Is It Time To Merge Sales and Marketing?

The case for a Client Engagement function at B2B investment firms.

"What am I doing in an office, when all I want is out there, waiting for me?"

—from "Death of A Salesman," Arthur Miller

For years, people have been predicting the death of the salesmen, the "road warriors," both male and female, of the investment management business. Is the crisis finally going to kill them off?

There was certainly evidence before the crisis that their days might be numbered. Since the rise of digital communications and social media, clients have been avoiding their "relationship managers," researching products and solutions themselves and waiting much later in the process to contact a salesperson. (Before the crisis, Forrester says many buyers didn't call until two-thirds of the way through their decision process; now it might be as a late as 90%.)

Then came the pandemic and the abrupt suspension of in-person selling. Without the chance to network at conferences, golf outings or shared meals, Sales teams have been grounded—and not in the office bull pen like poor Willy Loman in the quote above, but in the basements of their homes. With this crisis, the entire relationship between an investment management firm and its clients has been reduced to a screen on a home PC.

Investment managers are of course still selling. But they're doing so digitally and virtually, replicating traditional sales networking tactics online via virtual meetings, webinars and events (Figure 1). But this pivot to "virtual selling" has had a profound impact on the role of Sales teams, dramatically shifting their core function within their organizations. No longer are salespeople a firm's main point of contact with the client. Nor are they:

• the most effective way to convey key messages to customers

• the best repository of knowledge about customers

• the only, or even best, source of intelligence about what customers intend to buy.

What has overtaken these key Sales functions are digital and virtual interactions, and the client insights that are captured during online engagement. And what has become apparent over the past six months is that the customer insights obtained are more critical to modern selling than actual Sales’ contact with them, or even the interpersonal skills of individual salespeople. With in-person selling suspended, this trend is now clear—and it has accelerated.

At many leading investment managers, client communication and client knowledge are now better understood primarily not as Sales functions, but as integral elements of their digital marketing model. Marketing departments at these firms have been investing in digital transformation, encouraged by the data revolution under way in consumer marketing.

While Sales leaders have been focusing on Marketing’s role in “sales enablement” activity like industry networking events and product brochures, B2B Marketing teams at these firms have been developing tools and strategies more relevant to this new normal—customer insight platforms, demand generation and lead scoring, and account-based marketing. Marketing teams have tried to partner with Sales colleagues on these initiatives, usually with limited success. The sad reality is that Sales leadership at many asset managers either ignored these efforts or outright resisted them, perhaps out of skepticism of their impact, perhaps out of concern about being disintermediated.

Many salespeople remain in denial about much of this, assuming that these trends will reverse once the pandemic passes and they can get "back out on the road." But this seems unlikely. For one thing, a digital/virtual operating model is cheaper for investment managers than the "analog" one, but it also promises to be better—at reaching, tracking and targeting clients at scale. For another, it seems to be working. But most important, clients actually prefer this model. Two-thirds of B2B decision makers polled recently by McKinsey, for example, said the crisis model is equally or more effective, with three-quarters expressing preference for "remote human" or "digital self-service" over in-person selling (Figure 2).

The crisis won't kill off B2B salespeople; deals still need to be closed and clients still need a human contact point. But it should probably kill off Sales as a stand-alone function. What’s been true for years is that clients don’t want to be “sold to” (any more than they want to be “marketed to”). We're meant to be their trusted partners. The crisis offers an opportunity to reframe the relationship and introduce a paradigm that better reflects the way clients interact with their investment managers.

By reorganizing their client-facing functions, firms can unlock the power of the client data and the new digital tools they have their disposal—using these to deliver to clients the solutions, services, content and information they need, when they need them. Investment management has the opportunity to join other industries that have used data to remake their relationship and service model, but it is going to require realigning roles and de-siloing our deep knowledge about our clients. Achieving the necessary agility to do this will mean merging Sales into the new framework that has been developed in B2B Marketing. We call this new merged function—and the data-driven, client-centric, virtual-first approach that underlies it—"Client Engagement."

For customers, the benefits of this new Client Engagement approach are clear: an investment manager that knows them better with each engagement, providing on-point solutions to relevant needs and a well-informed customer experience across the entire relationship. For those who engage directly with our firms, it means the end of the deluge of unwanted emails, poorly targeted event invitations and irrelevant product pitches.

For investment managers, moving to Client Engagement is less about pulling Sales into Marketing than "bringing science to Sales," as McKinsey put it in a recent piece on the weaknesses in Sales models and gaps in its digital readiness. "In many ways, this data revolution in Sales matches what happened to Marketing three to five years ago, when they were forced to reorient their functions to be more analytically driven." Harnessing science and data can deliver double-digit gains in ROI, the study suggests.

