Tag: Sales

A few important definitions

As I repeatedly mention on this blog, I keep seeing recruitment advertisements for marketing staff only to read the job description and discover that the recruiting firm has a muddled position as to what marketing actually is.

I suspect this all started when sales representatives began using the hard sell to up their commission. Salesmen were rebranded as marketing personnel.  The same thing has happened with customer service.  To me customer service means after-purchase assistance, fixing problems and giving advice; but to many firms customer service means sales.

It isn’t just firms misusing the term marketing to cover sales.  There are other errors.

I see a lot of advertisements for firms wanting a multi-tasking superhero.  They expect their new marketing maestro to research and prepare their strategy, write all their copy, build their website, do their photography and draw their graphics.  There are huge issues with this job definition.  I seriously doubt a single individual has all of the above skills particularly as the role mixes numeric and analytical skills, technological expertise and artistic flair.  I have yet to meet any talented artist who is also a whizz with mathematics and able to adequately turn raw data into applicable information.

Another trend I see is the use of the phrase ‘Sales and Marketing’.  This term baulks for two reasons, firstly it implies that marketing is a subordinate function of sales, and secondly, it implies that marketing is part of an approach best described as management in silos. This appears to be a distinctly old-fashioned approach.

So I think it is useful to go back to first principles and try to appropriately define the role of both marketing and sales.

There are two types of sales; direct sales and indirect sales.  For complex or high value sales, the direct approach dominates.  This is often through the use of sales representatives and key account representatives.  It is a personal selling approach.  Indirect sales are how most low value, uncomplicated sales take place.  In fact most consumer purchases are through indirect sales.  These are often transactional commodity sales.  This is the use of retailers, websites, and distance selling techniques.

In business to business markets, it is often the case that 80% of sales are by direct means and the remaining 20% by indirect sales (there is the Pareto ratio again).

Unsurprisingly, sales is the physical act of selling and it has a complex and relationship with marketing but sales is not marketing. Marketing is not a function of sales; sales is a function of marketing.

Some academics see sales as a particular form of marketing at an individual of group level.

Personally, I see marketing as the framework which creates the climate for sales.  It is the process of adapting your organisation to the sales environment and matching your organisations mission to that of your customers.

Sales staff should work to a sales plan. Sales campaigns are the planned stages in acquiring new customers and increasing orders from existing customers.

Marketing is a formal business discipline which has developed over the last 150 years in four stages:

  1.  The Age of Production:  This was when marketing was contained by the limits of production. Products were often made to order so marketing was often limited to individual customers.
  2.  The Age of Sales:  The task of marketing was to get rid of everything the company produced.  This is the post-war era, particularly in America.
  3.  The Age of Consumers: this is effectively from the 1980’s onwards.  It marks the rise of consumerism and designing products to meet consumer needs rather than expecting consumers simply to buy what you are willing to offer.
  4.  The Age of Interactivity:  Some argue this is the current age with micro-segmentation of markets; mass customisation; brand communities and brand networks. An age of self-actualisation and self-esteem.

Marketing is more than the facilitation of commercial exchanges (otherwise referred to as sales).  Marketing is getting the right products, to the right customers, in the right place, at the right time, in the right way, and for the right price.

Rather than production capacity defining the market, Marketing is the development of a customer-centric model, defining your business through a customer focus.  Production-orientated marketing is no longer a valid assumption.  Sales-driven marketing is similarly defunct.

We have moved to a new model of marketing which is defined by global markets, unpredictable and fickle consumers, new purchasing patterns, new methods of distribution and new sales channels.

As David Packard said, “Marketing is too important to leave to the marketing department”.  It is a cross-functional discipline important to all business stakeholders.  It is the strategic process of transforming an organisation to match the needs and wants of its customer base.

Think of marketing as the strategic element of your business whilst sales is a tactical element.

Also, marketing is the top level process which links your business with ‘creatives’.  that means graphic designers, advertising agencies, social media management, web design and copywriters.  It isn’t the production of graphics or text, it is the process of defining the boundaries within which such creative content is produced.

Before developing a marketing plan, you need to carry out a marketing audit.  This audit process tests whether your organisation is capable of achieving its desired strategy, whether it meets the environmental and cultural expectations of proposed market segments.  A marketing audit has three parts.

