Sales versus marketing: Which is the better strategy for startups?

Benjamin-Chong-startup-funding

Right Click Capital partner Benjamin Chong.

Sales and marketing efforts determine the success or failure of any startup.

Regardless of how innovative a product is, if a founder is unable to gain traction and build a customer base, the outlook for the business isn’t great. But how does a founder decide if a startup should be sales or marketing-driven?

The first step is to understand the difference.

Sales is largely driven by one-to-one interactions between the company’s salespeople and their prospective clients.

It may involve outside sales where salespeople physically prospective customers in the field. It may involve inside sales where prospective customers are contacted over the phone, email or video conference.

The success of this strategy is dependent on the right salespeople with great contacts. The most effective salespeople thrive on the thrill of closing the deal, incentivised to do so through commissions and targets.

Marketing, on the other hand, casts a wider net to attract customers.

While sales is considered a push mechanic, marketing will pull in customers through a campaign approach. This may involve direct email marketing, advertising or media buying, PR, viral campaigns and a raft of other options.

The skilled marketer will have experience in a sector and be adept at crafting messages to strike a chord with their audiences and pull them in.

Although the net may be wider, great marketing teams know their prospective customer intimately.

They know their demographics, what their interests are, and whether they can be found on the internet, on a busy road using billboards or reading the newspaper.

They may also use campaigns such as ‘friend get friend’ to grow their customer base to reduce the cost per acquisition over time.

Most startups are sales-led in the very early days. These earliest customers are the hardest to acquire and take the most convincing.

Once a business is more established, and demonstrating signs of traction and product-market fit, decisions will need to be made around the business adopting a sales- or marketing-driven approach.

Many B2B businesses, particularly those with enterprise clients, have adopted a sales-driven customer acquisition strategy.

Success stories such as Palantir, Qualtrics and DocuSign prove that sales is a viable strategy in the digital age, especially for those startups with a smaller base of customers where larger contracts are at stake.

Large enterprise agreements with contracts worth millions of dollars are usually sealed with a face-to-face meeting (or Zoom in the current climate).

These larger-scale corporate clients remain relationship-driven, seeking comfort in real interaction.

Additionally, where a product is complex and requires explanation, a sales strategy is also likely to be more effective.

The drawback of being sales-driven is often a longer sales cycle, as this blows out due to initial meetings, the average trial period for the product or time to proof of concept, and the final stage of issuing a contract.

For many startups, achieving scale quickly can be challenging if it is a sales-driven business with a B2C product. They generally require the viral coefficient of brand marketing, public relations and content marketing to achieve rapid growth.

For this reason, B2C startups are often marketing-driven, as this is the most efficient way to get in front of thousands of prospective customers.

It is cost-prohibitive to call thousands of customers, however, less so to gain exposure to millions of unique monthly visitors on Facebook and thousands of people that drive by a certain billboard each month.

And, of course, accessing partner brands’ subscriber lists gives businesses a shortcut to likeminded customers.

If a marketer does not know how to reach their customer, the budget can quickly blow out, so the key for startups is to test a number of channels with small budgets to determine the most cost-effective.

Founders must be able to attribute results to specific marketing efforts so testing should be done in a methodological way.

For many startups, growth marketing will provide a framework to test and learn.

Often businesses will thrive with both sales and marketing strategies. Indeed, it would be rare that a business puts all its eggs in one basket.

Some businesses will choose marketing for one type of customer, and sales for another customer group.

Food delivery service Menulog and software provider Dropbox are two such examples.

Menulog has historically targeted restaurants using sales techniques but has used marketing to acquire customers.

Dropbox has adopted a similar strategy for enterprise customers and consumers.

Being a founder requires optimism, and a belief that customers will love the product.

But founders will also require a dose of realism as customers do not always will beat a path to their door to make the purchase, and this may cause them to underestimate the cost of acquiring customers.

Irrespective of the channels a startup chooses, the founder will need to have robust metrics to determine whether a channel is effective, enabling them to pivot when necessary to change course.

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LCo
LCo
25 days ago

This article made my head hurt. “Marketing” and “sales” are not an either / or strategy – you’ve got to have both. The author clearly doesn’t understand what marketing OR sales is – sales is literally “taking a dollar”. Marketing is everything that leads up to taking a dollar.

The idea that “sales” isn’t a relevant strategy for ANY company is akin to saying “making money isn’t right for some companies!”. Like, literaly WTF?