Fractional Futures

Aligning Sales and Marketing for Revenue Growth

• Paul Mills • Season 3 • Episode 9

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Fractional Futures is the essential podcast for CEOs, investors, and senior marketing executives looking to unlock the power of fractional marketing leadership.
 
Hosted by Paul Mills, Founder at VCMO, and with special guests, we'll share expert insights, provide actionable strategies and explore real-world success stories to help you leverage fractional marketing leadership for maximum impact.

In this episode

In this episode, Paul Mills and Rob Nicholls discuss the critical alignment between sales and marketing functions in driving revenue growth. They explore the financial risks of disconnected teams, the role of the CFO in ensuring alignment, and the challenges and opportunities presented by Revenue Operations (RevOps). The conversation emphasizes the importance of shared metrics, establishing a revenue council, and creating a feedback loop to optimize marketing strategies based on sales insights. Ultimately, the episode highlights the necessity of building trust and relationships to enhance revenue generation and business valuation.

Special Guest 

Rob Nicholls, Founder Rob Nicholls Consulting, CFO, Board Advisor and Angel Investor

Key Takeaways

  • Sales and marketing alignment is crucial for revenue growth.
  • Disconnected teams lead to financial risks and inefficiencies.
  • The CFO plays a vital role in aligning sales and marketing.
  • RevOps has potential but often fails in smaller organizations.
  • Shared metrics between sales and marketing drive accountability.
  • Customer lifetime value is a key metric for success.
  • A revenue council can enhance collaboration and insights.
  • Feedback loops between sales and marketing improve strategies.
  • Building trust is essential for effective customer relationships.
  • Sales cycles can be shortened through effective collaboration.

Sound Bites

"Achieving collaboration is often easier said than done."

"Incentives are really important here."

"Sales should be accountable for conversion rates."

"A revenue council can drive accountability."

"Building trust is critical for revenue generation."

"You need to focus on building trust in the brand."

Contact VCMO

Thanks for listening & keep podcasting!

Fractional Marketing Leadership | Marketing Transformed.

Paul Mills (00:01.437)
Hello and welcome to the penultimate episode of this season's Fractional Futures, where we explore how fractional CMOs can help SMEs and portfolio companies accelerate growth and maximize enterprise value. Today, we're tackling one of the most critical factors in driving revenue growth, and that's the alignment between sales and marketing. Now for too long, sales and marketing have been seen as separate functions in the organization, often working towards different goals.

But when these teams collaborate effectively, businesses will tend to see higher quality leads, increased conversion rates, and stronger revenue performance. In this episode, we'll be exploring how to break down silos, implement revenue operations to align teams and data, and how to use sales insights to refine marketing strategies. Joining me today is Rob Nichols, a strategic CFO

a non-executive director and board advisor with over 35 years of global finance experience. Rob specializes in profit maximization and value creation. And today he'll share his insights on how aligning sales and marketing can drive sustainable revenue growth. Hi, Rob, welcome to the show.

Rob Nicholls (01:14.092)
Thanks very much Paul, good to see you again.

Paul Mills (01:16.327)
So it's a Friday today, obviously that dates the episode today. you must be getting ready for golf today. Where are you teeing off today?

Rob Nicholls (01:23.502)
I am, It's a special day for me Friday. don't generally work, so this is work. This afternoon is play.

Paul Mills (01:31.635)
Fantastic. Well, hopefully the weather is looking quite good out there today. So hopefully it'd be a good round for you. So Rob, let's get started. I wanna look at how we can break down the silos between sales and marketing. And I think for businesses to scale effectively, the sales and marketing functions, they have to work in sync. They need to align on messaging. They need to align on lead qualification,

Rob Nicholls (01:35.842)
We're good. We're good. We're good.

Paul Mills (01:57.949)
brand and customer engagement. But achieving this collaboration is often easier said than done. So Rob, from your CFO perspective, what are the biggest financial risks of having a disconnected sales and marketing function? And how can businesses ensure that both teams work towards the same revenue goals?

Rob Nicholls (02:18.926)
I think this is an age-old problem. We've had this problem for 20, 30 years. used to be that sales and product operations used to be fighting it out. Now it seems like we have a problem in that people have become siloed between marketing, sales and finance, less so product now. But we have this ongoing battle, if you will, and that doesn't lead to the outcomes that we want in a business. you know, For me as the CFO and for the CEO, we're looking at revenue growth.

It's all about growth and that's the game we're in. And if we're not aligned between finance, sales, marketing and the overall operation around value creation, which starts with sales, we're not gonna win. So this is not a new problem. I think a lot of the issue we've had really stemmed from the individuals we had in these roles for a number of years.

Sales were already about always about owning the customer and the customer journey and converting those opportunities that came in. Marketing have always hopefully owned the story, the narrative, the engagement with the client, the brand. Brand became a big part of it as well. But the people in those roles and those roles have developed to such an extent now that they're almost antagonistic. And I think I don't think it'll ever resolve itself firmly.

But what we have to do and what I've seen with businesses that are successful, it's when you bring a third party into that. It's generally not going to be the managing director or the CEO. So it generally becomes the finance team or the finance individual, head of finance, finance controller or the, or the FD or CFO. And that's when it tends to work best. And that's the organizations that I've always seen is when you've got a group, whether it be a regional or a product specific group.

And I used to align all of my heads of finance around products or teams and that they are the arbiter, effectively the referee between sales, operations and the head of marketing, if you will, for each of those teams. So I think that's the first thing. You've got to have someone that basically enables the team effectively, marketing, sales and finance, to work well. You'll never get it working well if it's just marketing against sales.

Rob Nicholls (04:36.91)
I've just never seen it work really well there. The other thing that we've had introduced over the last three years, and I don't think it's fulfilled its promise that we thought it was going to offer, was RevOps. Basically taking the backend functions of each of those operations, sales and marketing, and putting them together in a new operationally focused and taking some of the elements from finance. That really hasn't...

caught fire. think there's a lot of people out there doing it, saying they're doing it, but effectively they're not. RevOps clearly was an idea that hasn't captured the imagination and businesses aren't really going in on RevOps. It's a good idea that you centralize it and do an effective shared service. It's not come to fruit and I wouldn't encourage businesses to go that direction right now.

I think the, the triumvirate, you will, with sales, marketing and finance is the right way to go. And it comes down to the ownership of the data and the information and how it's shared amongst each, each group. know, Sales really need to be focused on conversions and marketing really need to be focused on lead attribution, creating demand and building the brand. And I think if the teams stick to those areas,

the sales totally focus on conversion. For me as the finance person, all I'm really worried about is converting those sales. If I can take conversion rates from 30 to 40 % to 50 or 60%, that's a material impact that we can put in play that really marketing hasn't paid their part in other than bringing the lead, nurturing the lead and putting them in front of a sales team to convert. And really in a B2B world,

You know, those functions are really, really shortened, if you will, at the time scale too.

Paul Mills (06:37.031)
Yeah, no, I really like what you said there about the CFO owning that revenue alignment and really working in a triumvirate with sales and marketing. And I think having that independent protagonist between sales and marketing often can add a lot of value. I think also in the organizations I've worked in and clients I've worked for, it's the sales and marketing alignment, it's just not an operational challenge. It's a business imperative and it's something can actually, if you get it right, it can be a driver of

competitive advantage. But so many companies do struggle, like you said, getting that alignment. And I think if those two teams, if they're misaligned, forecasting becomes inaccurate, revenue predictability declines, and ultimately business valuation will suffer if you're coming to look to sell the business. If you can't predict what your revenue is going to be, if you don't have that predictable model,

a buyer is going to pay less money for you, so valuation suffers. And I think you're right. think just to pick up on in terms of the KPIs, sales and marketing really should share the same KPIs. know, customer journey insights should be centralized and very few organizations have that central repository of those customer insights. So when your sales team are speaking to clients or customers,

they should be capturing data that, you know, that data should go into the CRM, but very rarely is it put into the CRM. Is it really put into the CRM accurately? And very rarely is it shared with the marketing team to refine the ICP or get insights where they can refine campaign and messaging. So that there really does need to be that repository of data sharing.

