The more you move from consumers to enterprise clients, the more you’ll need a sales force able to manage complex sales. As a rule of thumb, a more expensive product, in B2B or Enterprise, will require an organizational structure around sales. An inexpensive product to be offered to consumers will leverage marketing.
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Beware, a good product doesn’t mean a successful company
As pointed out byPeter Levine, a general partner at the venture capital firm Andreessen Horowitz:
As a former software engineer and CEO, I used to hold the “engineer-centric” view that sales is not a critical function in an organization. I believed that product excellence and market fit obviated the need for a formal sales function: Build a great product, and customers will come.
That view was short-sighted, to say the least. The technology companies that are able to both build great products and integrate a strong sales function are the ones that succeed, whether consumer or enterprise — from Microsoft to Salesforce and yes, even Apple and Facebook. You may not hear about it, but all the world-class companies have a strong sales force.
This is critical to remember especially for founders that often have a technical background. As tech companies are gaining momentum, more and more often we see founders that are also engineers, developers or programmers. That technical background is critical as it allows them to develop applications that might improve 10x over competitors. Think of Brin and Page, Google’s founders. When they started to pitch their new search engine based on PageRank, they knew it was 10x better than any other search engine on the market.
However, it was when they started to think like businesspeople and stopped thinking as academics that the business took off. They understood the importance of distribution. And it is important to remark that even though Google initially was already used by millions of people, but very far from becoming the tech giant we know today.
In a story told by John Doerr, a venture capitalist and one of the first investors in Google, in his book “Measure What Matters.” When he met the young Larry Page, he knew that even though Google had entered the market pretty late (Google was the eighteenth search engine to enter the market), it was a product, 10x better than its competitors. Yet John Doerr’s future valuation of the company (the maximum growth it could achieve) was about a billion in market capitalization.
However, when he interviewed Page, that young entrepreneur surprised him by saying they would reach instead of a ten billion dollars revenue mark! Which according to Page made the company worth around a hundred billion dollars.
Several factors, comprising pure luck. But of course, an incredible execution is what mattered the most. When you have a company that is growing so fast the most challenging thing is to make sure it will not implode.
In short, putting together a sales process that works it means to keep well in mind the difference between marketing and sales.
At the same time, it is also critical to remind that sales are primarily about the bottom line, but it can also be used a propeller for a company’s brand. Google’s AOL deal is one of those cases.
Distribution can be a branding hack
You might think that Google was great at marketing itself, and in a way it was. Yet, what propelled its growth wasn’t just the marketing side, but rather the distribution side. Many associates sales and distribution as something purely connected to the bottom line.
While sales and distributions focus on the bottom line, they can also be leveraged to build up a strong brand. Think of when Google got the AOL deal, by taking it away from its main competitor at the time (Overture). Well, the distribution agreement with AOL, not only was a sales strategy that guaranteed an explosive growth.
It also represented a massive branding campaign. One that with marketing alone would have taken years to build. In other words, Google used an already established brand to grow its business, and it also worked as a propeller for its brand. As suggested by Google Ngram, by 2004 the term “Googled” had already become a cult!
Therefore, the primary role of sales and distribution should be to look at the bottom line. Yet, once that role is resolved, it can also be leveraged as a powerful branding tool.
You might think that for a consumer product company like Google, which offers a set of free tools to masses has been mainly driven by marketing. However, if we look at the business part of it, what brings revenues to the company is the advertising network where millions of small and medium businesses and enterprises spend their marketing budget. In this scenario, you can understand how sales and distribution become critical.
Some practical suggestions for your sales processes
Peter Levine, suggests a few practical ways to have a sales process within your company, as a CEO:
Have a weekly meeting with your sales VP where you review the pipeline and forecast, have the VP sales educate you on what he or she is doing, and ask questions
Ask what you can do to help your sales VP: Can I help with closing a deal, visiting a customer, or rallying the troops?
Spend time together! In fact, there’s no better way to build morale with your sales team than to do so with them and your customer
Hold your sales VP accountable by setting clear objectives with quantitative (not qualitative!) agreed-upon metrics; you should also know the quotas and productivity of each salesperson
Be sure to interview the first sales hires to ensure alignment with your head of sales as well as with organizational culture and values
Encourage engineers to spend time with sales, and sales to spend time with engineers; the more the two organizations interact solving real product and customer issues, the less foreign each will be to one another and the better your product will be
How much to spend on Marketing vs. Sales? It’s all about the product and the target customer
When it comes to marketing vs. sales, it is critical to start the assessment from your target customer. In general, we have three kinds of customers:
Consumer
Small and medium business
Enterprise
The idea is the more you move from consumers to enterprise clients, the more you’ll need a sales force able to manage complex sales. However, imagine the case you sell a simple product, which is worth $20, would it make sense to have a dedicated sales force? It might not. This would be too expensive and not scalable.
