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Sales/marketing Advice For A Start-up
Posted By: kollipnick* on 2/10/2007 10:56 AM (CST) 250 Points
Hi All,

We are planning to start a design services company (in US); I am personally an engineer so I know very little about marketing/sales. We need some advice on marketing our services.

1. We are planning on hiring/partnering with a marketing/sales guy. I know marketing and sales are usually different departments, but given our financial resources we can't afford that paradigm yet. This person will be a lone ranger for the first year and is responsible for building the sales & marketing organization over the next few years. Is it reasonable to ask a single person to do these different roles? What is a good pay package for such a person? I have conducted technical interviews before, but never conducted a sales/marketing interview. Other than the obvious things on the resume, what qualities/answers am I looking for during the interview?

2. As a percentage of annual sales, How much should we cater for our sales/marketing budget? What does the sales budget include (travel, commissions, salaries, etc.)? Other than unlimited budget:-), What does a sales/marketing guy need to do his job?

3. How do you generate leads for a B2B services company? Is cold-calling still effective? Can you still do e-mail marketing without being branded a spammer? Are any of the lead generation services effective for high-tech services?

Thanks
Nick

Posted by: CarolBlaha Accepted Answer
2/10/2007 11:23 AM (CST)
Why don't you ask your marketing/sales person to present what tactics they'd use to create business? It would be a great interviewing technique to make sure this person is capable of doing the job. You want this person not to be distracted from selling. But each salesperson is their own internal marketing manager.

Yes, the budget includes their salary, expenses, etc. When you are interviewing you can get an idea of budget, by putting numbers to the ideas.

As far as cold calling-- I have been in b2b sales all my adult life and if I didn't cold call I'd be living under a bridge. If there was an easier way, I'd have found it. Email marketing can supplement, but with everyone emailing-- the person with the personal touch wins.

As a guerrilla marketing coach, I can also tell you most effective marketing techniques are low cost -- you use energy and imagination over money.

After you hire the person, build a ramp up plan with performance goals. Focus on activity goals vs sales-- in sales, your opportunity volume x win rate = volume.

A great book on sales management is by Ron Marks, "Managing for Sales Results".

Hope that helps, Carol
Sell Well and Prosper tm
 
Posted by: Frank Hurtte Accepted Answer
2/10/2007 2:44 PM (CST)
It would be my impression that you would really be better served with a sales guy more than a marketing guy. It seems to me that as a startup company you really need revenue.. read that sales...

I would ask the sales person how he plans to get his leads, what actions he plans to take, and very importantly... what will his budget for getting things done be...

The pay depends on the industry and the expertise required. Start ups are very tricky. You need to be careful how you structure your compensation, and you need to be sure you do not create a defacto partner.

I provide coaching for starting businesses. If you want to reach me via my profile, I would be happy to spend a half hour or so talking about your specific situation for free...

Frank
 
Posted by: W.M.M.A. Accepted Answer
2/10/2007 3:33 PM (CST)
1. Is it reasonable to ask a single person to do these different roles?
a. Certainly, it is reasonable to ask one person to manage both departments. The important aspect of this is how much money are you willing to invest in the marketing/creative/communication tools necessary for this person to begin to create a successful program? Just asking a talented person to accomplish the most difficult aspect of a startup, is just the beginning. They need to know you are going to "investment spend" the necessary money.

What is a good pay package for such a person?
a. My recommendation would be at least $35K to $40K depending upon the market you are in. If you are in a top 25 city, that would be a fair pay, plus % of sales, bonus and related expenses.

I have conducted technical interviews before, but never conducted a sales/marketing interview. Other than the obvious things on the resume, what qualities/answers am I looking for during the interview?
s. You are seeking one experienced in direct B2B sales. One who can create a collateral package, and one who has experience in relationship development. But, most of all...one who can close business. Experience in a like industry...(service).

2. As a percentage of annual sales, How much should we cater for our sales/marketing budget?
a. Nothing happens w/o a sale. There is no certain percentage, as a rule.

What does the sales budget include (travel, commissions, salaries, etc.)? Other than unlimited budget:-), What does a sales/marketing guy need to do his job?
a. Collateral material, lists, direct sales support, website.

