B2B, Blog

The ‘circles of doom’: Quantifying the misalignment of B2B marketing and sales

Marketing can only generate an effective pipeline if it targets the same buyers as sales, but new research shows the overlap – even between brand and demand marketing – is often shockingly small.

What is the scariest number in B2B marketing?

We used to think the scariest number was 8%, which is the percentage of the budget that B2B marketers invest in brand advertising. This is terrifyingly low, given the fact that brand is the best way to influence the 95% of buyers who aren’t ready to buy today.

But we’ve got a new number in B2B that will send even more shivers down your spine. A number so horrific that it drops the jaws of every B2B CMO we meet.

That number is… 16%.

This is the average ‘alignment’ between B2B marketing and B2B sales. That is the blockbuster finding of a recent analysis from LinkedIn that measured the targeting overlap between sales and marketing across 7,046 B2B organisations.

To explain why this 16% number should frighten you, we’re going to play a little game. We call it ‘The Circle Game’.

The dream: Two ‘circles of boom’

Imagine two circles. The first circle represents all the buyers reached by your marketing department. The second circle represents all the buyers reached by your sales department.

Now, what is the ideal size of these circles?

That’s up for debate, but we’d argue the marketing circle should be something like 20 times the size of the sales circle. Why? Well, ideally your marketing should reach 100% of category buyers – both the 5% of ‘in-market’ buyers who will buy in the current quarter, as well as the 95% of ‘out-market’ buyers who will buy in future quarters.

Sales, on the other hand, should only reach the in-market 5%, since there’s no point in pitching your product to buyers who don’t need it now. Since marketing must address a 20-times bigger audience, it seems obvious to us that marketing should have a much bigger ‘circle of influence’.

Now, there are many hyper-targeting apologists who will argue the circles should be the same size – that marketing and sales should both target the 5% of in-market customers. The tighter the targeting, the better the performance, or so we are told.

But what no one even bothers debating is the ideal degree of overlap between these two circles. The obvious answer, regardless of your targeting philosophy, is 100%. In other words, B2B marketing and sales should talk to the same buyers. Marketing primes buyers and fills the pipeline with leads, sales turns those leads into customers.

So in theory, these two circles should be concentric, as visualised below.

But what do these two circles look like in practice?

The nightmare: Two ‘circles of doom’

Our colleagues on the LinkedIn Customer Insights Team recently analysed the sales and marketing overlap of 7,046 companies on LinkedIn. Their analysis covered five different verticals (technology, professional services, manufacturing, financial services and education) across four different regions (North America, EMEA, Asia Pacific and Latin America).

So, what exactly did the team uncover?

Let’s start with the good news: when sales and marketing overlap, performance booms.

Our data shows that when sellers reach out to buyers who have been exposed to marketing within the last 30 days, buyers are much more likely to respond. On average, B2B buyers are 19% more likely to accept a connection request from sales, and 15% more likely to open an inMail message from sales, after seeing marketing content.

But that’s just an average. Let’s examine a specific industry, like financial services.

Buyers in financial services are 56% more likely to connect with a seller when they see marketing within 30 days. If you remove the 30-day window, that number drops to 50%, which suggests that recency matters. If you look at buyers exposed only to lead-gen messaging – so no brand advertising – that number drops to 43%, which suggests that brand matters too. And if you look at those same metrics for global B2B professional services companies, the numbers fall to 21%, 16% and 14%, which suggests that execution matters.

But in all cases, overlap improves performance. When the circle of marketing and the circle of sales intersect, B2B businesses get to experience the ‘circles of boom’.

The bad news is that B2B businesses rarely get that experience, because marketing and sales rarely reach the same audience. Instead, most marketing and sales activities are entirely disjointed, with minimal overlap. As we said at the start, across all 7,046 companies, the average overlap between marketing and sales reach is 16%.

That means most circles look like this:

In North America, the average overlap between marketing and sales is 18%. In Latin America and Asia Pacific, it’s 20%. In EMEA, it’s 16%. And the overlap varies significantly by sector. The average overlap in technology is 19%, whereas the average in manufacturing is 8%.

But wait, the news gets even worse!

The worse news is that marketing is not only misaligned with sales – marketing is even more misaligned with marketing! That’s right, the call is coming from inside the house. You can measure marketing and marketing alignment by splitting the marketing circle: the buyers reached by brand marketing and the buyers reached by demand marketing.

Most B2B businesses fail to invest in brand marketing – so the brand circle tends to be one-fifth the size of the demand circle, even though brand must address a bigger, broader audience. But the even bigger problem is the total lack of coordination between the top-of-funnel and bottom-of-funnel marketing strategies. The average overlap between them is… wait for it… 5%!

There is robust research showing that brand marketing can improve direct response performance by two to 10 times. But that requires brand and demand to reach the same buyers. LinkedIn data shows that brand and demand usually reach entirely different audiences.

How to change the circles of doom into circles that boom

We call this analysis the ‘circles of doom’. We use the word ‘doom’ because of the death-like sensation that CMOs and CROs feel in their stomachs whenever we share this analysis. Instead of one integrated funnel that spans brand, demand and sales, most companies operate with three siloed funnels that barely intersect. Instead of one continuous pipeline, we have three unconnected pipelines, spilling all our sales.

This is a problem worth fixing. The LinkedIn analysis found that high alignment can increase marketing generated revenue by 208%, increase customer retention by 36%, and reduce sales and marketing expenses.”

Here are two solutions we recommend that can increase overlap and sales today:

  1. Marketing and sales need to align on targeting. If sales wants to target pharmaceutical companies with more than 10,000 employees in Estonia, then marketing needs to ensure that segment is included in their targeting parameters. Senior marketing and sales leaders need to have a strategic conversation about audiences, and their teams need to correctly execute on that strategy. This may sound obvious, but it is not actually happening at most B2B companies.
  2. Marketing needs to target broadly to increase alignment. The primary reason that marketing and sales are so misaligned is because at most B2B companies both departments pursue a hyper-targeting strategy. The small coverage of the sales and marketing circles dramatically decreases the likelihood of overlap. Because marketing is the only department that can feasibly reach every buyer in the category with the press of a button, marketing should lead the way in adopting broader targeting. The benefits of broader targeting are clear for sales and marketing and finance. Going broad doesn’t mean reaching everyone – it means reaching anyone who could buy the category, which in B2B is still a relatively small audience. Targeting the category isn’t wasteful, it’s impactful.

As always, we’ll end our column with a charming nursery rhyme.

Low overlap and sales doom, high overlap and sales boom.

 

 

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This article was written by Marketing Week and originally published here.

Author

Kristine

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