SiriusDecisions has found that marketing and sales spending nearly doubles when B2B enterprises are introducing new concepts into a market vs. when they are operating in established markets.
We define “new concept” as a disruptive product or service where no budgetary line item exists within target organizations. New-concept marketing requires significant effort to uncover issues and find highly motivated prospects or early adopters of innovation. In established markets, a product or service is accepted by the majority of target organizations and typically is budgeted for, because its purpose and value is understood.
Our data indicates marketing spend increases from 6 percent of revenue for companies operating in an established market to 11 percent when they are evangelizing a new-concept offering. Similarly, sales spend as a percentage of revenue increases from 17 percent of revenue in an established market to 27 percent of revenue for new concepts. Total spend for sales and marketing increases from 23 percent of revenue in established markets to 38 percent for new concepts.
This finding demonstrates how expensive it is for organizations to bring a new product or solution to life. It also elucidates the need to leverage resources as efficiently as possible by tightly aligning marketing, product management, development and sales functions. Make sure you have a comprehensive and agreed-upon innovation and go-to-market process that defines the activities and key deliverables (as well as accountable roles) needed to create, launch and grow your offerings.
In addition, audit your product launch planning process and checklist (at least annually) to determine which components just aren’t working, and stop doing them. We also encourage business leaders to revisit the division of labor between product management and product marketing (as well as interlock with the rest of marketing) to ensure that their innovation and go-to-market engine is running as smoothly, and cost-effectively, as possible.