those leaders not able to adopt a new model will find themselves increasingly in conflict with the forces that are shaping the market.

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