  1.  An Environmental Audit; both the macro-environment characterises by the term PESTEL (Politics, Economy, Society, Technology, Environment, Legal); and the micro-environment of Porter’s five forces (which includes the internal stakeholders within an organisation)
  2. A Strategic Audit; the alignment of marketing objectives with an organisation’s vision, mission, aims and goals. The analysis of markets to articulate a desired market position and target segments.
  3. A Functional Audit; the organisation of a business structure so as to meet the intended strategy and achieve objectives. Where the function of marketing sits within an organisation and how it links to other functionality.

Once this audit is completed, you create a marketing plan; the systematic approach to achieving the desired strategies and goals.  This can involve the use of tools such as SWOT analysis and perceptual mapping.  The development of an appropriate marketing mix.  Setting appropriate budgets. Defining how the plan is to be controlled and setting review processes to ascertain the level of plan success.

A marketing plan should establish, direct and control marketing and related activities across the desired mix within defined time periods.

And it is worth remembering that marketing plans are living documents which need constant adaptation to meet the changing external environment.

Does your organisation properly define the Sales and Marketing relationship?

Does your business have a Sales and Marketing department?

Do you call your sales force ‘Marketing Representatives’?

Do you have a sales office or a marketing suite?

When you employ marketing staff or consultants, do you measure their performance on the basis of sales KPIs?

I have found many businesses which can answer all these questions in the affirmative and that is puzzling.  These businesses clearly have a confused definition of two separate but linked specialisms.

Worse, the description Sales and Marketing is worrying as it gives prominence to the activity of personal selling over the strategic role of marketing professionals.

Sales is the activity of personal selling usually based on the employment of a cohort of sales representatives and involves direct face to face communication between the seller and the buyer.  It is a promotional activity based on two-way communication.  Sales presentations are also often designed to meet the needs of individual customers based on specific buyer demands and taking into account knowledge of the buyers status and issues.

Personal selling is often an expensive communication channel. You have to pay for expenses such as cars, travel expenses and a sales office. The total bill for a sales representative can be double their salary.  The practice of the traditional sales representative model is also changing through the increasing use by organisations of centralised purchasing teams.

Sales representatives are increasingly having to learn new skills.  Often the focus is now on the retention of profitable customers whilst the zombie customers that represent costs are abandoned.  Sales reps are now Customer Service Representatives, where the focus is on long-term customer retention as opposed to short-term one-off transactions.  Salesmen are now also expected to provide knowledge and database management providing market research data and administration.  Their role is to promote products and develop solutions; not just to sell.  Representatives are now problem solvers who develop partnerships with their clients.  They satisfy needs and add value.

The stereotypical image of the salesman as a  slick, fast-talking charmer is gradually disappearing to be replaced with that of the thoughtful, knowledgeable professional.

However, personal selling is not a stand alone business activity.  It sits as one part of a wider marketing mix.  It is only one element of a comprehensive marketing strategy.

Modern sales practice depends on:

  1. Target market choice: the targeting of profitable accounts.  This requires a wider of your targets through market segmentation and key account identification.  These wider strategic marketing functions provide for effective sales force management.
  2. The creation of differential advantage: The start of  successful marketing strategy.  This strategy needs to be embedded in the sales plan and be effectively communicated to all staff involved in the sales process.  The sales force must be able to articulate the differential advantage to customers.

One danger is that your sales representatives dilute your differential advantage by caving in to customer demands for price concessions.  it is also important that product benefits are communicated in terms that are understandable to the customer.

So sales activity relies on the strategic objectives of your marketing plan.

There are four generic marketing strategies depending on your market position.  These reflect the four quadrants of the Boston Consulting Group Growth/Share matrix:

  1.  Build your market: grow market share and sales volumes; increase your levels of distribution and increase your service levels. prospect the market for new accounts
  2. Hold your market position: maintain your market share, sales volumes and service levels. Limit prospecting
  3. Harvest the market: Increase earnings by reducing costs and targeting the most profitable customers. Reduce the cost of service. Reduce market prospecting. Transfer less profitable accounts to telemarketing.
  4. Divest: Limit sales visits to the most profitable accounts and increase order levels to minimise stock levels. No market prospecting.

Each of these marketing positions requires a different sales strategy:

  1.  Build:  Requires high call rates to existing accounts.  Highly focused sales activity during calls. Increased prospecting for new customers.
  2. Hold: Maintain current call levels.  Moderate focus during calls.  Call on new customers as they appear.
  3. Harvest: Call on profitable accounts. Move others to email contact and telemarketing. Don’t prospect for new customers.
  4. Divest:  Apply quantity discounts to hive volume accounts.

