Picture this scenario… A business owner or sales director sets lofty sales goals for each quarter only to find their sales team struggling to meet a fraction of the goals.
The owner or director then questions the team to determine what’s going wrong, but no one can figure out the root of the problem. Inadequate or non-existent marketing is often the source of the issue, but it’s rarely identified as the problem.
This phenomenon happens more than you would think – especially when businesses are limited to a handful of sales associates and one marketer (or a staff member doubling as a marketer).
In this blog, we’ll break down the methods in which business leadership can ensure that their sales goals are achievable or nearly achievable because they are backed by a firm marketing plan.
Understand the Relationship Between Marketing and Sales
Before we dive into goal setting and alignment, let’s look at how marketing and sales work together. We’ll also dispel some common myths and assumptions about sales and marketing.
We could write an entire blog about this topic, but to keep it relatively short: Marketing and sales are in fact two separate functions of a business and should either be separated into two different departments or designated to two different team members.
Marketing is responsible for understanding the customer, the product/service, the business’s position in the market, the competitive environment, and other factors. Their primary function is to generate leads (potential customers) for sales to then close.
Sales is responsible for understanding the customer’s requirements for purchasing the product/service. Their primary function is to work with leads gained from marketing until they are able to close them (win the sale).
Though many people think marketing and sales overlap in roles, responsibilities, and skill sets; it is not the case. It’s true that they are working towards complementary goals, but they are not to be lumped together.
A lot of businesses fall into the trap of combining marketing and sales into a single role or a single department – often labeling the marketing function as “sales development” or “prospecting.”
Though it seems like a logical move – especially if a business has limited resources – it actually does more harm than good. This is because good sales talent is usually not equipped with the skills needed to successfully implement marketing strategies.
Some businesses will try to aid this mismatch of talent and responsibilities by allowing their sales rep or team to conduct cold outreach (calls or emails) instead of performing actual marketing activities.
Though this works at times, it usually results in underperformance because cold outreach is a slow process with significantly lower close rates compared to selling to a warm audience created by proper marketing.
On the flip side, placing sales responsibility on an employee or team with a marketing skill set is a recipe for low close rates since marketers are better at opening the door for sales than they are completing the sales.
Now that we’ve covered the roles, responsibilities, and relationship between sales and marketing, we can take a look at how to properly set sales goals based on a sound marketing plan.
Work Backwards Beyond Leads
If you have any experience in sales, working backwards probably isn’t a new concept for you.
It’s the process of defining your ideal outcome first, then using certain assumptions to calculate what must happen in order for you to achieve that outcome.
For example: You want your sales associate to close 10 new customers next month. Using past sales data from your business, you know that your associate can close 1 out of 5 leads (20 percent).
You can then work backwards to calculate how many leads your sales associate needs in order to reach the sales goal of 10 new customers. In this case, it’s 50 leads (10 ÷ 20 percent = 50).
Many businesses will work backwards to determine how many leads marketing needs to generate in order for sales to reach the sales goal, but they usually don’t continue working backwards to calculate the amount of contacts or traffic marketing will need to generate to produce those leads.
We’re defining contacts as people whose contact information your marketing team has acquired that have not indicated any interest in what your business is selling.
They might have submitted their contact info for a free resource, signed up for a newsletter, or had their information out in the open for your marketing team to collect.
We’re defining traffic as people who have visited your website.
The misalignment between sales goals and marketing usually arises because no one takes one more step backwards to determine how many contacts or how much traffic is needed to produce the number of leads necessary to reach the sales goal.
Not because they choose to ignore it, but because they don’t realize there’s another backwards step to take. This is because people often view marketing’s role as generating leads – which is actually the end product of marketing’s work.
Knowing that you must work backwards from the desired outcome of marketing (leads generated), you might begin to wonder how many contacts or how much traffic marketing needs to generate in order to reach their leads goal.
If your team has already been running marketing campaigns, you can look at historical marketing data (e.g. website traffic, newsletter subscribers, prospects, database contacts, etc.) and historical sales data to create your set of assumptions needed to work backwards from the desired leads goal.
For example: In looking at your website analytics, you might find that a landing page responsible for generating 200 leads last got 20,000 visits (traffic).
This tells you that the landing page can convert 1 percent of traffic into leads (which is the assumption you need to work backwards).
With that assumption, you can then determine how much traffic is needed to reach your lead goal of 400 for next year – 40,000 landing page visits.
Sometimes, you won’t have the data to form the assumptions needed to work backwards, so you’ll have to come up with assumptions of your own. If you must do this, it’s best to use extremely conservative estimates, so your team over-prepares and over-performs rather than under-prepares and under-performs.
Once you’ve worked backwards to determine what amount of traffic or contacts is needed for marketing to reach its leads goals, you’ll then need to decide whether marketing can achieve it given the resources they’ve been allocated.
Adjust Resource Allocation Based on New Expectations
Because businesses often view marketing as an extension of sales or because they don’t realize what’s necessary for marketing to produce the number of leads they want, marketing is often under-funded and under-staffed.
After running the numbers to determine the amount of traffic or contacts marketing needs to generate in order to hit leads goals and sales goals, reach out to your marketing staff to see if they can hit those numbers given the budget and tools they have.
They’ll let you know whether it’s possible with what they’ve got, and they might even let you know if they’ve been struggling in the past to reach targets with the resources they have.
If whoever you have doing your marketing can’t tell you what resources are needed to reach those numbers or isn’t sure they can even reach those numbers, then it’s a sign that you might need to bring on more qualified marketing talent before you can hit your sales goals.
You might find that when showing your marketing team these numbers, they might have to adjust and rearrange their marketing plans to hit the traffic or contact targets.
This is good because they are thinking through ways to improve their approach to generating leads – which in turn will better align your marketing plan with your sales goals.
In contrast, your marketing team might come back to you with a budget that is beyond what your business can afford. If this happens, have them walk you through their reasoning.
If there aren’t any expenses you can reduce without diminishing expected results, then you may have to adjust your sales goals to fit within budget.
This is also good because you are aligning your sales goals with what is possible for marketing to achieve given the resources that are available.
Key Takeaways
As we mentioned, unmet sales goals is usually a sign that the needs and demands of marketing were not fully considered when the goals were set.
To prevent this from happening, work backwards to determine the amount of traffic or contacts necessary to achieve the desired sales. Then, consult with your marketing team to decide whether it’s possible given the restraints of your business’s budget.
In most cases, marketing will need to adjust their plan and you will need to adjust your sales goals so that the two are in alignment.