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.

Here’s why:

  1. 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)
  2. Salespeople hate to prospect and do the upfront work to drive demand. (salespeople want to sell not drive demand).
  3. 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.
  • Listen.
  • Engage.
  • Track results.
  • How much (qualified) pipeline does your company need to generate on a monthly basis? Most start up’s don’t know this.

This is a guest post from Spiceworks Director of Business Development Kenny Madden (@KennyMadden1973) and originally appeared on the Spiceworks Community.

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About Michael Brenner

Michael Brenner is the Vice President of Global Marketing for SAP where he leads content strategy and serves as the managing editor of the company’s award-winning Business Innovation thought leadership blog site. He is also the author of B2B Marketing Insider, a contributor to Forbes and a frequent speaker at industry events covering topics such as marketing strategy, social business, content marketing, digital marketing, social media and personal branding.  Follow Michael on Twitter (@BrennerMichael)LinkedInFacebook and Google+ and Subscribe to B2B Marketing Insider by Email

5 Comments

  1. Peter Johnston said…

    You’ve shot yourself in the foot, Michael, with such an ill advised guest post.

    This is a marketing person’s view of sales. It isn’t rooted in reality. Go and spend a few days with some of your top sales guys – you’ll find out how much they really do in the early parts of the sale. They don’t just cold call any more you know. Take a look at IBM’s Listening for Leads for an example of what enterprise sales teams really do.

    A useful new book might help – eselling by Sean McPheat.

    • Michael Brenner said…

      Hi Peter, Thanks for offering your point of view. Kenny is actually a sales guy but maybe he is thinking like a marketer, I won’t speak for him but this is actually a good proof point for his “smarketing” argument. Also note, that he addresses his perspective to technology start-ups and many others who may confuse adding sales people with adding, well, sales.

      I will say that I agree with his larger perspective that sales and marketing are blurring and that we need each other now more than ever. I think sales people are doing more marketing than ever as marketing people are driving more and more top-line sales with web ecommerce. I think there is a difference at each and every company between the acts of marketing and selling and who is actually doing the marketing and selling.

      Also, I think the ideas Kenny suggest for consideration are simple and hard to argue with. Now I love IBM’s “listening for leads” program concept and consider that also a great example of “smarketing,” “sales 2.0″ or whatever you want to call it. So maybe it’s just a question of semantics.

      Best,
      Michael

  2. kenny said…

    Peter,

    Thanks for such a passionate response.

    The IBM listening for leads is a perfect example of “SMarketing”.

    I agree sales and marketing are the same thing. Marketers need to become better sales folks and sales folks need to become better marketers.

    A combination of marketing, sales development and quota carrying sales reps is critical. My argument is more against the ill conceived idea of adding sales people = more sales. This is not true and defies logic.

    Also my post is also biased towards start up’s and high growth companies that drive the majority of revenue from net new business.

    Thanks again, your thoughts are appreciated.

    Respectfully,

    Kenny

  3. Jeff Simmons said…

    I couldn’t agree more Kenny.

    I just saw a small technology firm make that very same mistake of “let’s double our sales by doubling the sales team.”

    Guess what? It didn’t work.

    In some industries, you simply can’t rely on outbound sales to generate all the new business any more. You’ve got to have a good inbound program or else the sales guys will starve to death.

    For the old school business owners, it’s a major change in thinking. invest in Inbound Marketing first, Sales second.

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