Tomicide Solutions, January 2012
By Tom "Bald Dog" Varjan
Sales or marketing. Even the experts disagree, so whatever we say doesn't make much difference. But maybe a bit. A tiny bit.
Some experts say, in order to increase your sales you have to sell harder. Personally I believe, you have to market better and differently from how you marketed before.
Here we discuss five good reasons why you may choose better marketing over harder selling.
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Lunatic despot, Kim Jong-il ruled North Korea for 17 years, and many North Korean thought he was some kind of superman. Although it puzzles me that this superman was unable the defy death. Hm.
The legends of his amazing achievements are endless.
For instance, the moment he was born, a bright star lit up the evening sky accompanied by a double rainbow and winter suddenly changed to spring.
Legend also has it that the very first time he picked up a golf club, he shot a 30 under par, for which the North Korean media declared him the greatest golfer ever to walk the earth.
To all this add heroic feats like writing six operas within two short years, inventing a very specific sandwich and never needing to use the toilet. We can really say, he was more of a Superman than Christopher Reeve ever had been.
But in spite of having a superhuman leader, the country has always been a hotbed of raging poverty with constant famine and diseases.
So, how come that such a superman wasn't able to pull the country out of its misery?
Interestingly, the same is happening in many IT companies. They have excellent sales engines, and make all the revenue in the world, but by the time they pay their overheads, they are skinned, having only pennies in their piggy banks.
Just look at companies like Sun Microsystems where only a mere 2.9% of gross revenue per employee becomes bottom line profit per employee. At Dell it's 4.1%. At Hewlett Packard it's 7.0%.
What they have in common is that all three have powerful and super-aggressive sales forces.
But what can you achieve with an aggressive sales force but without marketing?
Imagine a Formula 1 racing team...
The team manager decides to cut costs, so, instead of getting a powerful engine for his car and recruiting a kick-arse mechanic crew, he hires a small army of unskilled labourers at minimum wage.
And when the race starts, a bunch of those minimum wage grunts start pushing the otherwise gleaming and glitzy race car around the track lap after painstaking lap.
Our team manager knows his team can win if only all the other cars drop out due to accident or engine failure, but his goal is not to win races but to keep his operation dirt cheap.And far too many IT companies operate this way. They have hefty sales goals, aggressive sales forces and... no marketing. Or in the best case, they have some institutional image marketing to "raise brand awareness".
Peter Drucker wrote sometimes in the last millennium...
"Foreign managers take marketing seriously. In most American companies marketing still means no more than systematic selling. Foreigners today have absorbed more fully the true meaning of marketing: Showing what is value of the customer."
Sadly, years later the situation hasn't improved significantly. IT companies are still hell-bent on selling more, using more testosterone and brute force.
Yes, selling has its place, but it is just a natural climax of a good marketing process. It's basically the moment when the goose actually lays the egg. Before that, the egg is growing inside the goose. You can't see it, but you know that you'd better take excellent care of the goose, otherwise the goose, thus the eggs will suffer.
So, here are some reasons why you should focus on creating sexy marketing that attracts and compels, instead of chasing after the market using more feet on the streets and more fingers on more telephone dialling pads.
So, let's see why it makes sense to invest in your marketing, instead of jumping the queue and trying to sell right away.
1. Selling provides instant gratification, but it doesn't last. In order to sell more, you have to hire more salespeople, and send them out to beat the pavement for new business. More people, more headache and higher overhead. And the bigger your sales force is, the lower its sales per person.
Marketing takes some time to gain momentum, but then you have it, you have created a natural gravity, so people will seek you out in a competitive vacuum.
Apple or Harley Davidson didn't become what they have become by employing armies of salespeople to bring in new business. They have created marketing gravity, so people seek them out for business. And in case you say you don't have the kind of money Apple does, let's remember that Apple started in Steve Jobs' parents' garage.
The interesting thing is that many business owners regard themselves as the proverbial gurus in their industries, come down from the mountains and start chasing disciples in the hope of converting them to the new gospel.
It is your marketing that establishes you as the guru, and attracts people, so they come to listen to you and do business with you. You can't chase people and beat them into buying your stuff. You can but, people will curse your name and lynch you at the first available opportunity.
2. Sales are about catching you a fish. Your business is always in the mercy of your sales people who can come and go at their hearts contents and depending on the offers they receive from your competitors. Rest assured, if they are good, your competitors are hunting for them.
You slip once, and they are out, quite likely to take some of the clients and customers with them. And this is not even slander. They have one-to-one relationships with those people, so it is understandable that people follow them. And there is not a sausage you can do about it.
Marketing is about teaching you how to fish and making the fish come to you. It is about helping you to build large ponds with full fish hungry for your bait. It is about helping you to build a large fishing machine which reels in all the fish that is ready for further action.
The difference between having a sales force and a marketing system is the same as the difference between linear income and recurring residual income. With the sales approach, every time a sale is made, you have to pay a pretty penny to your sales people.
With marketing you pay only once for a system, but then you get paid over and over again for what the system brings to your table. I am yet to meet a smart business owner who would forego the recurring residual income for the sake of one-time linear income.
