Executive summary and implications for managers and executives
This summary has been provided to allow managers and executives a rapid appreciation of the content of the issue. Those with a particular interest in the topic covered may then read the issue in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.Marketing and sales– two separate and distinct functions or two vital parts of an integrated entity which need to work together on a basis of trust, mutual respect, shared knowledge and objectives?
While sales and marketing may need their own separate cultures to thrive,successful company performance requires them to have an ability and inclination to relate effectively to each other and to one another’s shared values.
While organizations may have many sub-cultures operating within them,sometimes creating tensions, sales and marketing should have complementary ones if they are to achieve their common market-oriented goals.
What factors hinder their abilities to interact effectively? What frameworks can be put in place to ensure the talents of marketing and sales people are combined rather than contradictory, harmonious rather than harmful.
The critical importance of marketing and sales having an effective,cross-functional working basis is evident in these studies which variously support the notions that:
marketing, sales and purchasing roles being the sole function of separate departments is no longer relevant;
maintaining one face to the customer and the sense of one company projected by integrated marketing, sales and service data is what customers are seeking;
effective relationships between sales and marketing are necessary to achieve positive organizational outcomes; and
the view of account management as a sales activity, or alternatively as a marketing activity with emphasis on relationship marketing, might better be seen from an integrated business process perspective, encompassing marketing and sales as development activities.
Despite the widespread recognition that organizations’ sustainability can depend on the successful relationships between sales and marketing departments, that relationship is often, at best, uneasy.
Cooperation could be strongly improved in different areas of the marketing and sales management process, say Paul Matthyssens and Wesley J. Johnston who studied the relationship between marketing and sales in mechanical engineering,telecommunications, computer and industrial supply companies in Belgium. Their title “Marketing and sales: optimization of a neglected relationship”suggests it is an area which could benefit from urgent attention.
So essential is effective coordination and cooperation between the two, they recommend creating the position of a sales and marketing manager responsible for both departments. This would allow central coordination between the marketing and sales activities, with both departments reporting to the same person. The visions, objectives and activities of the departments could then be better coordinated. Separately, sales and marketing functions do not always recognize the importance of cooperation.
Their suggestions on how to stimulate the interface between sales and marketing has three main directions – organizational factors,communication factors, and human resources management (HRM).
As an organizational factor, product management, they say, should function as the coordination mechanism between marketing and sales. Product management as a structure to promote the interface does not seem to work adequately in some industrial companies. Product managers might act and decide too much from their“ivory tower”.
A further organizational factor successfully implemented by two companies in their research is the creation of multifunctional teams for specific markets,products or problems. These teams have a fixed formal composition and meet regularly in order to coordinate their priorities in time.
Cooperation within these cross-functional teams is especially desirable during the planning and implementation of the different marketing and sales activities in, for example, the introduction of a new product.
Effective communication was indicated as the most important factor to solve and prevent problems between both departments, with all managers who were interviewed saying that both formal and informal communication are necessary to bring the departments closer together.
Job rotation, as part of HRM, could help diminish the number of sometimes persistent prejudices. By taking up temporarily one or more functions in another department, the employee will gain more insight into the range of tasks which are normally done by a colleague and will see more clearly in his/her working environment.
Job training and development programs also stimulate the interface. A common jargon and thinking pattern is provided and the residential atmosphere of seminars leads to open discussion under professional guidance.
Matthyssens and Johnston also suggest top management and managers from both departments create an optimal organizational climate between the departments, a set of values and norms valid in the organization playing a determining role.
Bringing sales and marketing closer together physically in the same building might also be considered.
Several contextual issues “force” marketing and sales to get nicer and closer to each other as well as to other functions. Specifically, focusing on marketing vs sales, a first indication of closer co-operation is the change in the product. Apart from hardware, suppliers nowadays offer a high level service and know-how as well. Within a larger product concept the salesperson plays an important role as he or she is the one who informs the client and is,in most cases, responsible for the installation, training of the users, etc. That salesperson needs to have a good knowledge of the different applications and, therefore, support by product and application managers is essential.
