Dropping the Ball
When it comes to marketing, most CEOs at B2B companies make lousy catchers, and even worse pitchers.
It's tough to find a CEO that really loves to talk about marketing. Business owners, presidents, and CEOs pack into sales seminars, but similar marketing events are filled only with marketing directors and marketing VPs, with few CEOs in sight. And yet, in which area of the business do you think the CEOs are dumping more money without a measurable return, marketing or sales?
Typically, most CEOs have solved the sales puzzle to some degree or they wouldn't still be around solving problems. But many CEOs of private B2B companies get sales to a certain level and then see only minor fluctuations. Annual sales of $18 million might dip to $17 million, for example, then go back up, but no further. After several years, the CEO concludes that new sales hires, training, and coaching aren't making that sales figure budge, so maybe they should try some of that marketing stuff.
When sales start to stagnate in a service-based B2B company, the CEO is coming face to face with the truth about the forces of the marketplace: when you get out there and push on the market, the market pushes back. Your sales "force" can only generate so much power to move money in and out of your company. Enter marketing. Marketing is supposed to help you sell more of your products and services more easily, providing leverage for your business.
Yet, most CEOs of private businesses are frustrated with marketing, because they see it more as a waste of money than actual leverage. This might explain the surprising fact that most B2B businesses under $30 million in annual revenues don't even have a marketing department, preferring instead to employ direct sales forces. They have well-developed management and sales teams, but almost zero marketing functionality, except perhaps a low-level coordinator to handle the website and direct mail. Often, they are outsourcing marketing and advertising efforts to a boutique design firm or ad agency that is supposed to be helping their brand.
The result is that between the strategic management team and sales team there is a huge resource gap where the marketing team normally would be, and the company drops the ball time and time again when it comes to designing, executing, and managing marketing programs that can activate sales. Whose fault is this?
The sales team is there to sell. Generally, this means engaging with customer opportunities and closing. Marketing is there to create a strong selling environment that will help that sale take place, which they facilitate through identifying market needs, and building strong promises, products, and promotions. But who tells marketing how they can or cannot go about creating this selling environment? You guessed it: the CEO.
Why are so many CEOs of private B2B businesses failing to solve their marketing challenge, and therefore dooming their companies to flat or incremental growth? They know what marketing is, and how they are using it, but the problem is that they have absolutely no clue why it works. When there's a failure, they can't correct it because they're unaware of their role in the marketing process.
The situation is similar to a homeowner whose refrigerator breaks down. Everyone has such an appliance, and knows how to use it, but most of us don't know why it works, so when it fails, we're stuck. When a repair service shows up, do they replace the whole refrigerator a single faulty part? Although it might appear that the entire fridge is kaput, it's more likely that only a new part is needed.
Similarly, most private businesses attempt to overhaul an entire system to market themselves, but without the understanding of the component parts and their functions. Making the situation worse is the tendency to skimp on internal resources to plan, execute, or measure outcomes.
When CEOs think they know about marketing, they might plow ahead and spend millions on an ad agency, and find that in return they have high turnover and demoralization in their sales force. Eventually, they'll likely cease marketing altogether, concluding that their business is all about relationships, and still have the problem of stagnant growth.
CEOs drop the ball on marketing for the same reason as kids in Little League. They take their eye off of it. The ball is the customer. When the company was small, the CEO could see their customer very well, but as a company grows, the CEO starts managing the sales team, and stops managing the customer relationship that they steward. They fall down on marketing because they see marketing as a program or promotion here and there instead of seeing it as a leveraged means to sell more of their products and services continuously.
Successful marketing is powered by a strong vision from the CEO. Strong visions lead customers to new destinations fully supported by the company's commitment to fresh areas like products, services, capabilities, policies, methods, and procedures. Instead of beating down their sales people, CEOs need to develop focus and vision where it makes the most sense, because it's impossible to catch a ball that you can't even see.
Michelangelo Celli is President of The Cornucopia Group, where he works exclusively with CEOs of privately-held b2b companies that sell expensive products or services and whose sales depend on strong customer relationships to allow them to systematically develop more predictable outcomes from their marketing and sales efforts. To find out more, visit The Cornucopia Group Web site at http://www.cornucopiagroup.com or email Mr. Celli (mcelli at cornucopiagroup.com).
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