In other words, with a less expensive product that is targeting consumers, marketing will be a critical aspect. Where, instead of with an expensive product, which focuses more on small and medium businesses and enterprise clients, sales will become the most relevant aspect of your business.
Of course, this is a simplification. Yet it is a good starting point to understand and trace a line between marketing and sales. Take the case of a freemium business model. In that case, the investment in sales would be minimal if not none as you’ll be leveraging on free product features as marketing investment for the company.
While in a subscription business model that targets mainly enterprise clients, the sales force will solve a critical role.
Summary and conclusions
In this article, we’ve seen the main difference between sales and marketing. But also how sales and distribution can be used to hack the branding of an organization – where marketing would take years to build a strong brand.
A single distribution deal can generate revenues and visibility for the business. We’ve also seen how in some cases marketing might be easily confused with sales. Take the case of Google, where it has a free product targeting consumers. In that case, you might be fooled to think Google is all about branding.
Yet if we look at its beginning, Google’s main ability has been to create a powerful distributionstrategy by closing the right deals. That distributionstrategy turned into a branding hack, which turned the company into a cult, by 2004.
We’ve also seen how a few actions can have a large impact on a company’s future growth, by establishing some practical actions (like weekly sales meetings, accountability, and clear quotas).
A last critical aspect you can understand how to create the right sales and marketing mix by looking at two things, the kind of product you sell and what customers it targets. The more it will be an enterprise customer the more the sales processes will become important. The more we move toward an inexpensive product thought mainly for consumers, the more marketing will lead the game.
Enterprise Case Study: Zoom Complex Sales Organization
Zoom is a video communication platform, which mission is to “make video communications frictionless.” Leveraging on the viral growth from its freemium model, Zoom then uses its direct sales force to identify the opportunity and channel those in B2B and enterprise accounts.
While Zoom offers a free product available to anyone, it also has available packages which are enterprise. In this case, Zoom leverages a model that I defined freeterprise as it moves from a free product to a potential enterprise account, thanks to the ability of its salesforce.
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
Consumer Case Study: Apple’s Branding Power
In 2021, most of Apple’s sales (64%) came from indirect channels (comprising third-party cellular networks, wholesalers/retailers, and resellers). These channels are critical for sales amplification, scale, and subsidies (to enable the iPhone to be purchased by a larger number of people). While the direct channel represented 36% of the total revenues. Stores are critical for customer experience, to enable to provide the service business, and for branding at scale.
Apple has been among these companies that figured an effective distributionstrategy, that enables its products to be sold at scale.
Therefore, even if Apple’s products are usually sold at a premium price compared to other similar products.
Apple leverage a strong brand, and distribution capability without relying too much on a complex salesforce.
Although Apple does direct sales through its store. A lot of its distribution also happens via indirect channels, which enable a wider reach for its products.
Business development comprises a set of strategies and actions to grow a business via a mixture of sales, marketing, and distribution. While marketing usually relies on automation to reach a wider audience, and sales typically leverage a one-to-one approach. The business development’s role is that of generating distribution.
The more you move from consumers to enterprise clients, the more you’ll need a sales force able to manage complex sales. As a rule of thumb, a more expensive product, in B2B or Enterprise, will require an organizational structure around sales. An inexpensive product to be offered to consumers will leverage on marketing.
A sales cycle is the process that your company takes to sell your services and products. In simple words, it’s a series of steps that your sales reps need to go through with prospects that lead up to a closed sale.
RevOps – short for Revenue Operations – is a framework that aims to maximize the revenue potential of an organization. RevOps seeks to align these departments by giving them access to the same data and tools. With shared information, each then understands their role in the sales funnel and can work collaboratively to increase revenue.
In negotiation theory, BATNA stands for “Best Alternative To a Negotiated Agreement,” and it’s one of the key tenets of negotiation theory. Indeed, it describes the best course of action a party can take if negotiations fail to reach an agreement. This simple strategy can help improve the negotiation as each party is (in theory) willing to take the best course of action, as otherwise, an agreement won’t be reached.
In negotiation, WATNA stands for “worst alternative to a negotiated agreement,” representing one of several alternative options if a resolution cannot be reached. This is a useful technique to help understand what might be a negotiation outcome, that even if negative is still better than a WATNA, making the deal still feasible.
The ZOPA (zone of possible agreement) describes an area in which two negotiation parties may find common ground. Indeed, ZOPA is critical to explore the deals where the parties get a mutually beneficial outcome to prevent the risk of a win-lose, or lose-win scenario. And therefore get to the point of a win-win negotiation outcome.
Revenue modeling is a process of incorporating a sustainable financial model for revenue generation within a business model design. Revenue modeling can help to understand what options make more sense in creating a digital business from scratch; alternatively, it can help in analyzing existing digital businesses and reverse engineer them.