Perhaps the term Sales and Marketing should be reversed to recognise the strategic role of marketing.  it is your marketing strategy that determines the activity of your sales force.  Your sales force should not determine your marketing and corporate strategy.  This would be a better representation of the relationship between marketing and sales.

Even better, your marketing function should be allied to your wider corporate planning rather than being located as a silo function of your sales team. Strategic marketing planning should be a central part of your organisations top-level business planning.

 

 

 

 

What is Marketing?

Over recent weeks, I have seen a number of recruitment advertisements from small and medium-sized firms advertising roles described as marketing assistants or marketing executives. When you read the job specifications for these posts, you tend to find that the jobs contain work tasks more usually associated with graphic designers, web designers or sales representatives.
I know that distinguished marketing academics and professionals are regularly frustrated at their profession being incorrectly defined in this way.
So what is marketing?
The Oxford Dictionary of Marketing describes the function as follows:
Marketing is a formal business discipline originating in the USA at the turn of the 20th century. The profession, it is argued has gone through five stages:

  1.  The Age of Production:  This stage began shortly after marketing being formally defined and ended in the 1930s.  At this stage, marketing activity was constrained by the limitations of production.  The focus in companies was to produce as much as possible; as efficiently as possible.  Marketers focus was in ensuring the widest possible distribution of the products produced.
  2. The Age of the Product:  Marketing’s focus was not on cost leadership or distribution but on ensuring that the product itself would attract customers.  The focus was on product attributes, quality, performance and design.  Many of these concepts remain in modern marketing.
  3. The Age of Sales:  Here the focus was on pushing whatever the company had to sell.  This was the era of aggressive promotion as evidenced in the television series Mad Men.  Corporate thinking was that if you pushed any product hard enough it would sell.  Such sales tactics, the hard sell, could be risky as it could put consumers off and possibly drive them into the hands of competitors.  This developmental stage lasted until the late 1950’s.
  4. The Age of the Customer:  Some marketing academics believe we are currently coming to the end of the age of the customer which began in the 1960s.  This era places the customer at the centre of all marketing activity.  rather than making a product and then trying to find customers to buy it, products are specifically designed to meet the needs of distinct customer groups.  Critical to this era is customer segmentation and market research.
  5. The Interactive Age: This is the age of networking, massive choice, content sharing and content acquisition.  The aim is to let your customers become your marketers.  Many marketing academics we are at the start of this age with the rise of social media.  However, it must be stressed that interaction should not be only through electronic means.  It is still important that businesses interact with their target customers by more traditional methods.

Marketing is no longer the simple facilitation of commercial exchanges and transactions between producers and consumers.  Every contact a business has with its customers is a marketing dialogue, from initial sales calls to after sales service and the investigation of consumer complaints.

Marketing’s initial focus was on the producer not the customer.  It was getting the right products to the right consumer at the right price.  It was assumed that the producer controlled the market.  This assumption is no longer valid.

Take the example of the market for milk.  it is not the producer, the farmer, who controls the market for milk; it is the retailer in the form of the large supermarket chains.

Many of the advertisements for marketing jobs that I see still seem to treat marketing professionals as if they are working in the age of production or the age of sales.  Many see marketing as a subset of sales or as a subset of promotion.  In truth, sales and promotion are subsets of marketing.

Some firms, such as Hewlett-Packard see marketing not as the responsibility of a silo department but as a responsibility of everyone within the organisation, from the CEO down.

Marketing’s role is to develop a market-centric or customer-centric attitude throughout an organisation.  It is therefore imperative that marketing is closely linked to your overall business strategy and that it is central to the functionality of the senior management team.

Finally, lets look at the definition of marketing strategy.  The Oxford Dictionary of Marketing gives the following definition.

Marketing strategy is a series of planned choices about which part of the market to focus upon and how to compete within that target market.  These choices are based upon a thorough analysis of the ways and means of addressing target markets and customers.  Market segmentation and positioning are key to the development of a marketing strategy and it should put a customer focus on the overall strategic goals of an organisation.

Segmentation and positioning demand the development of a distinctive marketing mix.  Products and services must be designed with distinct customer groups rather than treating the market has homogeneous. Positioning ensures that your products are given a unique place in the minds of consumers which is distinctive from that of your competitors.

Marketing strategy is about making the most of your company’s strengths whilst exploiting the weaknesses of your competitors.