Sales and Marketing Leaders,
You are both responsible for driving revenue growth. To investors, your spending is two sides of the same coin – drive the commercial system of the business.
COVID has put much focus on the overall effectiveness of sales and marketing spending. We are finding:
Important points for The Commercial Ratio
1) There is a renewed focus for sales and marketing to drive profitable growth.
2) There is not one person accountable for achieving profitable growth, so there are many people involved with different lenses (finance, marketing, CEO, BUs, sales).
3) Sales and marketing spending is mostly driven by activities with little analysis.
4) Many, many different functional groups prescribe activities that create random acts of sales enablement.
5) These random acts are not coordinated, so they confuse salespeople and customers – creating waste an inefficiency.
To address this, sales and marketing costs need to be looked at as investments in revenue growth, not budget to be managed to control expenses.
This shift has to happen while also making the targeted investment to repair damaged pipelines.
The commercial ratio provides the north star to have an uncomfortable conversation within your company.