The investment CEOs need to make now
It's time for CEOs to stop the cycle of sales and marketing inefficiency. In today's economy with pipelines evaporating due to changes in market demand and supply chain interruptions, key accounts are one of the safest investments for CEOs to make.
For too long sales and marketing budgets were carried over year after year as part of general and administrative expenses based on money spent in the past, regardless of revenue growth performance. It is routine for companies to spend more in sales and marketing than in achieved revenue growth, for extended periods of time.
When the desired growth is not achieved, companies spend even more, which tends to accomplish the opposite effect -- worsen sales and efficiency efforts. This cycle stems from the misguided belief that if companies spend more on what they are already doing, revenue growth will increase.
To break this vicious cycle, C-suites need to adopt a single customer, big-picture view across product lines, companies and regions to see where opportunities and customer relationships align, resulting in tremendous growth that can be continuously mined. This new perspective provides an investment portfolio construct that augments traditional views of sales and marketing budgets, to empower more precision-based investments. Key accounts -- companies' most lucrative clients -- provide immense growth opportunities because of a mutual economic interest both parties have in exchanging value, in addition to an existing level of trust.
CEOs must illuminate where growth exists based on the company's key capabilities. They need to find what customers across the organization think, assess different buying groups and patterns, understand what problems clients face and proactively solve them together. This is where intelligent investment opportunities lie -- those key accounts that spend the most.
To reinforce this approach, CEOs must view sales and marketing as an investment. A customer-centric view in lieu of a market view brings clarity on where to invest sales and marketing expenses -- particularly where the time of salespeople is invested. Markets don't spend money, neither do salespeople; customers do. Many large-scale key accounts spend enormous sums of money that is ripe for the picking -- but most organizations don't see it or know how to pursue it once they open their eyes.
The opportunities are found in traditional corporate blind spots, further reinforced by organizational silos, product-driven financial reporting and an antiquated approach to market driven methods for growth. Common pitfalls to avoid include:
• Suppliers not measuring where they are lacking in key accounts.
• Suppliers not knowing what the many stakeholders at an account think of them or if the right people are even aware of them.
• Suppliers being incognizant of accounts' top priorities and how quickly they evolve in today's environment.
• Suppliers lacking a set up to solve customers' problems through their full capabilities -- instead pushing products and expecting customers to put them together themselves
• Suppliers focusing inwardly on products rather than externally on customer needs.
When investing their own money in returns, any investor -- including CEOs -- would carefully decide where to allocate funds. At the end of the day, how to manage their own company is no different. By strategically dedicating funds into the sales and marketing of key accounts, companies are steeling themselves for the unexpected twists and turns of the market, and the world.
• Dave Irwin is founder and CEO of Polaris I/O in Geneva.