Balancing marketing and sales investments in your small business.

The fastest way to grow your business is to add more sales people right? It makes perfect sense. So 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.

Professional Sales People or Customer Service?

You might find that a successful marketing program allows you to grow without hiring a lot of traditional salespeople. When your product or service addresses a clear market need and your offerings are clearly defined, knowledgable customer service staff can turn leads into quotes and orders. Companies offering more complex or commodity products and services will need professional sales support, but routine orders should still be handled by lower cost customer service staff.

Are You Ready To Invest in Professional Salespeople?

Before you invest If you’re planning on adding a sales professional, ask yourself these questions;

• Do we have a clear understanding of our market and how our products and services address an established market need?
• Have we standardized products, services and prices so that proposals can be generated quickly and consistently?
• Have we connected with our target market to create a steady supply of prospects to engage?
• Are there known opportunities to close new accounts or expand existing accounts with a focused sales effort?
• Do we have the customer service and support systems in place to prevent a sales person from getting bogged down in non-sales activities?
• Are we prepared to set clear sales goals and create a compensation plan to reward the desired outcome?

If you can’t answer all of these questions with confidence, you are probably not ready to add sales staff. Investments in marketing and other areas will likely yield better returns. Here are a couple of real world examples of what happens when sales people are added without effective marketing support.

Example 1 – Without marketing support, sales people are ineffective

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 began to retire, their limited network of contacts also 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 struggled to articulate a value proposition. They wasted much of their time developing one-off “brochures”, proposals and other sales support materials. They didn't do much actual selling. 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 - Sales compensation drives behavior.

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 initially 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 lack of new accounts and the salesperson's overall compensation.

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, salaried inside sales engineer. Sales costs are lower, but the company remains locked in a long-term revenue rut, largely due to ineffective marketing.

Venture 7 Advisors was built from the ground up to help business owners grow and successfully exit their companies. We think like business owners because we are business owners. We offer practical business advice on our website and here on LinkedIn. We encourage business owners to Contact us for a free brainstorming session. No sales pitch, just business ideas and support from experienced owners like you.