Centralizing Sales and Marketing under CXO: Pros and Cons with Real-World Case Studies
Sales and marketing are two essential functions for any business to grow and succeed. They create and maintain customer relationships, drive revenue, and build brand awareness. For these reasons, deciding where sales and marketing should report within an organization is critical. Some organizations choose to have sales and marketing report into the CXO, while others keep them separate. In this article, we will explore the positives and negatives of having sales and marketing report into the CXO, along with relevant case studies to support these arguments.
Positives:
Better alignment between sales, marketing, and the overall business strategy: When sales and marketing report into the CXO, there is better alignment between the two functions and the overall business strategy. This alignment leads to better communication, collaboration, and coordination between sales and marketing, which ultimately helps achieve the company's goals. For instance, Salesforce.com, a cloud-based software company, has both sales and marketing reporting to the same executive. This arrangement has helped the company maintain a unified customer-facing approach, resulting in a revenue growth of over 20% year-over-year.
Streamlined decision-making: When sales and marketing report into the CXO, it streamlines decision-making and ensures that there is a more cohesive vision for the company. With a clear hierarchy, it becomes easier to coordinate marketing initiatives with sales goals, creating more streamlined messaging and sales strategies. Procter & Gamble, a consumer goods company, has marketing and sales reporting into the same executive. This arrangement has helped the company streamline their decision-making process, allowing for more focused strategies and resulting in a 4% increase in organic sales growth.
Better utilization of resources: When sales and marketing report into the CXO, there is a better utilization of resources, leading to more efficient and cost-effective operations. With a centralized approach, there is a reduction in duplicated efforts, leading to greater cost efficiencies. For example, Airbnb, a vacation rental company, has a centralized approach to sales and marketing, with both functions reporting to the same executive. This structure has allowed the company to optimize resources, resulting in the company's successful growth and global expansion.
Negatives:
Lack of focus on the individual functions: When sales and marketing report into the CXO, there is a risk of not giving sufficient attention to each function, leading to a lack of focus on individual goals. This can cause the functions to be overlooked, leading to a less efficient and less effective sales and marketing strategy. For instance, in the early 2000s, IBM had marketing and sales report into the same executive. This structure resulted in marketing initiatives not getting the necessary attention, leading to an underutilization of marketing resources and a lack of success in that function.
Communication issues: When sales and marketing report into the CXO, there is a risk of communication issues, particularly when there are different priorities between sales and marketing. The CXO may not have the time or expertise to manage each function effectively, leading to communication breakdowns and issues with strategy and execution. In the late 1990s, Gateway Inc., a computer hardware company, had both sales and marketing report to the CEO. This structure led to communication issues between the two functions, resulting in a lack of alignment and execution on strategic initiatives.
Reduced agility: When sales and marketing report into the CXO, there is a risk of reduced agility, particularly when there is a lack of focus on individual functions. This can lead to a slower decision-making process and a lack of innovation. For instance, in the early 2010s, Hewlett-Packard (HP) had both sales and marketing report into the CEO. This structure resulted in a lack of agility and innovation, leading to missed opportunities and a lack of success in the market..
There are positives and negatives to having sales and marketing report into the CXO. The decision ultimately depends on the organization's specific goals, structure, and leadership. However, a centralized approach can help streamline decision-making, better align sales and marketing with the overall business strategy, and optimize resources. On the other hand, a centralized approach can lead to a lack of focus on individual functions, communication issues, and reduced agility.
It is important for organizations to weigh these positives and negatives carefully when deciding whether to have sales and marketing report into the CXO. While there are benefits to centralization, it is essential to ensure that each function receives sufficient attention and that there is a clear vision for the company's growth.
Ultimately, the key to success is not where sales and marketing report into the organization but rather the leadership and coordination among all executives involved in driving sales growth. Whether sales and marketing report into the CXO or not, it is crucial to have strong communication, collaboration, and coordination to ensure that the organization can achieve its goals and succeed in the market.
To Your Success & Prosperity,
Michael McMillan
Sources for Article:
"Marketing and Sales: How to Better Align and Collaborate" by McKinsey & Company - https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/marketing-and-sales-how-to-better-align-and-collaborate
"Should Sales and Marketing Report to the Same Person?" by Harvard Business Review - https://hbr.org/2017/11/should-sales-and-marketing-report-to-the-same-person
"Marketing and Sales: Separated at Birth or the Perfect Couple?" by Salesforce - https://www.salesforce.com/blog/2015/10/marketing-sales-separated-at-birth-or-the-perfect-couple.html
"Marketing and Sales: Why Are They Separate Departments?" by MarketingProfs - https://www.marketingprofs.com/articles/2019/41150/marketing-and-sales-why-are-they-separate-departments
"What’s the Best Organizational Structure for Sales and Marketing?" by Inc. - https://www.inc.com/jeff-haden/whats-best-organizational-structure-for-sales-and-marketing.html
"Centralizing Sales and Marketing Functions: A Look at the Pros and Cons" by MarketingSherpa - https://www.marketingsherpa.com/article/case-study/centralizing-sales-and-marketing-functions
"Aligning Sales and Marketing for Revenue Growth" by SiriusDecisions - https://www.siriusdecisions.com/blog/aligning-sales-and-marketing-for-revenue-growth
"Sales and Marketing: Better Together" by Marketo - https://www.marketo.com/articles/sales-and-marketing-better-together/