For Sales teams, armed with client data and insights, the new model means a world of only warm and high-quality leads, and of welcoming responses to offers of demos and webinars. Data from the big consulting firms and digital marketing agencies all suggest better client win and retention rates—up more than a third—and higher revenue over traditional selling strategies (Figure 3.) A Client Engagement function also enables a more agile go-to-market model for new products and creates the opportunity to automate perhaps 30% of low-value-add Sales activities—as it has done in Marketing.

So what would this new operating model look like in practice? Account-Based Marketing strategies provide a good starting point, with the cross-functional coordination they require to properly penetrate key accounts. But Client Engagement goes beyond traditional Sales and Marketing "alignment,” reorganizing the legacy teams around each client segment.

Sirius Decisions provides a good framework for this in what they call their Demand Spectrum Model. It aligns sales and marketing segmentation and their respective engagement strategies, from broad prospecting to Unnamed Accounts (aka "Demand Marketing"), through Verticals/Segments, to Named/Key Accounts and finally Strategic/Large Accounts.

The Sirius model defines a shared strategy for each segment based on the degree of message customization and buyer intelligence it entails, as well as a "cadence of collaboration" timetable to keep the two teams aligned (Figure 4). A Client Engagement function takes this a step further, unifying the teams dedicated to each segment so that they are capable of supporting this ambitious model: fully bespoke engagement with Strategic Accounts, on a weekly or even real-time basis; segment-level messaging and intent-driven engagement with Named Accounts and Verticals, on a monthly or quarterly schedule; and finally, repurposed content, always-on demand marketing and targeted sales prospecting to Unnamed opportunities.

To make this model work, supporting teams would be merged, with sales and marketing operations combined into a centralized "commercial hub,” along with integration of insight, data and technology platforms like Salesforce, marketing automation, and engagement tools like DemandBase and Lattice. New teams would coalesce around account planning, campaign coordination and client content development, to name just a few.

Salespeople continue to play critical roles in this new function, particularly as the human face of the firm for customers. It is not as though personal relationships will be any less important in a post-analog world: clients need knowledgeable dedicated account managers. But firms can no longer afford to have one person "own" a relationship, hoarding knowledge about buying centers at key accounts—a reality that persists despite the migration of contact information to CRM systems. Just as responsibility for meeting sales targets is shared across Client Engagement segment teams, incentives will need to be adjusted to reward client-centrism.

Most marketing people aren't any more ready for this new approach than salespeople are. While digital marketing is relatively mature at many leading firms, just as many have not made the leap, and the industry generally lags its peers At most organizations, marketers will need to embrace new responsibilities, upskill their talent and become significantly more "commercial" if the Client Engagement model is to work. In this new model, legacy marketing roles will be just as accountable for revenue as legacy sales roles.

Moving to this model won’t happen overnight. During the crisis, however, some firms have flipped "sales enablement" on its head, pressing under-used Sales bandwidth and knowledge into service in Inbound Marketing programs. Salespeople have been pulled into content and message development, and recruited to enrich account profiles, target personas and segmentation. Some are even actively engaging with lead generation and ABM campaigns.

Not every investment manager is ready to adopt a Client Engagement model. But since the onset of the crisis, the most successful have recognized Marketing as a strategic function and empowered it within their organizations. Some are centralizing oversight of client-facing functions in a Chief Revenue Officer—only to find that these leaders, who like traditional Heads of Distribution typically come out of Sales, don't have the requisite knowledge for digital transformation. (Not that Chief Marketing Officers are better suited to run Client Engagement; CMOs at traditional investment managers almost by definition have had limited revenue accountability.)

But the right way to set up our firms for success in the next normal would be to formalize the role of Chief Client Officer as the champion of a unified Client Engagement approach in the investment management C-suite. As long as our industry leadership settles for outdated Sales-centric operating models, firms will struggle to realize the full promise of digital transformation and remain vulnerable to competitors, inside and outside the industry, who are using client data to gain competitive advantage. There are no Willy Lomans working at Google or Amazon or Apple (or Ant Financial), and it's only a matter of time before digitally enabled disruption comes to the investment management industry. The industry has an opportunity to get there first itself, but only if ambitious firms take advantage of the crisis to evolve away from their analog models. "It's a situation of you evolve or you fade away," as one enlightened Sales manager puts it.

Willy himself would look at this challenge two ways. On the one hand, he would say "the only thing you got in this world is what you can sell." On the other, he might see the opportunity:

"A salesman has got to dream, boy. It comes with the territory."

Larry Black, Managing Partner
larry@blackmosspartners.com