As relationship marketing and customer relationship management (CRM)continues to evolve, changing purchasing behavior, major industrial buyers reduce their number of suppliers. In 95 percent of the sales situations problem solving is tailor-made, taking into account the specific applications by the client. The product manager and salesperson/account manager are both part of innovation and consultative selling teams.
A further stimulus for sales and marketing integration is the increasing diversity in industrial applications, with industrial markets fragmenting into micro markets. This evolution confirms the need for intensive cooperation between sales and marketing. Attentive sales representatives inform marketers of market developments and opportunities. The salesperson, on the other hand,depends on the correct positioning and targeting of the large product range by the product manager and must be backed by tailored marketing actions and offerings.
With the ever-growing time pressure industrial companies are facing, sales people and marketers need to switch faster from product plan to commercialization. Flexibility and fast-integrated internal and external communications are prerequisites for both parties.
Matthyssens and Johnston encountered spontaneous stereotypical views during their research. One example was a computer company’s marketing manager who said almost no information was transmitted from sales to marketing. Sales people countered that their remarks were not taken into account anyway so did not find it useful to report on their contacts with clients. The authors say: “The marketing and sales planning process is often considered a burden. The ‘coordination and integration’ is then supposed to happen afterwards, but nobody takes ownership of that process.”
The creation or enhancement of the close cooperation which Matthyssens and Johnston advocate could result from trust and also by being aware of the negative effects of coercive influence, according to Philip L. Dawes and Graham R. Massey.
In their piece: “A study of relationship effectiveness between marketing and sales managers in business markets” they point to the critical importance of having an effective cross-functional working relationship between marketing and sales.
In examining the working relationships between the “sister”functions of sales and marketing, they focus on interactions between the marketing manager (MM) and sales manager (SM) in UK and Australian firms which sell to business markets.
Although there may well be some conflicts of interest between these “sister”functions, on balance, in teams where the MM is more effective in being able to change the opinions and behaviors of other members of the team (i.e. having an effective manifest influence), the SM will perceive their dyadic relationship to be more effective.
In such instances, due to their increased manifest influence, MMs are likely to be able to obtain a greater part of the available resources which they may share with the SM. But why should the MM share more of these resources with the SM as opposed to other members of the cross-functional team? Part of the answer is that people in the marketing/sales dyad will have a higher domain similarity compared with people in other marketing dyads (e.g. marketing/finance) within the cross-functional team.
Dawes and Massey suggest it would be useful to send SMs and MMs on training courses and management development programs to help them choose the most appropriate forms of interaction and influence tactics for use on cross-functional projects.
Inappropriate action includes marketing managers using legalistic pleas(citing legal, contractual or informal agreements which require a certain action to be performed) and threats (indicting that negative sanctions will be applied if they fail to perform the desired action) to increase their influence during cross-function projects.
The study noted that the impact of MMs using threats often leads to negative psychological and psychosocial outcomes. Specifically, the use of threats was negatively associated with both cognition-based trust (derived from a person’s rational bases for trusting another person – such as finding them competent, reliable and dependable on previous occasions) and affect-based trust(typified by emotional bonds between individuals in which one party exhibits genuine concern and care for the welfare of the other person).
The use of threats may increase the MM’s manifest influence – the actual effect the MM has on specific decision-making processes in terms of influencing other contributors’ opinions and actions. But it comes at a high cost because trust and relationship effectiveness are adversely affected. Apart from lack of trust, where coercion is attempted, there is a risk of retaliation and escalating conflict within the cross-functional relationship. Consequently managers in lateral relations are advised to use more socially-acceptable influence tactics such as rational persuasion, collaboration and consultation.