Here is one more snag you are facing with putting your faith into salespeople. Every decent salesperson demands a base payment above and beyond her commission. With straight commissions you end up with a bunch of mercenaries who can take you to the cleaners before you can say Jemima Puddleduck.
Why? Not because they are bad people, but because they don't care about your business' success. They come when the cream is rising and there is good money to make, and go when shit hits the fan. The average annual salesperson turnover in companies is 43%.
In IT this number is 71%. Imagine, one year from now 71% of your salespeople work for some of your fiercest competitors, prospecting to the same market they prospect to today on your company's behalf. And as I said earlier, they often take some of your clients and customers with them. After all, they've acquired them, so they have the right to move them around.
In contrast, you can hire a good marketing person only once to help you to put together a marketing programme - to position, package and promote your stuff - then your system takes over. You will have to tweak it here and there, but it becomes almost automatic.
Don't get me wrong. Depending on your industry, you still need a sales force. But if you expect 5,000 lbs of commission-based warm meat with pulse beat to perform miracles for you without proper marketing, then you are more naive than you need to be.
3. Your sales people are influenced by mood swings. They are dictated by rejections, phase of the moon and personal issues, and they will create a hell of a swing in their performance (I truly believe it - after seeing it over and over again - that underperformance is caused by personal and family issues, not by being or not being professionally competent), thus in your revenue.
Your marketing system, however, is immune to any mood swings and anything else. It does the job for you regardless of external circumstances. It doesn't go on strike, doesn't demand pay increase, doesn't fall ill, doesn't suffer from a broken heart or broken leg and doesn't need vacation.
4. Your salespeople can never establish your brand. Without a brand you are dead in the long-term. Yes, you can make some quick bucks, but you will never become a recognised expert in your field. Either way, people will talk about your business. It is up to you to manage this message as well as possible.
If you think long-term, you can build a lasting brand, and become an industry leader. But if you think of just some short-term money grabbing, then you are a third-rate punk, thus not worth doing business with you anyway. So, the rest of the industry would do a huge favour to your target market by pushing you out of business and wipe you off the face of the planet once and for all.
The business world is already chronically overrun with unethical greedy bastards. Arthur Andersen was caught, but there are plenty more out there.
5. Sales people can reach only a very limited number of prospects. There are only so many people your sales people can meet in a specific time frame. The only way to see more prospects is by hiring more sales people.
However, with more salespeople you have more hungry mouths to feed, more mood swings to accommodate. Remember, the idea is not what you make but what you actually keep. With good marketing you can reach millions of people with a lot less money.
Now, I have nothing against sales as a business function. But what I find plain, staggeringly, bottom-achingly stupid is that, when business owners want to increase their profits, many of them hire legions of salespeople and send them out on peddling sprees and cold-calling grunt work.
These salespeople go out to drum up new business, trying to sell something nobody knows and nobody has ever heard about because the stupid retarded, ignorant business owner decided to skimp on marketing in order to save the marketing budget and lift it out of the business, then spend it on another fancy car or exotic vacation.
In the meantime the business is struggling but our greedy myopic business owner ignores it and enjoys his (yes, in most cases it's a guy) personal wealth. How sad, how tragic.
For instance, what would you have said if someone had turned up at your doorstep uninvited in 1985, offering you Internet services? Would you have paid? Probably not. You probably didn't even know what the hell the Internet was.
I bet you would have kicked him out. Of course. Someone unknown interrupts your life and tries to make you part with your money in exchange for a preposterous budgie-brained idea which bears a staggering resemblance to a well-disguised technology scam.
So, before you hire a salesperson on commission, ask some of your friends what words come into their minds when they think of a salesperson, sales and selling. You will hear words like, spineless, slimy, greedy, unethical, pushy, aggressive, etc.
Is this the brand you want to build: "XYZ Widgets Inc, a bunch of spineless, slimy, greedy, unethical, pushy, aggressive con artists".
Instead, create a good marketing programme, so potential clients can seek you out in a vacuum. You will attract the right clients by what your firm becomes through the perception that your marketing creates.
Either your believe this now or the world will make you believe it after you have wasted all your money, exhausted all your energy and accumulated a nice little stomach ulcer while chasing people trying to sell to them.
Do yourself and favour, stop the selling madness right now and start marketing and make them come to you. Both your piggy bank and sanity will thank you for that.
So, why is strategic marketing more important for your long-term success than tactical selling?
As the market has become more sceptical and cynical of selling and salespeople, marketing has had to tone down.
In his book, The Ultimate Sales Machine, sales wizard Chet Holmes reports that...
And this is why your company gets stronger in the market by flexing its marketing muscles instead of merely selling harder.
By beefing up your selling, you can make a few more sales.
But with better marketing your company...
With better marketing, you get more sales at higher margins. Yes, it's probably cheaper to hire some aggressive peddlers, but in the long run that sales aggressiveness alienates your market and you're in trouble.
So, now at the beginning of the year, think about how you want to do to reach and exceed your sales projection. Selling harder or marketing smarter.
What do you think?
Come and let's discuss this newsletter issue on my blog...
Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.
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