Should Sales and Marketing Share a Budget?
January 8, 2018
As we dive into 2018, with sales and marketing alignment continually emerging as a widespread business objective, there is a growing focus on sharing between the two departments: sharing knowledge, sharing resources, sharing credit.
But one of the key questions, from an operational standpoint, is whether sales and marketing should share a budget.
One of the more interesting insights to come out of research for the Power Couple eBook is that while many sales and marketing professionals recognize a need for better alignment, there doesn’t appear to be much desire for a shared budget. In fact, only 16 percent of respondents agreed that such a measure would improve collaboration.
This feels like a topic worth exploring, because it’s a crucial component of practical implementation. What are the downsides to a shared sales and marketing budget? What are the benefits that eight out of 10 pros might be overlooking?
How Does a Sales and Marketing Shared Budget Work?
On the surface, it makes sense for today’s businesses to adopt a joint budget for sales and marketing activities. In general, executives seem more interested in bottom-line revenue than strictly delineating its sources, so why not be more agnostic in divvying up their budgetary allocations?
Such a setup would enable more seamless planning between the two sides, preventing the sort of tug-of-war that occasionally ensues when disparate budgets square off. Theoretically, it’s easier to formulate a strategy that integrates both sales and marketing when you don’t need to worry about conflicting resource pools.
But the data tells us most sales reps and marketers aren’t interested in this approach. And based on our preliminary search for examples, it seems very few organizations are currently utilizing a shared budget for sales and marketing -- at least not openly.
The Problems with a Shared Sales and Marketing Budget
Why the resistance? What is it about the idea of a shared budget that seems to repel professionals and companies alike?
There are a few major roadblocks standing in the way, and they aren’t necessarily easy to overcome.
Both Departments Want Autonomy
Although sales and marketing professionals we polled overwhelmingly saw the benefit of sales and marketing collaboration, responses also made it clear that these individuals didn’t necessarily see departmental overlap as the best way to achieve it.
When asked which actions are most important to ensuring collaboration, these three all ranked near the bottom:
- Better marketing skills for the sales team
- Better sales skills for the marketing team
- Job swaps
This isn’t especially surprising. People get into their lines of work for a reason, and usually have skills conducive to those disciplines. Salespeople want to engage in sales; marketers want to engage in marketing. Suggesting a shared budget can lead to disconcerting thoughts of blurred lines and reduced autonomy.
Questions Over Control
It’s one thing to pose the idea of a shared budget for sales and marketing. But once you actually put it into action, someone needs to be in charge of managing it. If that authority falls into the hands of a CMO, for instance, it would only be natural for members the sales team to start wondering whether they’ll get the short end of the stick.
A potentially helpful development in this regard is the rise of the Chief Revenue Officer, which is a trend discussed in the State of Sales 2017 report. The proliferation of titles such as this reflect a growing emphasis on driving profits holistically, rather than stringently focusing on roles and attributions.
Fear of Cuts
When people think of consolidation, they often think of layoffs and budget reductions. So when the notion of a shared budget is presented, employees will invariably wonder if it’s an effort to cut down on overall spending or hiring for the two departments.
However, the truth is that effective integration can dramatically lower unnecessary expenses. Sales and marketing misalignment costs businesses $1 trillion per year. If this step proves helpful in fostering alignment, businesses can increase the total planned budget for sales and marketing, and still come away with higher revenues.
Implementing a Shared Budget
Many companies are seeing success with sales and marketing collaboration despite separate budgets. Conjoining them certainly is not a prerequisite. But it’s an option that business leaders are increasingly going to start considering within the coming year or two.
If you see this as a potentially helpful direction for your organization, but have reservations about getting buy-in, here are a few steps that could make it an easier pitch:
Build Trust. This is a long-term objective, and hopefully one you’re already focused on. But if you build a culture of respect and trust, and each person on the team feels valued for their specific roles, you can eliminate some of the autonomy concerns.
Focus on Advantages. How could a shared budget be used to add new tools and resources that will benefit both sales and marketing? How will it become easier to launch campaigns and projects involving each side? How would this change make everyone better at their jobs? Answering these questions will help get people on board.
Be Transparent. It’s always a good practice, and is especially valuable when discussing significant organizational changes like this. The more you can explain your rationale, and outline the particular ways a shared budget would function, the less confusion and anxiety you’ll encounter.
Ultimately, there are no right or wrong answers. This is a fairly new concept and there really aren’t enough companies doing it to give us much evidence of the impact. But what we do know is that many sales and marketing departments could stand to be more strategic in their alignment, and sharing a budget may help facilitate that. It’s a thought worth exploring as we move into the new year.
For more advice on improving sales and marketing collaboration from every angle, subscribe to the LinkedIn Marketing Solutions blog where we tackle the topic regularly.