As a company grows, from a startup to becoming a leading player, you need to constantly balance sales and marketing. The theory below is typical of a B2B operations while companies selling business-to-consumer (B2C) products will definately need to have proportionally more marketing at all stages.
This chart shows the notional percentage of your marketing budget which is spent on “marketing”, as distinct from “sales”. The horizontal scale is months from launch. Here’s how it could happen…
1. Before launch: Marketing=100%, sales=0%. There’s nothing to sell but you want to let the world know that something is happening and collect curious turned interests of early adopters. This has been one of the most successful approach followed by companies like apple and
2. Launch -1 month: Marketing= 50%, sales=50%. You need to create the awareness among the potential users as well as the people within your distribution networks. The standard advice is for the sales team to conduct distributor gathering events design to please, convince and impress the people who would distributing and selling your products. Marketing should continue with building the hype and excitement among the targeted asn well as the general populations. In developing Asia where word-of-mouth and social acceptance remain to be the important drive of buying intention, the stories behind the hype and excitement could result in massive interest and trials when the product hits the market.
3.Launch: Marketing=50%, sales=50%. Next comes launch. The sales team is still doing the distributing and selling, but the company will need to begin to introduce a proper integrated marketing communications to build a strong personality for the product within the early on created excitement. boosting of the marketing spend here is the common best practice. You would like to boost sales too. But sales people do not want to work for newly launched/unproven brands, because the pay (incentive) and job security are both bad and they have to waste time learning how to sell an unknown product, so you will find it very difficult to hire anyone good.
4. Launch +6 months: Marketing=80%, sales=20%. If launch is successful, the business needs to scale rapidly and the easiest way to do so is by improving its marketing. Marketers are quickly dealing with the “low hanging fruit” and turning a prototype business into a real business. Meanwhile, the sales people will finally get the boost of morale with the early success and are getting up to speed.
5.Launch + 12 months: Marketing=50%, sales=50%. The salespeople are earning their keep and there is balance. There should be less problem in motivating the salespeople.
6. Launch + 18 months: Marketing=30%, sales=70%. If the business continues to grow, the easiest way to support this is by hiring more qualified salespeople to widen your distribution, to quickly identify local needs and maintain a solid stock-cover-days. At this point hiring sales and getting them up to speed should be relatively easy because they are the types who learn best from their colleagues. They can shadow their more senior colleagues, so once you have a successful sales team, it’s easy to grow it. In contrast, marketing is brain-intensive work to automate existing sales processes and improve collateral – difficult to do well, and harder to do consistently.
The point of this article is that there is no ideal balance between sales and marketing in a growing business. The numbers fluctuate wildly and any fixed percentage split is likely to become wrong. You need to continuously review the balance between these related functions, according to the company’s needs and core competences. For companies with core competences in research and development, you will want to translate that unique ability into the perception of top notch/breakthrough prooducts as the benefits being offer to the consumers. As history dictates South East Asian companies are still a long way from reaching that level of believable competence yet. Except, if we are talking about products which are uniquely produced and positioned to cater to the specific taste of locals. This is why Western companies have always find it hardest to break into Asian food industries.
The guideline above depends very much of course on the objective at hand. To elimate weaker players companies with deep pockets can begin with building their already strong brands and later offer deep discounts when price oriented players tried to stay in the market. For companies thinking of going in and harvesting quickly sales focus may be the best approach. On the staffing side looking at short term targets, it always seemed better to hire an additional sales person than an additional marketer, because the salesperson had a more predictable short term benefit.