The liquidity risks of 2008/9, public bailout, market nervousness and contraction, financial market uncertainty, high unemployment and subsequently sluggish US economy have all commanded world attention for the last two or three years. None of this though prepared most of us for the genuine risk of sovereign debt default for a growing group of member states, and the potential collapse of the European Union, or at least that of the Euro Zone.

2012 is, at best, a period of further uncertainty. How should sales and marketing leaders prepare?

In a paper entitled. “Collateral Damage. What next? Where next? What to Expect and How to Prepare”, David Rhodes (MD, BCG London) and Daniel Stelter (MD, BCG Berlin) painted their view on how things will play out in Europe. is staffed by Sales and Marketing professionals, not economists, so we’ll rely on other experts to predict the future with what one might hope to be a degree of reliability. Let me summarise what I took from their writing, and then suggest what this means for us as Sales and Marketing leaders.

BCG argue that the lack of the automatic rebalancing mechanism of currency devaluation has masked the growing inefficiencies and increasing labour rates in some Euro Zone economies (like Greece, Spain and Italy) compared with those of stronger states like Germany and the Netherlands. The three scenarios they suggest businesses prepare for are perhaps not surprising therefore:

  • “Japan” – a prolonged recession and resultant deflation. This would undoubtedly worsen the indebtedness of the more affected countries and companies leading to greater defaults. This may prove to be a self-fulfilling prophecy; the fear of this recession and deflation will perhaps cause companies and countries to reduce expenditure, and therefore increase the probability of this cycle of contraction.
  • Inflation – ‘monetary easing’ (printing money) could be seen as the most politically acceptable solution for troubled governments, despite its folly. This pattern will ultimately drive prices higher leading to the need to reprice constantly, to manage supplier costs aggressively, and to seek structural shifts that reduce costs in the long run.
  • Breakup of the Euro Zone – progressive exit either of troubled economies ejected by the stronger ones, or the stronger ones leaving as a means of self-preservation. Whilst they argue this is the least likely of the three scenarios, they nonetheless advise businesses to prepare for this possibility by quarantining their cash and debtors, and preparing for the added complexities of the introduction of new currencies.

They pose all three scenarios as the consequences of failure by what increasingly appears to be the strategy of Euro Zone leaders: ‘muddling through’. The sovereign right to manage one’s own affairs is protected more fiercely than the obligation to do so well. The recent agreements amongst Euro Zone members will be difficult to enforce, and the risk is great that the weaker states lack the will to reduce pay rates, which is all they have left given the absence of a rebalancing mechanism like currency devaluation.

So what can we do as Sales and Marketing leaders? Here are six strategies that thinks you might want to contemplate over the Christmas break.

  1. Massively shift costs out of your combined Sales and Marketing engine. Businesses who still rely on Sales to generate their own opportunities are retaining costs that may prove a luxury during the next decade. Considering investing now to change your processes to have Marketing generate a higher proportion of the opportunities which close. This means Marketing needs to be on the hook for closure rates, not leads. In our alignment study in 2007 we found the benchmark to be 24% of revenue from marketing-generated leads, but perhaps we need to set our sights on a much greater proportion in the future. This means you need process redesign, that you need Sales and Marketing to buy in to those new processes, and you need to do it fast.
  2. Aggressively focus Sales’ efforts onto only those deals which can close. Sales people love relationships, are eternally optimistic, and they hang on to opportunities long after they are dead. Consider building better indicators into your funnel management systems and processes, and use those indicators to prise the sticky fingers of optimistic sales people off deals that won’t close soon, and hand them back to Marketing to nurture. Most businesses buy into the need for marketing automation as a nurturing tactic, but few are deliberately leaking their stalled opportunities out of their funnel and handing them off to well-built automated marketing programs which balance low touch with high scrutiny. We need the low touch for cost management but we also need the high scrutiny to know which leads are again ripe for handover back to the sales force.
  3. Increase visibility into your engine, and use it to stop low-yield programs. Consider recoding your opportunity management systems so that you can record name source, trigger campaign (the campaign(s) which brought the opportunity to the fore), BDM, lag (time to progress) and leakage (failure to progress) for each stage in the buyers’ journey. These insights will help you to cancel campaigns that yield leads that don’t close (e.g. trade shows), and opportunities that are stalled. An opportunity that has been in your funnel for a long time is not necessarily stalled; consider an opportunity that took an interminable long time in the early stages but somehow managed to progress through the last two fairly quickly – that’s not necessarily the one to rip out of your funnel. Visibility needs to be precise.
  4. Forget about branding. It doesn’t matter what the market thinks about you, if they don’t. Consider massively reweighting your efforts from branding towards demand generation. Focus on reasons why businesses should be changing what they do at all, rather than the merits of your approach over others. Leave that to the sales people and focus Marketing’s efforts towards getting your sales people in front of more prospects to have that conversation.
  5. Churn low performers and lift the skills of others. You already know that the difference between a high performer and a low one is not a blip but a chasm, so lose the low performers and invest heavily in training for those you plan to keep. This is as true for Marketing professionals as it is for Sales. In uncertain times throwing greater salary packages around won’t increase retention of your stars, but continuous investment in professional growth will.
  6. Outsource marketing. Smaller companies already do this, but usually because they do not have the time or skills to build great marketers, nor the environment to keep them entertained. Larger firms may consider retaining only their domain experts (market or product experts) and outsourcing the specialist area of demand generation to experts who can do this better, and can handle the lumpiness of that activity.

If you would like to discuss any of these strategies, please reply to this email, or call + 61 3 9006 4999. I’ll get the right people on the call so we can explore how you can get your Sales and Marketing to deliver more revenue at less cost, as we are undoubtedly facing a time when the strong companies will get stronger, and the weak will disappear. It is no longer good enough to be ‘in the mix’.