When it comes to an optimized organizational chart, Fractional CMO Veena Vadgama shares why Marketing can’t report to Sales.
Often, I come across organizations where the marketing team reports to the sales team. It happens for two reasons:
1- The marketing team is small (i.e. $10M or less) and the function has not fully developed. As a result, the marketing team is more reactive in nature and/or focuses on gathering leads for sales.
2- The company has hired a Chief Revenue Officer (CRO). In this case, the CRO is managing beyond sales to include all organizations that support sales.
Marketing is not a “Set It and Forget It” Function
To understand why this is a mistake let’s first define marketing. Marketing is the activity of specifying, describing, and promoting your offering to the market. Much of this work is strategic in nature and, in early-stage companies, it is performed by the CEO and founding team at the start of the business. Therefore, when early-stage companies think of marketing they often consider only the tactical piece of generating leads which can feel like a sales function.
The problem is you can’t do strategic marketing once and be done with it. Marketing should be a continuous process of refining and expanding your offering to capture more of the market. This work is strategic in nature and does not happen if marketing is inside the sales function and is measured only on generating leads this quarter for the sales team.
Many founding CEOs feel like they are the product visionary and want to retain control of these strategic marketing functions. They want their “marketing” department to just generate leads so they can close business. The problem with this approach is that it is almost impossible to generate leads without a deep understanding of the problem the product solves for the customer. This understanding is developed through the strategic marketing process of specifying and describing the product. Asking a marketing team to generate leads without being involved in the underlying strategic work is like asking someone to race in the Formula One just because they have a driver’s license.
As a CEO, this approach sets you up for failure. By putting marketing inside sales, you’ll get less experienced, less motivated heads of marketing. You’ll have a gap between marketing and product, leading to undifferentiated messaging and an inadequate ideal customer profile. Your marketing team will be reactive to sales, and you’ll have a pipeline generation problem, hurting your long-term growth.
According to the Harvard Business Revenue, the lack of alignment between marketing and sales hurts corporate performance. On the contrary, when marketing and sales work well together, “companies see substantial improvement on important performance metrics: sales cycles are shorter, market-entry costs go down, and cost of sales is lower.” (Marketing geeks – this article is by Phillip Kotler – check it out.)
The Rise of the CRO
Marketing reporting to sales is a bad idea.
In many companies, the chief sales officer (CSO) role has evolved into the chief revenue officer (CRO). What is the difference? The head of sales is responsible for closing deals. A revenue officer is meant to be more than that. A CRO is often responsible for sales, marketing, customer service, operations, and support. The thought is that these teams must work closely together for maximum customer revenue potential. When you have a CRO, you have one throat to choke, and they have the expertise to orchestrate a fine-tuned machine. Sounds impressive, right? It doesn’t work. The problem is no executive is an expert in all of these areas that require different skills and experience. As opposed to the CEO who is a generalist, an executive should be the expert in their area of responsibility. This is just not possible with such a wide range of responsibilities. Inevitably certain areas will be neglected, and, in most cases, sales will be the only area that receives close attention. (Plug: For more insights around organization design and how to become a better CEO, consider checking out our partner, AmericanCEO for more details plus a new webinar series.)
I’m not saying your sales leader can’t be called a CRO. Call your sales leader whatever you like as long as marketing does not report to sales.
Marketing and Sales Have Different Objectives
The sales team has to think about the here and now. Marketing must play the long game. Sales is trying to get to quarter end. Marketing needs to ensure a pipeline for quarters beyond. Right there exists an inherent misalignment.
When marketing is inside sales, they become reactive to the needs of sales. After all, sales is the boss. If the boss says, “Hey, Marketing, build me a nurture campaign aimed at leads that are in the last stage of the pipeline,” the marketing team should question that ask. (Yep, true story.) Can the marketing team say no if that is the boss’s request? Hence, you have marketing team focused on helping close the month but not actively looking beyond it.
Marketing Must Know Product
Marketing cannot be 100 percent about demand generation. Yeah, I said it. Many sales leaders think marketing equates to leads. How does a marketing team find leads if they need more clarification on the product value, the differentiation, the ideal customer profile, and more? If marketing reports to sales, where does product marketing sit? I’ve seen many cases where there is no product marketing because marketing reports to sales, and the product team handles the messaging. Can you guess how that works out for messaging and value prop definition? (Hint: not good.)
Tension is Healthy
A healthy tension between marketing and sales will lead to better outcomes. You want your marketing and sales leader to have a healthy partnership and the ability to hold each other accountable. I’m sure you know this conversation well. It’s the “I need more leads” vs. “Close the ones I sent you!” debate. Solving those problems requires two able partners working side by side.
Metrics are Different
As much as we wish there was one dashboard to rule them all, the measurements differ. Marketing is measured on brand reach, engagement, lead collection, lead quality, and lead velocity. Sales is looking at bookings, conversion rates, and sales quotas. Ultimately, the final measurement is revenue and profitability, but the inputs to get there are different. If you monitor marketing metrics at the leadership level, you will see signs that your company is gaining or reducing its popularity in the market. Understanding these signs early can help you better manage your pipeline.
Conclusion: Set Up Marketing and Sales to Work Side by Side for Greater Outcomes
Your marketing and sales leaders can be excellent partners. At many companies, my sales counterpart and I became good friends. I have worked with some genuinely incredible sales leaders. We solve problems and celebrate wins together. However, it’s that mutual respect and holding each other accountable that makes the partnership work. Don’t hide your marketing department inside your sales team.
Need help navigating these issues? I’m happy to help. Our fractional CMOs and fractional marketing professionals can deliver organizational design recommendations to help ensure you are on the path to success.