Rob Nicholls (08:28.507)
Yeah, I mean, the CRM is a wonderful solution for the organization, but you're absolutely right. I've come across organizations, I worked with one organization where the CRM data was basically so jealously held by the marketing team that the sales function didn't have access. They literally didn't have access. In fact, the finance person didn't have access to the CRM data. So that was a critical mistake.

that had to be resolved. And Alignment is so key here as well. I think one thing we haven't really talked about is the incentive. If you align incentives for sales, perhaps around conversions and for marketing around other KPIs, but it has to be driven by revenue. I think incentives are, tax policy is a big creator for opportunities within business. And the same way that if you incentivize people with the right

the right opportunities, whether that's financial rewards or whether it's titles or promotions or professional development, whatever it may be. think incentives are really important here. I sales, basically, they've always been incentivized. I really do believe that marketing should be incentivized to hit the KPIs that the organization has created.

I'm a big believer in incentivizing marketing. I don't think you should just be salaried. I think you should have bonuses, whether that's monthly or quarterly. I don't believe really in financial incentives that are on an annual basis because you just have to wait too long for them. There has to be like a quarterly target, whether that's inbound opportunities, whether that's whatever the KPI is.

you need to align them. can't just be sales having a bonus based on converting an opportunity that a marketing person or group or team has nurtured and worked with for months. So I think alignment of incentives is really important too.

Paul Mills (10:33.939)
I think you hit the nail on the head there. And I think one of the, in every organization I've been in, lot of the tension between sales and marketing comes from the fact that the sales team, those individuals, they get a massive bonus. If they hit their sales target, they get a big bonus and the marketing team, they might get a company bonus like all the other employees do, but not to the same degree as what the salespeople do. there's quite a lot of animosity there between the two. And I'd like to come back to this topic a little bit later on this episode, Rob.

You mentioned a moment ago rev ops and you sort of suggested there that it's probably not a good way to go. But there will be some companies that have chosen to embed rev ops, whether it's a rev ops person or spending a lot of time and effort combining sales and marketing.

and it may or may not be working. I just want to get under the skin of that a little bit, Rob, if you don't mind.

Obviously, RevOps is there. Some businesses will be looking at it. The theory of it is great, where you can get sales and marketing working really closely together, optimizing revenue where you have a single framework, operational framework to improve efficiency, enhance the customer experience and increase predictability. But it is a difficult thing to do. So Rob, I just want to get under the bonnet of this in terms of, from what you've observed and seen on RevOps,

Rob Nicholls (11:42.606)
Hmm.

Paul Mills (12:05.749)
What really, where does it go wrong if RevOps is done badly?

Rob Nicholls (12:11.726)
I think when RevOps has worked is with medium to larger size corporates, where there is the scope, the functional scope and the number of people and instances, that's where it can work well. And we're talking sort of 150, 200 person businesses, perhaps turning over six, eight digit revenue numbers. That's where it seems to work well. Where I don't find it works well is where you basically pull together people that may have been

a finance analyst, maybe someone who'd been a sales coordinator, someone who'd been a marketing coordinator, and put them into one team and basically try to get them to own the operation, whether that's the CRM system, the HubSpot, whether it's this CMS, and basically they get behind the scenes. That doesn't seem to work very well. I don't know if it's leadership. Oftentimes RevOps,

will still report into either a marketing head or a sales head because it's not generally large enough to report directly into a managing director, even a CFO, perhaps. So I think perhaps it's a leadership issue where it doesn't work right, because you're right. The idea is a sound one in that you centralize back office, you make sure that all the operations that support the sales and client journey are working in alignment.

It just doesn't seem to work very well with those smaller organizations of less than sort of hundred, hundred and fifty persons. And I think it's probably a leadership issue. Now, whether it's the individuals that's been chosen to head up that function are not the right ones, I can't imagine it's the same issue in every organization. Whether it's just going to take more time to mature, if you will. I don't know what the answer is to it, but it just isn't working yet.

