Background
Historically, Sales has been one of the most impactful yet overlooked aspects of Exit Planning. In this article, I address the critical nature of Sales & Marketing Alignment within the Exit Planning process.
Sales & Marketing Alignment
A while back, I worked with a VP of Marketing whose favorite saying was, “Nothing happens until someone sells something.” As the leader of our Marketing department, he was the biggest advocate of the Sales organization I had ever known. It was refreshing. We enjoyed a very positive working relationship and grew the company’s sales revenue by over 40% CAGR over a four-year period. Our working relationship was memorable because of the close and effective alignment we created between our Sales and Marketing organizations.
Creating Alignment
As the business owner, you must create alignment between your Sales and Marketing organizations. Alignment isn’t optional or nice to have; it’s mission-critical. In my last article, I revealed the Top Three Sales Priorities a business owner must undertake to maximize the value of the business at the time of the liquidity event. The third Sales Priority focused on removing obstacles that are hindering the progress of the Sales organization. Not only is it critical for the business owner to remove sales barriers across the entire business (Operations, Engineering, Shipping, Credit, etc.), but also to create a collaborative environment critical to sustaining the strategic alignment between Sales and Marketing.
Alignment Process
In addition to hosting weekly Sales review meetings to discuss results and obstacles to achieving sales goals, a proactive business owner will also host a monthly meeting with the Sales & Marketing leaders to discuss the prioritization, impact, and timing of new initiatives. This approach can help the business owner confirm that the Sales and Marketing teams are aligned and well-positioned to achieve their revenue goals.
Misalignment Happens
Let’s face it, many of us have worked for companies that were dysfunctional at one time or another. In some cases, Sales and Marketing remained aligned only while the Owner or President was in the room. As soon as the owner left, they did whatever they wanted. Sales & Marketing Alignment is far too critical to allow separate silos to operate independently from one another. Misalignment creates chaos and confusion, and the results are almost always suboptimal. For example, I once worked for a company that rolled out next-generation cellular infrastructure 18 months before the matching handsets were available. Can you imagine allowing two divisions within the same company to have product plans launching 18 months apart? Massive failure.
How to Ensure Alignment
So how does the business owner ensure the Sales and Marketing organizations remain focused and work together to achieve superior results after the owner leaves the room? Here are a few ideas an owner should consider implementing to ensure Sales & Marketing leaders, and their respective organizations, remain in alignment:
1. Performance reviews. Do you have the right people leading your Sales & Marketing organizations? Having the wrong people in some of the most important roles in the company can potentially put your entire exit plan at risk. Establish a cadence to review both leaders’ performance regularly, at least annually.
2. Strategic Planning. Host an Annual Sales & Marketing Strategic Planning session to jointly develop forward-looking sales and marketing goals, action plans, budgets, & KPIs. Go off-site.
3. Peer Reviews.
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Have the Sales Leader review the Marketing Plan before finalizing it to ensure it aligns with the Sales Plan.
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Have the Marketing Leader review the Sales Plan before finalizing it to ensure it aligns with the Marketing Plan.
4. Budget Approvals and Reviews.
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Refrain from approving budgets until there is complete alignment across Sales and Marketing, including the product plan.
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Commit to quarterly budget reviews of the sales & marketing initiatives, and confirm the expected timing of when expenses will hit the budget.
5. Link Compensation.
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Tie a portion of the Sales Leader’s compensation package to achieving Marketing goals.
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Tie a portion of the Marketing Leader’s compensation package to achieving Sales goals.
6. Confirm Math & Assumptions Align. Often Sales and Marketing objectives align, but the underlying math doesn’t. Sales and Marketing plans could agree that $6 million in Sales Revenue is the sales target for next year. Still, if the Average Sales Price (ASP) compresses by 20% due to a new low-cost competitor entering the market, additional sales leads will be required from Marketing to compensate for the shortfall. Have the Sales and Marketing leaders walk through the math together, using available metrics (close rates, deals/rep, etc.) to gain agreement on how many more leads and resources are required.
7. Implement a Documented Change Process. Develop a documented change process that allows Sales and Marketing Plans to be updated mid-cycle as long as all the relevant stakeholders’ approvals are secured in advance.
Elevate Your Exit Price through Revenue Growth
During the exit planning process, it’s easy for owners to get distracted from elevating the top line. If sales flatline, the organization loses momentum, and the company’s value declines. On the other hand, exceeding sales forecasts, improving operating margins, and introducing new recurring revenue streams can make your business more valuable. Companies that successfully execute an aligned Sales & Marketing strategy are more likely to achieve their sales plan, improving the multiple a business can command.
It’s your name on the door. Most business owners have a tremendous amount of pride in the business they’ve built over the past 10, 20, or 30 years. They want to turn the keys over to the next owner, knowing it’s in great shape.
If you’re ready to explore exiting your business over the next 1-3 years, why not begin working with a professional Sales Advisor who can help you prepare for your transition? Contact Strategic Elevation today for a complimentary consultation and sales assessment.