SBHD: Old-fashioned selling skills look to be challenging the multimillion pound marketing budget as the leading resource in capturing customers.
A friend of mine, who knows a thing or two about salesmanship, lamented the other day that Cordiant was not actually spelt Cordeant. That way, it would have been an anagram of “don’t care”.
Relax. This is not another “Saatchi doesn’t matter” diatribe. I am told you have all heard enough of that. What my friend meant – and the theme I would like to develop here – is that the top-heavy marketing department (and budget) is in decline, in favour of a renaissance of the sales resource.
I say he meant that, because that is not what he actually said. He said that there was a re-balancing of marketing effort in the telecoms industry to meet market demand more appropriately, of which more in a moment. But there are parallels to be drawn from this emergent industry to our more established FMCG disciplines, and some evidence that a relationship shift between the sales and marketing functions could and should be under way.
Take the cola wars. The Big Two had a fairly complacent original response to the entry of own-brand products (apart from Coca-Cola’s partly successful objection to Sainsbury’s original can livery). But Coke and Pepsi have now been forced to take rather more seriously the threat to cola market share that Toronto’s Cott Corporation has generated through Sainsbury’s and then through Richard Branson’s Virgin.
Cott’s sales strategy, in the UK at least, has been exemplary. The result has been that the combined UK market share of Coke and Pepsi has fallen from 88 per cent to 82 per cent in the half-year to January, with own-label products taking 12 per cent. Coke’s share of the entire UK market has, for the first time since records began, fallen below control level, from 55 per cent to 42 per cent.
Sainsbury’s, I need hardly tell you, has an intimate sales relationship with its customer base. Its power to influence, nay manipulate, customer preference has long proved more potent than anything it does above the line. Virgin, meanwhile, has apparently identified more than 40,000 independent retail outlets to distribute Virgin Cola, expanding from a relatively narrow distributive base of Tesco, Thresher and Iceland.
What is Coke’s response to this formidable tightly-focused, sales-led onslaught? It plans to double its network television advertising and sponsorship budget to £40m. It has always worked before, argues Coke, so it’s back to consumer brand marketing in a heavy way.
It might work. I would only suggest that, if there is a fundamental trend redeveloping the sales function, then the established colas may be facing a fresher challenge than those the strategy has fought off before. In this context, it is worth remembering that the decision by Mars to review some $350m-worth of global advertising business isn’t only about relationships with Bates, Saatchi and Don’t Care. The fact that Mars is launching new sizes of its classic central product might serve as anecdotal evidence of the re-emergence of sales within marketing.
If this is happening in FMCG, what of the sunrise, cutting-edge service industries? What happens when you make a mental quantum leap from fizzy-pop and choccie bars to the modern emerging markets? Enter my friend from telecoms, with a history book.
Cast your mind back to the days when the late Mr Grayson and his friend Cholmondeley-Warner were but a potentially lucrative twinkle in the eye of Howell Henry Chaldecott Lury. When customers wanted phone systems, they had a list of one – British Telecom – from which to choose. It was selling what the telecoms industry calls POTS (Plain Old Telephone Systems), with no competition, negligible marketing and little service.
After privatisation came marketing. BT, deploying mass market FMCG experts from the United States, brought us Buzby (a bird) and Beattie (Maureen Lipman). After vast advertising budgets had been thus invested, a realisation dawned that this is not America and it was not selling FMCG.
Then competition and the information superhighway arrived and it became increasingly clear that growth in telecoms would be in the selling of services rather than products. Furthermore, as with any emergent technology, what came to be known as PANS (Pretty Amazing New Stuff) is expensive. The public might buy POTS, but it was big business that was going to demand PANS. And POTS and PANS demand a very different marketing approach.
In this context, it is fruitful to compare the current marketing strategies of the majors. BT has followed Buzby and Beattie with Bobby, telling us that it is good to talk. In short, it has stayed resolutely above the line with expensive advertising.
By contrast, Mercury’s new chief executive, Duncan Lewis, has developed the business market, because that is where the market is for PANS and, presumably, where the margins are also to be found.
Necessity is, of course, the mother of strategic invention. Mercury’s withdrawl from the mass market owes as much to BT’s post-monopolistic strength as it does to any initiative on Mercury’s part. Nevertheless, Mercury has decided to play to its own strengths, rather than BT’s, and is structuring itself according.
To accommodate this strategy, Lewis has apparently developed a flatter management structure to match his markets, with the marketing function working alongside the salesforce. The salesforce, because of its relationship with customers, drives the marketing strategy.
There is nothing radically new in this. It has been called relationship marketing in the past and, more prosaically, there are those who would say it is simply Being A Good Salesman (BAGS, I suppose).
But it should be worth noting that, in industries as diverse as cola and telecoms, the radical innovators are those that are assimilating the sales function directly with the previously rarefied beings of the marketing department. In this respect, note that Lewis’s last job was as MD of Cable & Wireless Business Networks, the part of C&W that specialises in offering telecoms solutions (their word) to multinational businesses. As such, he is likely to be in the vanguard of sales and marketing technique.
There is also a fighting chance that, if the sales function is in the ascendant again in everything from fmcg to service industries such as telecoms, then its status within marketing, and its consequent quality, will improve. Those who have bought portable pensions over the past few years, among others, would appreciate that.
Meanwhile, for those where the marketing buck stops, it is simply a question of letting the salesforce be with you, rather than against you.
George Pitcher is joint managing director of media consultancy Luther Pendragon.