Paul Mills (14:07.731)
Yeah, I think where I've seen it go badly wrong, that's probably a little bit over dramatic really, where it's been struggling is certainly those larger organisations, you have multiple functions and those multiple functions, they will have their own performance metrics that aren't tied to the unified revenue target. So,

what you get, again, you get more silos. You've got the HR department with completely different metrics that have no resemblance or have no link at all to that revenue. I think really when it should work, if marketing is measured by sales accepted leads and revenue impact, that's probably a good place to start. But a lot of marketing teams, as we know, they use the vanity metrics, which

they again, they very tenuously link to revenue, if at all really. And really sales should be accountable for conversion rates and deal quality, not just volume. And I think that's where a lot of companies get it wrong. They rely on sales volume, but you know, look at how good.

are the deals coming through? What sort of conversion rates are you getting? That's really where the sales team should be rewarded, not just on the number of deals they get across the line necessarily.

Rob Nicholls (15:32.984)
think that's a good point around the KPIs and the metrics because you're right that sales have their own metrics and KPIs and marketing as well. And I think if you dilute those metrics and focus on metrics that don't underscore the business objectives at the company or organization level, you're right. You're just going to have a misalignment of incentives. So it's leaderships, it's metrics and how do they support the overall mission vision.

of the organization as a whole. You're right.

Paul Mills (16:04.039)
Yeah. And I think another metric that can be shared across the organization is customer success generally. And if the organization, if you can retain and increase the lifetime value of your customers, of your clients, the business as a whole succeeds and that's a responsibility that everyone in the business can and should own. Very few businesses do. One of my clients, I was working with them this week and

When I asked them about, you know, what is, do you have any numbers on customer lifetime value? They just looked at me blank. And it's like, if you're not measuring that, that's not a good place to start. So we're trying to re sort of engineer how they look at their metrics and really what metrics are more important and how we can track them accurately and what they mean commercially.

Rob Nicholls (16:57.326)
That's a really good point. As an investor, I'm a big investor in healthcare and health tech, if you will. And they've got retention rates sort of north of 90%. And in some instances in the US, you'll get retention rates close to 95%, 96%, 97%. It's the same with hotel occupancy. I was at a hotel recently, they had 50 % occupancy. And I just couldn't understand why they weren't using pricing to drive the occupancy up to 70 or 80%.

Maybe it suited them for the time of the year, that's understandable. I think you're right, those lifetime values, those retention rates, really critical metrics that for some organizations, they're just not tracking.

Paul Mills (17:41.179)
Yeah. And I think as well in these organizations where you've got CMO operating, CRO, the CFO, head of sales, what's there's quite a few protagonists there that are all, they have a role to play in revenue generation and revenue accountability, but that, you know, it's a like too many cooks and not enough chefs or vice versa. One of the things that I've seen work particularly well, I don't know if you've seen the same Rob, is the organizations that do this

really well. They have what I call a revenue council where you've got the CRO, the CFO, the CMO and a few others that come together in a collaborative meeting.

And they look forensically, analytically at revenue, what's driving revenue, what's not driving revenue, looking at customer lifetime value, looking at customer acquisition costs, sharing insights between sales marketing, and also revenue insights from the CFO across the team as well. Is that something you've seen or you would encourage?

Rob Nicholls (18:48.12)
So it is something I encourage. It's something for one of my clients. sit on a effectively it's a sub board where we've got the sales and marketing lead, myself and the CEO. And it's really about ownership of the pipeline where we're basically tracking every lead, who owns it, what the likely conversion, the probability of conversion is, when that's going to convert as well. And we're looking at that.

not on a weekly basis, but that is certainly something we look at on a monthly basis. And it goes into the long term forecast. We run a nine month rolling forecast. So we're already tracking where January of next year is looking, which builds on where were we January of this year. It's a rolling forecast and the ownership of that. It's absolutely critical that the finance need. And to be honest, in most of the organizations that I work in,

We don't have both a sales and sales head or a marketing head and a CEO or managing director. Most of them have two out of three or three out of four of those heads. Most of the organizations I work in don't generally have a marketing lead, a sales lead and a finance head as well. It's kind of two out of those three. A lot of the businesses I run

are less than 50 million pound turnover businesses. But it's really about ownership. It's looking at this on a frequent basis. It's not necessarily every week, but clearly at month end, we'll look at it the week before. We'll look at it during the week, the final week of the month. We'll look at it clearly very closely on a quarterly basis as well, because for me, you we have good months, you have bad months, but it's the quarter that counts.

