Early Stage Startups: Sales vs. Marketing

It’s that this question of priorities exists that one can appreciate why so many startups fail.

For decades, economists have noted that only two things create value in business: innovation and marketing. Everything else is a cost of doing business.

Yet… we’re exploring here the notion that Sales is more important. You’ve been led to believe so.

Innovation and Marketing being paramount is evident in a company like Apple, where Marketing distinguished it from PCs. It’s evident in Marketing then figuring out how to make Smartphone cheaper, better, and faster through companies like Samsung and Google.

About 15 years ago, the internet took over everything and many realized that they could spend little to get leads and customers (AdWords, email, SEO, etc.).

This perveted what people think of as Marketing.

Marketing became what you did to sell a product.

Then it got worse.

Because it is easy to acquire customers (and it is), startup books and advisors started saying “it’s all about the customer!!” and while they’re not wrong, the economy evolved to perceive that what matters most is Sales. Moreover, that you pay for Sales (evident in our question of priorities).

It is all about the customer but as a startup you don’t actually have a customer, you haven’t even really created a customer for a new product or service, if you can’t sustain your business and compete in the market.

Selling a mattress to a customer does not mean that you’ve effectively established a new mattress company — let alone an innovation in mattresses.

The Job of Marketing is to Make Sales Superfluous

That’s how you need to prioritize marketing. Marketing is the work of knowing the market, competitors, pricing, what works and what doesn’t, what to prioritize so as to remain competitive.

If you don’t do that first, foremost, and with focus at the start and end of every day, how they hell do you know what to do??

I had a fantastic discussion, a couple years ago, offline, in which some Product Executives noted that 15+ years ago, Product was a division of Marketing (see: the 4P — or more-Ps of Marketing; thanks Russ Klein).

Your Product is the Result of the Market

When the internet dawned and engineers and developers took over the development of the products of today’s economy, and Marketing was relegated to doing affiliate marketing or email to promote those products, the VP of Product emerged; distinct from Marketing. Suddenly, Product was its own business unit.

Interestingly, that shift coincides with the same philosophies emerging in the startup ecosystem:

The Product Market Fit comes to mind… We HAVE a Product and need to fit it INTO the Market. The Problem Solution Statement is another concept that reinforces this shift — There is a Problem, we have a Solution.

Neither of those perspectives reinforce that the work of the Market is what determines the Solution the Market wants, nor that the Product developed as a reaction to the Market: not a square peg looking for a square hole.

Both ideas helped usher in the belief that a Product focus, validated by Sales and customers who affirm that the Product has market, is the right way to go.

Therein, Marketing is done once you’ve established that and have some revenue (or investment) to spend on advertising.

But how do you know how, where, and what to advertise?? How does Sales know what to say and how does the company know what to build?

Consider the evidence of this idea that Marketing makes Sales superfluous. The most successful innovations have never had someone Sell to you:

• Apple and Banks consistently come out as the most successful companies in the world. How’d that cold call about the new iPhone go?
• Toyota is near the top of the list and yes they sell you a car when you walk in the dealership but you walk in the dealership for a reason
• Google’s Analytics, Adwords, Android, Apps — you want them
• Uber? The company has had their challenges but we all sought it out for what it is
• Salesforce… Facebook… Amazon (ironically)… WhatsApp

They don’t sell you. No one calls to pitch you. They aren’t trying to close you.

Why?

They know their customers, what the customers want, and what to offer and how, so that customers seek them out.

Marketing.

Having to do Sales is the very definition of a company failing: If you aren’t doing what your customers want, you have to go after and physically tell them.

Examples of that? My favorite example is Solar. I want solar on my home, I really do.

Solar might be the worst marketed innovation in recent decades.

I have no idea how it works, what it should cost, how I’ll benefit, if I can do it myself… the entire industry is fixated on Selling it precisely because the industry isn’t doing anything its customers actually might want. There are no major brands or dominant companies as a result — Focusing on Selling Solar enabled everyone else to do the same and has prevented anyone from emerging the leader.

Have you ever talked to a Solar franchise, local representative, or installer? “I want solar on my home, how much will it cost?” “Well… that depends.”

Follow that logic through. I want it, I’m ready, I’m seeking the solution at a price the market will support… and the industry can’t deliver that which the market wants.

Worse, founders perceive that they should be investing in selling rather than treating it as a cost of doing business; a reaction, given a failure to distinctly create value for the market.

Startup Founders: You sell. You personally sell until you know how you can avoid having to do so.

okay, maybe you commission people for that and hell, as a seed stage startup, give Sales 80% commission. Give them everything, for getting you traction and answers; the pittance income isn’t going to make any difference anyway as what you need to figure out is how to serve the market without having to Sell to it.

Notice that? When you are selling at this stage you must consider it not Sales but Marketing — you are doing customer discovery and if you expect revenue from the efforts of Sales, at this point, more than you value Sales figuring out how to put itself out of the job, you will fail.

That investment is in what’s called Marketing:

• Attracting or hiring an experienced team that knows your industry, niche, and competitors
• Budgeting to efficiently create awareness and demand where your customers can be found
• Investing in figuring that out
• Funding the development of a front end User Experience, Brand, and Product that people want

Those are Marketing expenses and in allocating for them, you distinguish yourself in the industry, create customers, and alleviate the cost of doing Sales.

Originally published: Early Stage Startups: Sales vs. Marketing