Dawes and Massey comment:
One major implication flowing directly from our research is the salience of interpersonal trust in building and maintaining effective cross-functional relationships. MMs should be aware that in order for SMs to begin building trust in them, they must first demonstrate their competence and professionalism. Our results suggest that once this competence is demonstrated, cognitive-based trust may emerge and where CBT develops, the qualitatively more “special”form of trust, affect-based trust, may develop. The positive effects of these two forms of trust on relationship effectiveness, both singly and in combination, is substantial.
The value of trust, recognized as an important factor in encouraging effective relationships between buyers and sellers, should not be neglected in intrafirm relationships such as CFRs between interdependent managers. The more interdependence there is between departments, the more their activities need to be coordinated. In the context of marketing and sales,because marketing managers do not have all the monetary, information, or human resources necessary to do their jobs, they must seek out these resources from people in other areas.
Such exchanges of resources are likely to occur most frequently between departments operating in similar domains – those with shared objectives and closely related tasks and skills. Since sales and marketing operate within a similar domain, interdependence is likely to have a strong effect on their relationship.
The level of interdependence between marketing and sales, and the power of the marketing unit, are important structural conditions for the development of cross-functional relationships. Interdependence can affect the development of trust in CFRs, most likely because higher interdependence implies a need for more work-related interaction between those managers. This can then provide enough evidence for managers to conclude that their counterpart in another department is competent and reliable – i.e. cognitive-based trust can emerge, and where it does affect-based trust may then develop.
In addition, higher interdependence is associated with higher manifest influence, and both cognitive-based trust and manifest influence are positively associated with relationship effectiveness. Consequently, if senior management explicitly link marketing and sales activities, i.e. increase total interdependence between the managers, this may help improve the performance of the working relationship, and deliver greater satisfaction to customers in business markets.
This study found that, on average, the perceived level of relationship effectiveness between sales managers and marketing managers was “surprisingly high” – the authors concluding that such findings clearly demonstrate the potency of interpersonal trust (both cognition-based and affect-based) in building effective CFRs
Sales and marketing functions must work together to program a defense mechanism against powerful customers who initiate influence tactics against them, says Aberdeen Leila Borders in her article “Customer-initiated influence tactics in sales and marketing activities.”
To be able to sustain competitive pressures from other companies that handle these customers is also necessary.
Borders investigates what bearing four specific influence tactics (requests,ingratiation, threats and promises) have on the coordination and cooperation of sales and marketing organizations in a supplier firm, in an attempt to contribute to an understanding of under which conditions the cooperation of sales and marketing is likely to be successful.
In a rapidly changing sales environment, customers become more demanding,perhaps aggressively so, and one of those demands is that suppliers understand them better. If substitutes are readily available, and the customer sees no extra or unique benefits from one particular supplier’s version, then that supplier’s marketing and sales efforts are in vain.
Customers are looking for value in other areas as well. How easy and convenient is the product to acquire? How can it be customized to their specific needs? What support comes with it? Can lead times and inventory requirements be cut? What else can the supplier’s organization do beyond providing the products and services? Customers are demanding the answers to these questions for which sales, marketing, and the other previously siloed functions must respond.
Maintaining one face to the customer and the sense of one company projected by integrated marketing, sales and service data is what customers are seeking.
The notion of marketing, sales and purchasing roles being the sole function of separate departments is no longer relevant at a time when many other parties are involved in the buying and selling process. The selling organization now gathers customer, company, and competitor information, in addition to selling and is accountable for managing customer relationships, not just territories. Additionally, more and more routine orders come in to suppliers’organizations from the internet, which provokes the need for crucial coordination of the marketing and sales efforts.
As a firm’s ability to operate within a global context increases, the need to service sophisticated and demanding markets all over the world becomes a strategic imperative. Thus, sales and marketing must cooperate and coordinate efforts to respond.
