Grow your business with investments in sales or marketing?
You want to grow your business? That means it’s time to add more salespeople, right? It makes perfect sense. The more salespeople you have, the more sales you will have. Maybe not. One of the most common mistakes small and mid-sized companies make is adding sales capacity before they’re ready. Why doesn’t it work more often?
Marketing success drives sales success.
Companies often mistakenly assume that they can skip marketing investments and simply invest in more sales people. The results are often disappointing. The line between sales and marketing can be blurry, especially in small companies where founders and initial “business development” staff wear many hats.
The larger the company, the more important it is to develop separate specialties in marketing and sales. They are different disciplines, requiring different skills and working on different time frames. Marketing needs to focus on long-term engagement with a broad audience. Marketing positions the brand, tells stories, cultivates interest and turns that interest into leads for the sales team. Marketing develops the upper part of the sales funnel. Sales takes those leads, qualifies them, nurtures them, proposes solutions, negotiates and, closes deals.
In order for Marketing to do its job, it needs to maintain a steady stream of one-to-many communications (which could be a simple as blog posts or as complex as publishing a book or presenting at an industry conference). Marketing people watch the business horizon for new opportunities and changing trends in customer behavior. On the other hand, if your sales staff is working efficiently, they don’t have time to look too far over the horizon or to publish marketing communications. They’re too busy closing deals - as they should be!
Marketing is the key to getting off the sales roller coaster
Small companies that combine marketing and sales in the same person or small team typically find themselves with bursts of sales followed by slow periods. When business is slow the focus shifts to marketing. As leads are developed the focus shifts to closing near term deals at the expense of developing the next wave of leads. Breaking out of this pattern and scaling a business requires consistent marketing investment. Marketing is an ongoing process, not a discrete project to be idled when business is good.
Do you really need “Sales People”?
You might find that a successful marketing program allows you to grow without hiring a lot of salespeople. What you might really need are customer service people who know your products, can answer basic questions, generate quotes and enter orders. Customer service staff are generally much less expensive and easier to manage than professional salespeople.
If you’re planning on adding a sales professional, ask yourself these questions:
Do you have a steadily refreshing supply of prospects to engage?
Who are your new salespeople going to sell to? Do you have a long list of opportunities for them to pursue on day 1?
Have you standardized products, services and prices so that salespeople can produce proposals quickly and consistently?
If you can’t answer all of these questions with confidence, you are probably not ready to add sales staff. Focus on marketing investments until you are ready.
Example 1: Sales people need marketing to be effective
An IT firm specializing in software development was facing a long-term decline in sales. The founders had traditionally handled business development through their network of peer relationships in the region. As the partners aged and their limited network of contacts retired, the business began to decline. The "obvious" solution was to hire a professional sales staff to supplement the founder’s declining ability to leverage their network for business. The problem was that the company had never developed an effective marketing capability. They didn’t advertise, speak at conferences or even attend them with any regularity. The website was dated and ineffective. In short, the company was practically invisible to their target market.
Not surprisingly, the new sales team was ineffective. They wasted time cold calling companies with no need for their services and when they found a prospect, they spent much of their time developing one-off “brochures”, proposals and other sales support materials. As a result, the company contraction continued until it was about one third of it’s peak size. Instead of developing a marketing capability to meet the needs of a larger business, the business contracted to the level it’s marketing capability.
Example 2: No Leads and The Wrong Sales Compensation
A manufacturer of specialty valves wanted to grow sales so they hired a sales professional, but marketing was weak. To complicate matters, they compensated the salesperson based on a percentage of overall sales instead of targets based on new accounts. The salesperson tried to develop marketing materials to attract new prospects, but whenever she did, she was told to “go sell something”. The founders would say, “We hired you to sell, not write articles or press releases.”.
Without consistent new leads coming in, the salesperson ended up fielding inbound calls and taking orders, mostly from long-standing customers. As orders from legacy customers grew, the salesperson’s commission grew. After a few years, the founders were unhappy with the level of new business and the cost of paying the salesperson. They had, in effect, hired a great professional salesperson and put her in a customer service role. The salesperson was fired and replaced with a lower cost inside sales engineer. Sales costs are lower, but the company remains locked in a long-term revenue rut, largely due to ineffective marketing.