One of the major problems at technology start up’s today is the lack of understanding of how much sales and marketing principles have changed. “If I need to double revenue growth, I need to double my sales force to drive it” or “I need to generate 1,000 leads to generate one sale. Therefore 2,000 leads will generate two sales.”
This doesn’t make sense and management teams are confusing correlation and causality. A vendor who believes in this may as well claim, “Christmas trees cause Christmas.”
The majority of technology start up management teams are still under the influence of the 1980’s and 1990’s mind set. Sales and marketing has changed so much it’s amazing.
The problem today: Not generating enough qualified pipeline and sales to hit and exceed estimated revenue targets.
Here are the two major root assumptions executives, founders and VC firms have that causes the majority of the problem:
I need to double my revenue, therefore I need to double my sales team.
Salespeople can find new business on their own.
No they won’t. They may find some but not enough to feed themselves.
- Salespeople are terrible at prospecting. (Sometimes it has takes 30 – 40 attempts to break into a company and qualify a brand new opp. Salespeople usually stop after 4 – 5 times)
- Salespeople hate to prospect and do the upfront work to drive demand. (salespeople want to sell not drive demand).
- Even if a salesperson does do some prospecting, as soon as they generate some pipeline, they become too busy to prospect. It’s not sustainable. (This is why ramp up times are so much longer than anticipated.)
Salespeople do not cause customer acquisition growth, they fulfill it.
It’s a huge shift in thinking. Of course, a company needs more salespeople if it’s getting bigger, but this is not the main cause of new customer growth.
Marketing, awareness, demand generation and engagement causes new customer acquisition and sales fulfills that demand generated by marketing.
There aren’t any quick fixes to this problem. However, there are ways to solve this. I have outlined (in brief) a few ideas below for you to consider. (These are especially important for companies with a high volume sales model.)
- Trial-and-error in awareness, demand generation (requires patience, experimentation, money) MUST be a true combination of sales and marketing team working together. I jokingly call this SMARKETING but it works.
- Use CRM religiously and track, track, track.
- Patience in building great word-of-mouth (the highest value lead generation source, but hardest to influence.
- Create a well supported sales development team with resources, This is by far the most predictable source of pipeline, but it takes time and focus. ( Ties in to point # 1.) BEST indicator of pipeline generation in the short term. We did this at a previous company and took the business from $1Million a quarter to $6 Million.
- PR & Social media outreach on a consistent basis.
- Find the right network.
- Target social networks that are relevant.
- Track results.
- How much (qualified) pipeline does your company need to generate on a monthly basis? Most start up’s don’t know this.