Customer experience maps are visual representations of every encounter a customer has with a brand. On a customer experience map, interactions called touchpoints visually denote each interaction that a business has with its consumers. Typically, these include every interaction from the first contact to marketing, branding, sales, and customer support.
AIDA stands for attention, interest, desire, and action. That is a model that is used in marketing to describe the potential journey a customer might go through before purchasing a product or service. The AIDA model helps organizations focus their efforts when optimizing their marketing activities based on the customers’ journeys.
Social selling is a process of developing trust, rapport, and a relationship with a prospect to enhance the sales cycle. It usually happens through tech platforms (like LinkedIn, Twitter, Facebook, and more), which enable salespeople to engage with potential prospects before closing the sale, thus becoming more effective.
The CHAMP methodology is an iteration of the BANT sales process for modern B2B applications. While budget, authority, need, and timing are important aspects of qualifying sales leads, the CHAMP methodology was developed after sales reps questioned the order in which the BANT process is followed.
The BANT process was conceived at IBM in the 1950s as a way to quickly identify prospects most likely to make a purchase. Despite its introduction around 70 years ago, the BANT process remains relevant today and was formally adopted into IBM’s Business Agility Solution Identification Guide.
The MEDDIC sales process was developed in 1996 by Dick Dunkel at software company Parametric Technology Corporation (PTC). The MEDDIC sales process is a framework used by B2B sales teams to foster predictable and efficient growth.
STP marketing simplifies the market segmentation process and is one of the most commonly used approaches in modern marketing. The core focus of STP marketing is commercial effectiveness. Marketers use the approach to select the most valuable segments from a target audience and develop a product positioning strategy and marketing mix for each.
The sales funnel is a model used in marketing to represent an ideal, potential journey that potential customers go through before becoming actual customers. As a representation, it is also often an approximation, that helps marketing and sales teams structure their processes at scale, thus building repeatable sales and marketing tactics to convert customers.
Venture capitalist, Dave McClure, coined the acronym AARRR which is a simplified model that enables to understand what metrics and channels to look at, at each stage for the users’ path toward becoming customers and referrers of a brand.
The general concept of Bootstrapping connects to “a self-starting process that is supposed to proceed without external input.” In business, Bootstrapping means financing the growth of the company from the available cash flows produced by a viable business model. Bootstrapping requires the mastery of the key customers driving growth.
The virtuous cycle is a positive loop or a set of positive loops that trigger a non-linear growth. Indeed, in the context of digital platforms, virtuous cycles – also defined as flywheel models – help companies capture more market shares by accelerating growth. The classic example is Amazon’s lower prices driving more consumers, driving more sellers, thus improving variety and convenience, thus accelerating growth.
Business storytelling is a critical part of developing a business model. Indeed, the way you frame the story of your organization will influence its brand in the long-term. That’s because your brand story is tied to your brand identity, and it enables people to identify with a company.
Enterprise sales describes the procurement of large contracts that tend to be characterized by multiple decision-makers, complicated implementation, higher risk levels, or longer sales cycles.
Outside sales occur when a salesperson meets with prospects or customers in the field. This sort of sales function is critical to acquire larger accounts, like enterprise customers, for which the acquisition process is usually longer, more complex and it requires the understanding of the target organization. Thus the outside sales will cut through the noise to acquire a large enterprise account for the organization.
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
Zero to One is a book by Peter Thiel. But it also represents a business mindset, more typical of tech, where building something wholly new is the default mode, rather than building something incrementally better. The core premise of Zero to One then is that it’s much more valuable to create a whole new market/product rather than starting from existing markets.
Palantir is a software company offering intelligence services from governments and institutions to large commercial organizations. The company’s two main platforms Gotham and Foundry, are integrated at enterprise-level. Its business model follows three phases: Acquire, Expand, and Scale. The company bears the pilot costs in the acquire and expand phases, and it runs at a loss. Where in the scale phase, the customers’ contribution margins become positive.
Consultative selling is a sales approach favoring relationship building and open dialogue to adequately meet the needs of a prospective customer. By building trust quickly a consultative selling approach can help the customer better meet her/his expectations and the salesperson hit her/his targets more effectively.
A unique selling proposition (USP) enables a business to differentiate itself from its competitors. Importantly, a USP enables a business to stand for something that they, in turn, become known among consumers. A strong and recognizable USP is crucial to operating successfully in competitive markets.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
2 thoughts on “Marketing vs. Sales: How to Use Sales Processes to Grow Your Business”
Garvit
Thankyou Sir for clarification between sales & marketing your Article is Awesome.
Thankyou Sir for clarification between sales & marketing your Article is Awesome.
Thank you Garvit!