Marketing and sales under stress

Is your sales organization raising expectations, but also struggling to understand how to sell increasingly complex service sets? Is it facing the pressure to win new customers, while also generating new revenue from existing ones?

If so, you're not alone, according to the results of a recent MarketBridge survey of marketing and sales executives and professionals in the telecom industry. The survey, “Driving Marketing and Sales Effectiveness,” was administered by MarketBridge, a professional services firm, and co-sponsored by Telephony and Northwestern University's Kellogg School of Management.

The survey had 350 respondents from 160 different companies. About 70% of those classified themselves as executives, managers or professionals within marketing and sales organizations at either wireline/wireless carriers, dedicated wireline carriers, dedicated wireless carriers or cable TV/satellite providers. All in all, they painted a picture of telecom industry firms struggling against internal operational barriers, while striving externally to beat the competition and break new ground for revenue generation.

About 58% of those who responded said they are raising quotas for their sales teams over the next year to combat competition, but almost 55% also said that their primary sales compensation challenge is “setting achievable quotas.“ Meanwhile, carriers plan to increase sales headcounts by an average of 5.6%, while cable TV firms grow sales staffs at an average of 8%, and manufacturers increase sales personnel by about 6.1%. However, about 46% of all respondents said “offering attractive target pay level“ is their second-greatest sales compensation challenge.

“There is a reverse Robin Hood situation where companies will need to figure out how to get the best pay into the hands of their top producers as they increase headcount, and that will take some time,“ said Mark Donnolo, senior vice president of communication and media for MarketBridge.

The increasingly complex variety of services most carriers offer also has created very complex marketing and sales organizations, Donnolo said. Single, do-it-all sales reps are no longer the standard, and indirect sales channels, while popular, have proved difficult to maintain. “There's a lot of new complexity to the sales organization. You've now got a lot of vertical experts and horizontal layers rather than just one rep, and they're all trying to communicate value,“ he said.

He added that many telecom companies are getting much of their increasing headcount in marketing and sales from other industries, such as media and entertainment, as telecom converges with those industries.

Donnolo said the rapid rate of new service introduction also is making it increasingly difficult for marketing and sales groups to translate general corporate strategies into meaningful sales directives and goals. “How do you take a big, general directive and translate that to the sales organization and into all your different sales channels to get the right message to the right segments?” he asked. “That's the biggest concern a lot of sales leaders have at this point.“

The trend toward “coopetition” — being open to working with competitors for the good of the customer — also is having an effect on how companies market and sell their offerings. About 48% of all carriers and 62% of large carriers said coopetition is necessary (though only 26% of cable TV companies agreed). But 54% of all carriers said it also made it difficult for them to determine business direction, and 53% said they were confused about how to convey these relationships.

Among external issues, 49% of respondents said current customer revenue retention was their top priority over the last year, while 23% said it was to increase penetration among new customers. However, over the next year, the numbers are expected to shift, with 40% saying retention will continue to be their top priority, and 30% saying winning new customers will become their top concern.

“Companies are not taking their eye off the ball of customer retention, but now they are looking at new ways to grow, whether it's through Internet, wireless, IPTV or other services to existing and new customers,“ Donnolo said. “They're getting very focused on how to get more of the customer wallet.“

He added that carrier consolidation and tougher competition among remaining carriers have raised the bar for marketing and sales teams in these companies to tap into new market segments, and for many, the most popular new segment is small and medium-sized businesses (SMBs). The enterprise market already is the largest revenue market for most carriers, but SMBs are starting to play a larger role, as 29% of the respondents from large carriers said they expect SMBs to become their biggest revenue segment within the coming year. More surprisingly, 25% of cable TV company respondents see SMB as a future top revenue segment, while only 6% of those same respondents see it that way right now.

“There has been a focus on high-revenue potential customers for so long, and the SMB is not the last frontier. It is an untapped frontier,“ Donnolo said. “SMB is actually a bit of a misnomer because there are really so many facets to this market — it's a whole checkerboard of revenue segments.”

SMB REVENUE SEGMENT

	Currently	Future
Carriers identifying small/medium-sized business market as a top revenue segment:	16%	27%
Cable TV companies identifying SMB as a top revenue segment:	6%	25%
Source: MarketBridge survey

CURRENT & PLANNED PRODUCT/SERVICE OFFERINGS

A high percentage of respondents currently offered landline voice, data and equipment. Planned offering within a year and beyond centered around IPTV, VoIP, rich media content and mobile offerings.

	Offer to customers now	Plan to introduce within one year	Plan to introduce in one+ years	Don't plan to introduce
Landline voice	69	4	0	26
Landline data	71	4	1	25
CPE (may include equipment produced by other companies)	70	6	4	20
Network equipment (may include equipment produced by other companies)	67	6	3	24
IPTV	22	22	21	34
VoIP	55	17	10	18
Rich media content	29	20	14	37
Mobile voice	50	12	6	32
Mobile data	49	10	10	31
Mobile video	27	16	14	43
Mobile hardware	41	10	6	43
Software and appliances	45	9	7	40
Network solutions	68	9	4	19
Outsource/managed services	51	10	6	33
Mobile solutions	44	13	8	35
Source: MarketBridge survey

COOPETITION BY THE NUMBERS

48%

Percentage of all carriers surveyed who said coopetition is necessary.

62%

Percentage of large carriers who said coopetition is necessary.

26%

Percentage of cable TV companies who said coopetition is necessary.

54%

Percentage of all carriers who said coopetition makes it more difficult for them to define a business direction.

Source: MarketBridge survey