3. How do you generate leads for a B2B services company? Is cold-calling still effective?

a. You must begin to nurture the relationships you already have...network. I would recommend that you join various networking organizations...breaifast/lunch. Be where your clients are. Spend the necessary money to seek and sustain networking relationships. If you know of a marketing firm that has no graphics/design aspect, offer to partner with them.

b. In relation to "cold-calling"...I am not a fan of it. It used to be valid. It is extremely slow in generating quality leads and business. I firmly believe that cold-calling can be a negative. 1. You do not know if the prospect has a design firm. This demonstrates that you have done no research into the needs of your client/prospect. It is a very weak way, in your industry, to gain business. I believe you should develop strong relationships through a quality networking program.

Others may not agree. But it is more important for long term to develop strong relationships, than run through the numbers, wasting time with those who may have no need for your services.

Best 2U.

Randall
WMMA
 
Posted by: telemoxie Accepted Answer
2/10/2007 3:57 PM (CST)
I disagree that you cannot afford a marketing person, and a sales person.

I believe that a very cost effective option is a part-time business development / marketing person (I'll be happy to throw my hat in the ring) generating leads for straight commission sales folk (possibly experienced saleswomen re-entering the job market). As the company grows, and as the sales person builds a client list, you have the option to bring the sales person into a more full-time role, and expand the volume of marketing effort.

Cold-calling can be a part of the program - but don't expect much business from the first call. it's more important to build and cultivate a pipeline of business, and you will need to integrate such efforts with high-ROI activities, e.g. postcard mailings and drip marketing, as well as networking activities.

I've helped marketing communications firms get business for over ten years - I'd be happy to discuss further.
 
Posted by: CarolBlaha Accepted Answer
2/10/2007 4:26 PM (CST)
To clarify a bit: Sales and marketing are interchanged. You can't have one without the other. The role of marketing is to generate leads. Sales gains commitment. It takes a prospect to a customer. If you want someone to sell and handle their own internal marketing-- that will work fine. But if you want them doing marketing functions as planning ads, trade show booths etc-- you will dilute the sales process with busy work-- and give them an excuse to not make those calls.

Whether you cold call or send masses of postcards, you rarely will get an order first point of contact. It used to be a norm that you had to have 5 points of contact to get an order. The average salesperson quits at 2. Today, they Say its 9-- and the average salesperson still quits at 2.

You can automate some of those contact points. You have to create what I call TOMA, top of mind attitude. The reality is, unless the customer calls you, they don't know they need your service. A salesperson can create that need and urgency, but still has to be at the top of the prospects mind when they are ready to buy. I have stolen jobs from lazy reps who created the need, and disappeared.

I work with many salespeople who try less aggressive techniques thinking they can avoid prospecting. When I get them out there making their calls, they start closing deals quickly. I know that only subtle behavior changes are often the difference between a mediocre salesperson and a award winner. Your salesperson will have to build a pipeline. You should also build a process to "inspect what you expect" as far as activity and know what that pipeline looks like. If they know they will be held accountable, they'll do what you expect them to do.

Carol
Sell Well and Prosper tm
 
Posted by: pmccord Accepted Answer
2/10/2007 9:02 PM (CST)
You've received some interesting advice so far, so I'll throw my two cents in. I've been working in the sales and marketing ares of over two decades and have been a sales trainer, coach, consultant for the past several years.

As to whether you need two people--marketing and sales--or a single person, there really isn't a good anwer without knowing something about you budget. If you are a typical strat-up on a very tight budget, then certainly look for a single person with a strong emphasis on sales rather than marketing. Your lifeblood is sales; more sophisticated marketing would have to wait until the company matures a bit.

What you pay a salesperson and the prospecting methods used are actually tied together to some extent. Much depends on your target market. The more sophisticated the market, the more experienced and sophisticated the salesperson you will need and the more polished and sophisticated the lead generation methods to be employed. If your target market is small mom and pop businesses, then a relatively inexperineced salesperson in the 35-40k a year range using less sophisticated lead generation methods such as cold calling and email should work just fine. On the other hand, if you're targeting larger companies with a more advanced purchasing process, with more costly and intricate needs, you'll need to look at a much more experienced salesperson who is competent in using much higher lead generation methods--with a corresponding increase in anticipated income.