Are we making the quarter? Because for us now, a lot of my businesses are in the fourth quarter. So it's looking ahead now is what is the first quarter of 2025-26 looking like? Who owns it? When is the likely opportunity going to drop? What do we need to get that opportunity in the month? So, you know, we got a lead that's saying, well, it might be May. I want it in May. I want to bring it in May. What do we need to do to bring it in May?

Rob Nicholls (21:07.626)
Is it a lunch? Is it a visit? Is it a freebie? Is it an incentive? What do we need to bring that in? And I've got another, I've got a startup that I work with that's been forecasting a sale was going to convert from August of last year and here we are in March. They still haven't converted it. So that clearly was not an opportunity that was going to convert in the quarter. We might not even convert it in the next year. So it shouldn't have been

as a sort of a 50 % likelihood of converting, it should have been a 10%. And those are the ones that are long term need to be nurtured and focused on the longer term. Maybe pricing is right. Maybe the product is right. But it's ownership of that process and sharing the data that works. When it works, it works really well. And I used to be part of a very large organization. had a very, very well honed process.

that basically I as the finance controller in that business. I knew with pretty much certainty when we were gonna make the month and the quarter because I'd already got it in my back pocket. I knew those sales were going to convert and I had a 90 or 95 % conviction it was gonna convert. And a lot of it comes down to not knowing your customer, not knowing what's important to the customer, what the calendar is for that customer. Do they have the budget?

A lot of businesses are struggling right now because they're selling into markets that are hamstrung through budget constraints, whether that's government, education, academic. A lot of budgets are kind of on hold at the moment. And so those sales are just slipping. cycles are taking longer and the sales are slipping from the first quarter to the second quarter. And then what do we need to get it over the line in the third quarter?

Paul Mills (23:04.307)
That's interesting. I think you mentioned in that piece there the importance of data sharing, creating some sort of feedback loop. And I want to explore this concept of a feedback loop now, where you can use sales insights to refine marketing strategies for growth. We both know that sales teams, they have the direct line to customers. They're the ones at the coalface talking to clients, talking to customers, getting insights.

They will hear firsthand what customers care about, what objections they have, and what resonates the most in terms of messaging. So when marketing can tap into those insights, campaigns can become more effective, lead quality improves, sales cycles hopefully should shorten. But too often this valuable information isn't shared effectively between teams. So Rob, I want to touch on this earlier on in this episode.

From your experience, what are the financial benefits of having a well-structured feedback loop between sales, marketing, and finance? And how can businesses ensure that those insights are being used to refine and optimize marketing strategies?

Rob Nicholls (24:16.589)
I think if you step back a little bit, I think a lot of the customer journey from what I used to call order to cash, getting cash in the bank from the initial order opportunity comes down to two things. And I think it's two things that are often missing from an awful lot of businesses and an awful lot of customer journeys. And part of it is because the sales organization or the marketing organization, in some cases the finance organization,

don't understand the importance of, and it's through experience, knowledge, working in different regions, different countries, different businesses, different products or services, whether it's professional service or manufacturing or widget or whatever it may be. And those two things are the relationship and trust. And I think those are two things that both the marketing and the sales organization really, really need to focus on.

And that trust thing comes through brand. comes through the customer experience. comes through the customer life cycle, if you will, that I think the marketing team or function really need to own. And the relationship side really does come down to the importance of the sales team, earning the trust of the client over time, retaining that client, making sure they really, really understand the pain points and the

problems that that customer is looking to solve with your product or service. So it's relatively simple. It's easy to say, but I think we lose sight of it so frequently and someone like myself who's a little bit more remote from the day to day, the customer journey or the conversion cycle. I look at this in a pine from sort of a 30,000 foot view with the CEO that I really need to ensure that my marketing team

really are building trust over time. that's brand that's getting out there, understanding where the market is going, doing real research as to where the product and the service and the market and the client and the customer journey is. And it also comes down to having a sales team that is totally focused on building relationships over time and really understanding people. know, when someone is unhappy in their role that you're selling into,

Rob Nicholls (26:42.71)
and understanding and perhaps helping that person, leveraging that opportunity, understanding where people have come from, what's important to them, what issues they're dealing with both internally and externally, and building that relationship. I constantly see this in every business I go to where marketing aren't building trust and sales aren't building a relationship. And if those two things aren't working, finance and the organization will not be collecting revenue.

