McKinsey: Marketing & sales capabilities bolster growth

13 April 2015 5 min. read
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Implementing modern marketing and sales capabilities can help average performing businesses significantly improve growth rates, according to recent research from McKinsey. The research finds that growth of an industry average player stands at 4% compared to top percentile marketing and sale performer at 5.3%. To achieve similar results, seeing marketing and sales as an investment, understanding key capabilities, developing sector specific capabilities as well as institutionalising capabilities within a sound vision and operational model, are found as key by the consulting firm.

Modern Lean management techniques transformed the way manufacturers produced goods, cutting waste while increasing productivity and efficiency. Yet while companies invest considerable energy in developing highly efficient and productive manufacturing processes, a recent report from McKinsey & Company highlights that the same care and attention is not being given to marketing and sales. This may mean that companies are missing out on a considerable growth opportunity, research from the firm finds.

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McKinsey’s research to understand the marketing and sales performance of companies involved 15,000 employees at more than 140 leading B2B and B2B2C global businesses*. The results from the research shows that companies that have more advanced sales capabilities are able to improve revenue growth by around 30% above that of the average company in the same sector. In terms of yearly growth, this translates to an average company growing by 4% would, in if it were in the top percentile of marketing and sales sophistication, grow by 5.3%.

Improved marketing &sales capacities beat market growth

Improving capabilities
According to the consulting firm, one of the issues rolled out as inhibitive by many senior executives is that “sales is just too difficult to assess.” With the calculation on the return on investment (ROI) hard to determine, a potential deliberative approach to adopting institutional marketing and sales capabilities is traded in for focus on tactical efforts that provide quick, visible results. This, according to McKinsey, is a mistake, with their research identifying a number of ways in which companies can improve their sales performance and thereby company growth as a whole.

Marketing and sales as an investment

One aspect of the research highlights that many companies continue to engage with sales as an expense rather than an investment. This attitude itself prevents a company from understanding the functional group and disempowers senior decision makers from transforming sales into a ROI building unit. Contrary to the belief that the ROI for marketing and sales cannot be calculated, the authors suggest that contemporary techniques now provide the means to do exactly that and that the best performers are those that “focus on building capabilities that are directly linked to specific growth and margin opportunities by instilling ROI discipline.”

Not seeing a problem inevitably means that the problem is not solved. In the case, companies rigorously measure and track key performance indicators, yet few apply the same approach to capabilities. With respect to marketing and sales, a lack of such indicators means that it is difficult to compare themselves to other players and to thus where improvements may be made.

Targeting capabilities

Another area which the research highlights is that of competently targeting the capabilities that matter the most. Without understanding what the most important capabilities are for sales and marketing within a particular sector, investments may miss the mark. Identifying and developing around six key capabilities is, according to the research, related to the best practice of the top percentile companies surveyed. The research, however, also highlights that not “doing too much” is also important, with the development of new capacities. Companies that attempted to develop or create three new capacities often failed, while companies focused on two were often successful.

Taking account of where the company is within its life-cycle is another important aspect of successfully deploying highly organised marketing and sales practices. Different stages may require different capabilities and therefore a carefully constructed strategic vision needs to be developed for the long terms sales growth path.

Thinking institutional capabilities

A strategic plan for a company’s long term marketing and sales also means preserving capabilities when key talent moves on. The creation of a companywide institutional marketing and sale strategy should be done collaboratively “to encourage a broad, inclusive discussion that creates a clear view of which capabilities are necessary across the entire company and how to prioritise them.”

The final key is a strong operational model, as building marketing and sales capabilities alone will not be enough. According to the researchers, “without the right operating model to support change, even the most advanced capabilities will wither.”

* B2B refers to business-to-business and B2B2C to business to business to consumer companies.