Integrating Marketing & Sales in the Building Industry

Timothy M. Smith, Srinath Gopalakrishna, Rabikar Chatterjee.

Abstract

The effective integration of various elements of the marketing communications mix is an important challenge for practitioners and academics alike. Corporations spend millions of dollars communicating with their customers and prospects; yet there is little definitive knowledge on practical issues such as the right mix of communications to employ, the appropriate levels of expenditure on those elements, and the timing of subsequent communications.

While marketers intuitively embrace the integrated marketing communications (IMC) perspective, research in this area is scarce. Corporations seek to improve the efficiency of their overall communications system – beginning with lead generation, progressing to completed personal sales visits, and culminating in a potential sale. However, limited sales force capacity, particularly in the high season, can result in significant delays in the in-home visit. As a consequence, potential sales opportunities are lost because the prospect’s interest level has declined in the intervening time period. Under these circumstances, developing an effective communications program focusing on the allocation and timing of lead-generating communications effort along with a sales force plan to cover the in-home sales visits poses a significant challenge.

We address questions of media effectiveness, communications budgeting and allocation, and sales call timing by analyzing customer-level data on lead generation and the rest of the sales process. The data cover 36,000 prospects from two major metropolitan markets over two years. To this end, we develop a multistage model that is estimated and validated on this dataset.

Stage 1: Lead Generation. Marketing communication elements such as direct mail, radio/newspaper advertising, and trade shows generate leads in the form of phone calls from potential customers to the company’s call center.


Stage 2: Appointment Conversion. Of course, not all leads are converted to sales appointments. Attrition (non-conversion) occurs because the customer may not be ready to schedule an in-house sales visit, the time lag between the call date and the earliest sales appointment date is unacceptable to the customer, or the customer cancels a sales visit after it has been scheduled.


Stage 3: Sales Conversion (Closure). Similar to the dynamics in Stage 2, sales appointments have a probability of conversion to orders that decreases as the time lag between the initial customer contact (sales lead) and the scheduled sales visit increases. Thus, sales conversion is modeled such that timing of the sales call, the lead generating communication source, and salesperson characteristics affect the probability of conversion of the appointment into a sale.

Finally, the size of the order given that an order is placed, is specified based on the anticipated volume of the order (ascertained at the time the lead was generated) and salesperson characteristics.

. A Three-stage Response Model of Integrated Marketing Communications with Dynamic Effects: Investigations at the Marketing-Sales Interface.

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We combine the results from the three stages into an optimization model: the MDv1.

Timothy M. Smith, Srinath Gopalakrishna, Rabikar Chatterjee. With Sergio Molina.
This tool aims to illustrate the directional associations between media spending, the impact of this spending on the sales organization, and the subsequent impact on closure rates and contribution (stages 1, 2 and 3 above).

Note: This tool can be played directly online (but changes can only be saved in your or you can save it in your own computer.