And we won't be generating cash. And we won't be shortening the cycle. one of the big things I focus on is shortening the cycle from order to cash. it's taking a journey that might have taken six months and trying to get it down to 60 days. I want the opportunity engaged.

into the funnel effectively or the flywheel, converted, invoice, product delivered, service delivered, invoice generated and cash in the bank in the shortest possible cycle. So if marketing and sales can work together to shorten that cycle from six to nine months in the funnel to 30 to 60 to 90 days maximum, you're going to generate a whole lot of good feeling from the finance person and the CEO.

and the board and investors. And I think one of the problems we've struggled with over the last year or two is sales cycles are expanding. They're going from 60 to 90 days, from 90 days to 180 days. And that's a real problem. You've got to compress the sales cycle, which means you need to focus on building trust in the brand and the product and the service, and on the relationship side, making sure that you can convert quickly.

removing roadblocks, removing issues that stop the client from converting, from signing, from sending the order in.

Paul Mills (28:44.089)
I think you're right. There's so many things I totally echo everything you've said there. I think certainly the marketing team is often guilty of focusing on top of the funnel lead generation.

And they focus so intently on that they don't always know what truly converts into revenue. And again, it's that trust and that working relationship. If they work really well with the sales team, they'll know how that top of the funnel converts into a prospect becoming a sales qualified lead. They're moving through the funnel to a customer or client. And I think really that

structured feedback loop is so important to have because if the tail is wagging the dog or the dog is wagging the tail, it just doesn't work. And I think if the sales and marketing work together, you can refine messaging based on real customer objections. If sales are holding on to those insights, if they don't tell marketing, our customer said this the other day, that's not a very good thing, is it? Well, actually, if we know what these objections are, we can refine the messaging or we could

can refine the value proposition or we can innovate the product or the service to mitigate those objections. But if you're keeping them in Chinese walls, if not sharing that information, then at the end of the day, the company is going to suffer, revenue is going to drop, customers will switch. It's as simple as that.

Rob Nicholls (30:08.545)
Yeah, and think the thing we talked about there is I think the timeline is really, really critical. You know, if I'm the CFO or the CEO of an organization and I want the audit in this month, it needs to be in this month, not next month, not May, not August. And you'll generate a whole lot of credibility within an organization. If you can bring that client in, when you say you're going to bring it in, you remove the roadblocks to the opportunity of the client actually

putting the order in place and you'll generate a whole lot of kudos with me, the finance leader, because I'll get the cash into the business much, much quicker. I can't be waiting months for it. You know, I've got to wait maybe 15, 30, maybe 60 days in some instances, depending on our trade terms. But if you can bring that order in, the other thing is if you can bring it in early in the month as well, I'm much happier as a finance leader if you bring me an order the first week of the month.

the Thursday of the final week of the month or the quarter. And I've had organizations and salespeople that literally will sandbag until the end of the week or the end of the month. And they know if they've made their quarter or their quota or their KPI, that they'll sandbag till the next quarter. not if I've got, if I've looked under the tent and seen that, you you've got that order in hand.

We need to drop it into the funnel now. So you'll get a lot more credibility in the organization if you keep your promises through the relationship, through the trust you built and get that sale into the funnel on time.

Paul Mills (31:49.235)
Good stuff. That's probably a good point to close this show. If you've been listening or watching this episode, I hope you found value from the discussion. In the next and final episode of this season, Rob and I will be discussing how marketing improves valuation multiples at exit. So stay tuned for that one. Rob, thank you again for giving up your time to share your perspective. So I've really enjoyed the show. We could probably talk about sales and marketing alignment all day long, but I you've got to get onto the golf course. So enjoy the golf later and I look forward to the next episode.

Rob Nicholls (32:19.33)
Thanks, Paul. Cheers.


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Paul Mills

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Rob Nicholls

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