Some sellers commit to long-term investments from which it may be difficult to withdraw, either of their own volition or under pressure from powerful customers. Understanding the nature and extent of possible influence tactics(internal and external) and their effectiveness is difficult because the organizational response from the targeted supplier firm raises issues of asymmetries of power, dependence, and relational investments between the buyer and seller firms.
Understanding trust, commitment and cooperation from the supplier’s perspective, enhances the ability to understand why the sales and marketing functions must work together respond to the tactics of these customers.
Marketing and sales can come close to aligning their operations when they realize that customers seeking global purchasing synergies are coordinating efforts in their interrelated business units at an accelerated pace. Competition from established and small, flexible start-up companies also drives the sharing of intangible resources (such as knowledge and information) among marketing and sales, the leveraging of core competencies, sharing of best practices, aligning of strategies, concentrating on intra-company synergies, and combining know-how from different units within businesses.
An organization’s structure can hinder the scope of opportunities provided for realizing coordinative efforts. If vehicles are not in place for the internal exchange of information or horizontal cooperation within the selling company, coordinating efforts could prove to be difficult. Formal and informal relational structures and conduits must exist. Ultimately responsibilities for making this happen in more instances than not might lie outside the sales and marketing areas. Support must be provided from top-down management.
The ephemeral essence of marketing is for suppliers to trust the customers so that customers can, in turn, trust them. Besides posting signs to attract customers, marketing and sales both need to be involved in handling customer complaints, returns and servicing after the sale is made.
Successful characteristics companies display that have achieved cooperative marketing and sales synergies include:
strategy decisions of a long-term nature;
appropriate sharing of inventory aids in more meaningful forecasting;
effectively functioning teams across the organization;
open channels of communication;
assistance with issue resolution at the local, regional, national or global level;
appropriate delegation of authority;
coordination built in a step-by-step process;
motivated employees; and
increased financial rewards.
Borders comments:
The expectancy of relationship continuity weighs heavily in customer and supplier firms to use and respond to influence tactics. It is proposed that when a great deal of cooperation exists between the sales and marketing groups, fewer incidences of coercive tactics might be employed. When customers sense a lack of cooperative activities between sales and marketing in their supplier firms,clandestine and manipulative tactics may be used to keep the seller uninformed of how various employees are being used to reach customers’ goals.
Even though 20 percent of customers can account for 80 percent of revenues, many companies think in a rather confused way about account management. The result of a few powerful customers controlling an important portion of the suppliers’revenues and, possibly, profit, highlights the importance of account management.
Traditionally most companies view account management as a sales activity. More recently it is considered as a marketing activity with emphasis on relationship marketing. However, the approach of Derrick Philippe Gosselin and Guy André Bauwen, in their article “Strategic account management:customer value creation through customer alignment”, is to look at account management from an integrated business process perspective, encompassing as well marketing and sales as development activities.
The purpose of account management (is it a sales or marketing activity?) is one of three distinct sources of confusion identified. Is account management responsible for relationship building and coordination with important customers or mainly responsible for (transactional) sales generation?
The second source of confusion relates to geographical scope: does account management show the same characteristics on a local, regional or global level?The third relates to a universal applicability question: is it possible to design and implement a single best account management organization structure,applicable to most types of companies and independent of the complexity of:products, services or systems; customer organization; supplier organization; or environment?
Gosselin and Bauwen say:
Understanding the different sources of confusion will contribute to the enhancement of companies’ capabilities to create competitive advantages based on the creation of customer value. Since different sources of confusion are rooted in different levels of complexity, this will imply the need to create and implement different ways to approach customers from a sales or marketing perspective in order to be able to create customer value. In addition understanding those sources of confusion also implies specific structural organization, designs, processes and interactions with customers. These considerations have implications for relationships within companies as well as between them.
In order to bring stability to their operations in rapidly changing environments, and to respond quickly and flexibly to accelerating changes in technology, competition and customer preferences, companies have created new organizational forms which emphasize partnerships and strategic alliances with both customers and suppliers, and focus on relationship building through repetitive, rather than single, sales transactions.
