What comes first, adding a sales person or having ready prospects and opportunities to pursue?
I once worked for a company where Sales held all the power – more than product development or finance and certainly more than marketing. I recall a discussion with a long-time senior executive about the amount of marketing investment required for the company to profitably grow. She commented that the company had a tried and true method of driving growth. “We don’t need to invest in marketing. For every sales person we add, then revenue will grow!”, she proudly exclaimed. This had indeed been true at one time in the company’s history, but along with that revenue growth came increased expenses and decreasing sales productivity. The company eventually went through an inevitable and painful exercise of downsizing a much too large sales force.
This was a fairly large organization, but the mentality of adding a sales person instead of funding marketing is much more common in small businesses. Why is this so? Perhaps it is because companies tend to continue doing what they have been doing. If it’s worked before, then why not keep doing it? Or maybe it’s a lack of understanding of what marketing is and how it supports the sales process.
When companies start out there is really no distinction between sales and marketing. Those doing sales (which most likely includes the founder) are also writing brochures, sending emails and helping to manage events. As the company gets more business, more sales people are added, and any marketing workload is spread amongst the team.
As companies get a little bigger it becomes much more difficult for sales people to spend quality time on marketing activities. There is a direct correlation between the time spent on developing and closing opportunities and the amount of time spent on developing messaging and demand generation activities. Sales people will naturally fill up their time focusing on closing immediate business.
When Sales runs out of opportunities, then they focus on demand generation activities. Imagine a sine wave going up and down – troughs and peaks of marketing and sales activity. While this can maintain a revenue stream, this is not a sustainable or effective way to grow revenue. Companies can get lulled into believing that if they add more sales people, then they can keep the revenue needle moving.
A business will plateau to the level of its marketing capability
Without focused marketing to build awareness, develop sales tools and generate business leads the revenue productivity of your sales people will likely decrease over time. It makes no sense to add a sales person (and all the associated cost) only to find out that your revenue per sales person has decreased. Its better to put those funds toward activities that generate plenty of leads and opportunities for a new sales person to pursue, while also building materials and focused messaging to make your current sales people more productive.
You hired your sales people to sell – free them up and enable them to do so and watch the positive impact on growth. You might even find that you need fewer sales people than you thought!
So, where to start?
Before you reactively throw money at the problem, its best to first assess your current readiness to invest in marketing. Here are a few areas to look at to get started: