Sales and marketing are keys to any business plan as they help introduce the business to new markets and customers. Some startups, however, benefit more from either a sales- or marketing-driven mindset – and that really depends on the type of business.
Sales Vs Marketing
It’s best first to define the difference between sales and marketing. An organization that is sales driven hires either inside or outside sales people. Some companies even hire sales people on a commission-basis, meaning that the person only gets paid when the company makes a sale.
With a sales-driven organization, the sales person is responsible for going out and drumming up new business. This involves finding potential clients via their personal/professional connections or cold-calling, setting up appointments and making the sale. A good sales person will generally have a lot of connections within their industry. Basically, the growth of the startup depends on the sales person’s skill and associations.
Unlike sales, marketing is a bit more impersonal. It’s an ad or piece of content distributed to an audience via TV, radio, billboards, events, word of mouth, social media, etc. While social media still requires some personal connection, no one person is necessary to reach a potential customer. Marketing involves researching the target audience, doing competitor studies and pulling together messaging that best fits the audiences’ wants, needs and pain points.
Marketing still requires that a company hire a good team, but that team is interchangeable. If a particular marketing person or department is not working, companies can hire a different team, generally without risk. That’s quite different to firing a sales person that has 20 years of connections.
Should a Company Invest in Sales or Marketing?
The answer to that question really depends on whether the startup is focused on B2B or B2C. For the most part, B2B companies are sales driven and B2C marketing driven. According to a recent Forbes article, B2B companies tend to benefit more from a sales-driven approach because: “(i) they are usually dealing with a much smaller base of customers, more easily reachable by a sales team; (ii) corporate customers are typically relationship driven, and want the comfort of working with a salesperson that best understands their needs; and (iii) the average transaction size can get very large, often into the millions, which needs the comfort provided from a face to face meeting to close a sale (e.g., the trust factor).” Examples of these types of companies include car parts, technology, business service, etc.
B2C companies on the other hand are dealing with much larger audiences – oftentimes in the millions. A sales force could not personally reach out to this many people. Media, however, allows companies to access these much larger audiences. While marketing budgets need to be watched closely, marketing can be very effective for introducing a startup’s product or service to the wider world whether it’s via PR, social media, TV or print news.
Whether a startup invests in sales or marketing or a combination of both, return on investment (ROI) must be carefully watched. If a sales person or a particular marketing campaign isn’t doing the job or is costing more than anticipated, it may be time to switch sales people or tactics.