Relative to Sales and Marketing, two paths will need to work in tandem to achieve the company’s sales goals in a timely fashion, a Marketing plan and a Sales plan.  The marketing plan is all about branding the company and their products as well as positively impacting demand generation.

Very often the marketing plan will be financially short funded in favor of additional funding for the sales effort.  Rarely does this work though as any money saved in reduced marketing spending only comes back as an additional expense in the cost of sales category as the sales force is endeavoring to push their way into sales.  It is much more cost effective if the company can get their customers to request their products and services verses the salesperson having to force their way into sales. This is often understood as “Sales Pull” verses “Sales Push”.

Push and Pull Strategies defined:

Marketing theory distinguishes between two main kinds of promotional strategy – “push” and “pull. A “push” promotional strategy makes use of a company’s sales force and trade promotion activities to create consumer demand for a product. A “pull” selling strategy is one that requires high spending on advertising.

There are a number of sales models that a company can engage to leverage a sales pull or push strategy. They include the following:

• Direct
  • Inside and outside sales on company payroll.
  • Web
  • Indirect
    • The company engages a third party to conduct their sales activity.
      • Dealer
      • Distributor
      • VAR (Value Added Reseller)
      • Hybrid
        • This is a model that enjoys the best of both worlds. For certain portions of their business they engage a direct model and for certain portions of their business they engage an indirect model.

Sales models in most early stage organizations primarily favor a indirect reseller type model over a company direct sale. With a direct sales model the company benefits by having a sales force that is financially and emotionally tied to the company’s success. The cost of a direct sales force can be up there when you consider the cost of fielding a direct sales force with salary, commission and benefits. This cost can easily fall north of $100k for each salesperson annually can be a large burden on an undercapitalized organization.  Not counted in this $100k is T&E which can quickly add an additional $50k to this number.

Over time as sales increase it will become easier for the company  get their arms around controlling the cost of sales but therein lies the direct sales challenge; getting any sales momentum at all with just one or two salesmen  and no market presence or ongoing demand generation to speak of in a timely manner is highly unlikely.

The opposite of a direct sales effort is an indirect model, often characterized as a third party sales model. Drivers that support this model include the following.

• Reseller already has a trust and business relationship established with your end customer.
• Reseller already has a trained sales force.
• Reseller already has a service and support model in place.
• Reseller is in a better position to more quickly and efficiently introduce your product to the end customer.
• The Reseller will absorb most all the T&E sales expense.

The risks involved in working with a reseller model include the following.

• Cost of sale may be higher as the reseller’s margin requirements than what you might pay a direct employee.
• The reseller is not emotionally invested in your product and is not willing to take on unnecessary personal or reseller company risk to resolve a customer issue.
• Reseller sales training on your particular product is challenging in the best of times.

The benefits and risks of a reseller model notwithstanding, over time it is normal for organizations to develop hybrid sales models to bring their products to market.  The hybrid usually consists of a direct effort as well as a reseller effort running in tandem. The image below gives you a sense for how this might work.

Future discussions will be in alternative sales modeling and related sales and marketing execution. Executing on a sales and marketing plan should not be viewed as a singular event such with a sales call to one entity or another or as the creation of a fresh web site. Rather it should be seen more like a battle plan where all the aforementioned items roll out together pointed to a common company objective.

-End of Part Two-

The purpose of this writing is to foster an introductory sales and marketing discussion. Starting a sales and marketing structure is similar to building a house; there are many parts that need to come together in an orderly fashion for the house to become something useable and lasting. First and foremost however the house needs to be built on a solid foundation.   My apologies in advance if some of my commentary comes across as simple and obvious. This discussion is intended to bring us all to a common understanding and frame at a high level the sales and marketing challenges that face the new company as well as foster a discussion that will eventually lead one to an executable plan.

Given the early stage nature of a business start-up, relative to the sales and marketing area, there are a number of business challenges that the new company will need to overcome to begin to generate sustainable sales momentum.  One of the foundational challenges the company will need to spend some quality time on is in the value proposition area. Fielding any sort of sales effort without first validating if there is pent up demand for your product and clearly articulating a value proposition will be a very expensive and highly risky proposition.

Only after validated confirmation that there is indeed pent up demand for your product and that further you have a highly competitive offering should you begin on a sales and marketing effort.

Opening questions:

1. Who is my customer?
2. What is the problem my product is designed to resolve?
3. Does my product resolve the problem better than what is currently available to the customer?
   1. If so, how so?
   2. Is there any data that supports this assertion?
   3. What makes my product indispensable?

These are critical questions that need clarity in the affirmative area to begin working on the value proposition.

What Does Value Proposition Mean?
A business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.

Value Proposition Explained

Companies use this statement to target customers who will benefit most from using the company’s products, and this helps maintain an economic moat. The ideal value proposition is concise and appeals to the customer’s strongest decision-making drivers. Companies pay a high price when customers lose sight of the company’s value proposition.

After the value proposition for the product/solution is defined and articulated, the next step is building the company around it to market and satisfy what will hopefully be rich customer demand. In this instance I am only addressing the sales and marketing end as the business operations will need to follow a different path.

-End of Part One-