Account management, being the management of dedicated sales and/or marketing processes (e.g. customer selection, customer satisfaction, channel management,relationship management, etc.) directed towards important customers in business and industrial markets, can be seen as a practical implementation of long-term buyer/seller relationships.
From this relationship marketing perspective, account management is one type of seller-initiated (often defensive) partnership or strategic alliance, adapted to situations where structural change is due to supply base rationalization. However, account management can also be seen as a proactive development towards a customer-focused organization. Account management is then no longer the outcome of a defensive move, driven by competition or imposed by customers, but becomes part of the implementation of a customer-focused strategy.
As such, account management is much more strategic. It contributes to the realization of a unique selling position; therefore, it creates a competitive advantage that increases performance, which ultimately leads to shareholder value creation.
Gosselin and Bauwen stress the significance of important customer account selection as a possible key success factor for shareholder value creation based on external customer alignment. This, they say, means that not every customer in business and industrial markets can, must and/or should receive important resource allocations from the supplier company. Consequently proactive account management is both important and necessary.
They also believe that excessively formal account management organizations present some major disadvantages because internal alignment within the supplier company seems not to contribute much in explaining about account management performance.
Central and fundamental questions for management wanting to create customer value in business or industrial markets are:
Is top management sufficiently involved in the selection of strategic accounts?
Are strategic accounts contributing to the development of core competencies?
To what extent do companies manage their strategic important accounts proactively?
To achieve their individual outcomes, specialized marketing and sales cultures are necessary, say Michael Beverland, Marion Steel and G. Peter Dapiran in “Cultural frames that drive sales and marketing apart: an exploratory study.”
These cultures are not identical but there must be some crossover if the two functions are to work together. This shared culture (which may be shared across the whole organization) provides the context for interaction, including identifying whether collaboration is valuable, and the rules by which that collaboration will take place.
This is particularly important for marketing given that this function often relies on sales for the achievement of its performance targets such as customer retention, acquisition, sales and profits, and brand communications. Tension between the two functions must, therefore, be successfully managed by both in order to meet their respective goals.
Effective relationships between sales and marketing are necessary to achieve positive organizational outcomes. Despite this, practitioners and academics report that the relationship between the two functions is, at best, uneasy.
Beverland et al. examine two questions: “What are the cultural frames that create tension between the two functions?” and “What contextual variables encourage or discourage cross-cultural understanding between the two functions?”.
Throughout their findings it was clear that both units functioned at a sub-optimal level.
There were a number of instances whereby salespeople opted out of providing market-based information to marketing due to frustration of not being taken seriously, or failed to comment critically on marketing strategy which they believed would not work.
Likewise, negative stereotypes of salespeople led to a belief on behalf of many marketers that salespeople would be unable to understand marketing-based information and strategy, and have little interest in contributing to strategy formation.
Also, the findings identify that these problems relate to deeply embedded sub-cultural frames that may be difficult to change. The findings have a number of managerial implications.
First, managers should attend to status differences between the two functions by removing barriers between the two units, and providing sales with a strategic voice in the top management team.
Second, encouraging integration will require changes to the organizational context including changes to organization design. Depending on the gulf between the two functions, CEO support is likely to be necessary to ensure change.
Although the findings focused heavily on differences between the two functions, it was also clear that there was nothing in the outlook of sales that was antithetical to marketing philosophies per se. Greater integration between the two units would encourage greater understanding of each other’s role, and the interdependent relationship between the functions.
Education sessions for both functions and the encouragement of an open atmosphere where the assumptions behind the sub-cultural frames can be surfaced and discussed will also be necessary to move the two functions together, without sacrificing the benefits arising from separate sub-cultures.
Finally, changes to human resource policies in relation to both functions are necessary to highlight the importance of integration between the two units.(A précis of the special issue “Exploring the sales-marketing interface”. Supplied by Marketing Consultants for Emerald.)
