Is Your Tech Business Marketing or Sales Driven?

Software and hardware businesses are often segmented by the vertical or horizontal market they’re targeting, their technology platform, small vs. large companies, and so on. However, one of the more important ways to segment tech businesses isn’t often discussed. That is by tech business marketing and sales. Is the company sales-driven or marketing-driven in its customer acquisition strategies?

A balanced approach to tech business marketing & sales

Some reading this article may ask “Why wouldn’t you take a balanced approach”? Indeed, I don’t mean to suggest that either sales or marketing should be absent in the customer acquisition efforts of tech companies. A few scenarios could be drawn up to support a singular sales or marketing exclusive approach, but certainly very few. There are also some situations where the customer acquisition circumstances are “in-between” in price, complexity, market size, etc. In these cases, you DO end up with a fairly balanced approach between marketing and sales. But in my experience, either the sales or marketing function will rise to the lead, more often than not.

Key criteria in choosing customer acquisition techniques

Several considerations often drive whether the marketing or sales function will dominate:

Product Complexity

This often decides whether or not a product can truly be driven to purchase by marketing. Or whether significant sales rep intervention will be required to close a deal. It should be noted that even when product complexity is high, marketing support in sales tools (examples: case studies, road map presentations by product management) will still be quite important in the sales cycle. But this will still generally be a sale driven by the sales force, with marketing in a supporting role.

Product Price/ Typical Sale Size

The lower the product price and typical sales size, the more likely you’ll be able to acquire customers exclusively through marketing. Or at least in conjunction with inside sales primarily “taking orders”. Conversely, products that cost a lot may require the extra interaction provided by an outside sales force. Deal size also often justifies the cost of the sales force.

Market Size

Large markets, with many customers, are more easily reached cost-effectively using marketing. A tight market with small numbers of total prospects (think nuclear power plants) will usually be served almost exclusively by an outside sales force, with minimal marketing intervention.

Use of Channels

Companies selling heavily through channels often need reps to call on the channel partners. However, far fewer channel reps are required than if the sales reps are dedicated to direct selling. Channels also require the software or hardware vendor to create demand via marketing. Generally the heavier the use of third-party channels in the customer acquisition approach, the more heavily the sales/marketing mix will lean toward marketing.

Marketing-driven tech company keys to success

• Adequate marketing funds – If you’re going to be marketing-driven in your customer acquisition approach, you better dedicate enough money to fund marketing. Demand creation programs require superior performance. To do otherwise will cripple your business.
• An objective, marketing data-driven culture – The beauty of a marketing-driven approach is that it can remove much subjectivity from optimizing customer acquisition activities. Especially in this era of highly measurable online marketing, decisions should be made on what the data says. Decisions shouldn’t be made at the whims of the CEO or some other senior executive.
• Excellent inside sales in support of marketing – This is needed except for very simple, low-cost products. Those products where marketing can truly drive the sale all the way to completion. Today that often means a software download, SaaS signup, or physical product order. It’s still important to have an efficient (but low-cost) inside sales operation supporting your marketing machine.

Sales-driven tech company keys to success

• Great salespeople – Hiring good people is so very important in every area. But when you’re relying on an expensive outside sales force to drive revenue, you better hire the best reps you can afford and attract.
• Success-driven comp plan – If your success depends upon them, make sure your sales reps become really happy only when the company is also happy with their results.
• Good marketing support in the form of lead generation programs and sales tools – Unless you have a tiny market with obvious, easily identifiable prospects, it’s still very important to have a good marketing function. One which generates leads and supplies winning sales tools.

The best marketing vs. sales approach isn’t always chosen

Unfortunately, logic and situational analysis don’t always win out when software and hardware companies design a customer acquisition strategy. Usually, when a company grows to be large, its approach is in line with what’s best for the business. Of course, your chances of growing to be a big company are reduced if you make serious errors in sales and marketing strategy! But in any event, by the time a company is big, they usually utilize both sales and marketing effectively and in the proper balance.

Startups and early-stage companies are another matter entirely. Often the emphasis on either sales or marketing is based on the experience of the founders and senior executives. If they’ve been successful in the past and their new company has a similar focus, maybe it’s fine and their approach works well again. But a problem occurs (often!) when these executives start up a very different type of company than what they’ve had success with previously. It’s human nature to fall back on your “common business sense”. That is the rules and tendencies that are formed by your unique, personal background and past experiences. This is when you can end up with a misalignment between what a company needs and the approach taken with the sales & marketing mix.

Don’t let tech business marketing & sales develop without a strategy

Even worse still is when the customer acquisition approach develops more or less haphazardly. This can happen when the founders of a company don’t have much functional experience in sales or marketing. This occurs with some frequency in software and hardware companies. Technical folks create many startups. In these cases, there may be a fairly unsophisticated approach to sales and marketing. Then whatever function has even a bit of early success ends up dominating. For example, hire a sales rep who makes a few sales. So the model becomes to hire a lot more reps and turn them loose, without much (or any) support on the marketing side. A direct email campaign or online advertising generates early sales, so money is poured into that method. And so on. Unfortunately, these may not be the best strategic approaches for the business in the long run.

That’s my take on tech business marketing vs. sales-driven orientations. What’s yours? Post a comment with your opinions/stories about what drives customer acquisition in high-tech companies.

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