A more detailed answer really depends on too many unknown factors. But from the above, you should be able to get an idea of where you should be setting your sights--on the higher end of the sales performance curve or on the lower. The most important thing is simply focusing on generating sales as quickly as possible. Unfortunately, many start-ups get so caught up in the establishment of things and processes, they forget that the most crucial aspect of their business is getting sales through the door.
 
Posted by: michael Accepted Answer
2/10/2007 11:06 PM (CST)
I'd go with a good sales person and find a marketing person from this site (post it in projects if you'd like or read some of the postings an pick someone) to handle your marketing.

Not that there aren't people who can do both. You'll need a salesperson with some technical background, though. You can even outsource that at www.replocate.com.

Michael
 
Posted by: greg.elicit* Accepted Answer
2/11/2007 3:14 AM (CST)
I disagree with some of the things that WMMA says above.

Firstly cold calling is just as valid as it ever has been. Human beings haven't changed, so neither has cold calling. All cold calling is, is the act of calling a stranger and communicating why you shouldn't be, within the opening 30 seconds.

To state "cold calling is no longer valid" is about as logical as saying chating-up a member of the opposite sex is no longer valid, now that Internet dating sites exist. If you're good at it and have the added bonus of being good looking then it works enough of the time to make it "valid". If you're not, usually because you lack a thick skin, then there are other methods of marketing.

Of course those people that repeatedly fail to successfully sell themselves to members of the opposite-sex, will deny its effectiveness, rather than their inability to make it effective. Much like Aesop's story of the Fox without the Grapes. Remember a poor workman ALWAYS blames his tools.

There is a very good podcast on the subject of making prospective calls in a b2b environemnt, produced by two British guys who call the movers and shakers on Wall Street (and what could be a harder audience than that?)

www.coldcallingpodcast.com

On a second point, to get what you want, you'll need to pay much more than $33-$40k per year. In my view the only way to get someone with the skills you need is for them to have learned them through practice. Nobody in their 20s is very likely to have the experience or the contacts.

I'd have thought you're looking at low six figures or you'll just be wasting an opportunity because there is nothing more expensive in the long run than not hiring the best professional for the job. If as a start up you can't afford that, then once again I'd recommend the above podcast series because they talk specifically about business owners and the natural advantage you have when marketing (versus an employee).

Only when you have begun to master what sales and marketing are about and understood your limitations will you be able to size up a potential hire.

You would not appreciate a salesperson or marketer that thought that the engineering behind the product was unnecessary to comprehend, since to some extent the engineering is what helps differentiate it. Likewise you as the business owner should not wash your hands of the need to understand the sales and marketing discipline.

If you fall into this trap then you are far more likely to hire a lazy exploitative charlatan than a sincere, skilled and hard-working employee. I've witnessed start-ups hire these sorts of charlatans repeatedly until they either went bust or had the investors make a different hiring decision.
 
Posted by: telemoxie Accepted Answer
2/11/2007 7:02 AM (CST)
Let's be careful not to be arguing over definitions. For example, many have said that "cold calls" have decreased in effectiveness (I agree) and some have said they should be avoided (I disagree). But what is a "cold call"? As Randall used the term, he may have been referring to a random call to a company you have no knowledge about. But, if you have researched the company a bit, have some info on their demographics and possible needs, know who the point of contact is, have sent a postcard or two, and have reviewed the web site, is that process a "cold call" ?

Today 'prospecting' is more difficult and challenging than ever, requiring research skills, database marketing skills, relationship skills, prioritization skills, and especially qualification skills. Will you find a person who can do all that, can also sell, and is available part time and inexpensively in your market? If you do, as they build relationships with hundreds of accounts, will you be able to afford to keep them?

If you find this "magic person" who does everything, what will you do when they leave? If you find this "magic person" who does everthing, how will you grow your business? If you find this "magic person" who does everthing, how will you migrate to the goal which was the inspiration of your question: a marketing function and a sales function?

There are many possible solutions, some of which will require your "networking" time, some of which would require someone like Carol to set metrics and oversee the process, and some of which would require you to manage and outsource projects, keeping the monkey on your back.

Frank says that you need "a sales guy more than a marketing guy". I agree - you need more sales horsepower than marketing horsepower - but you still need both. If you take a look at larger, successful firms, you will probably see that they have a marketing function and a sales function, as described in your question. And, you will see that the sales team is larger than the marketing team. If you divide the number of marketing folk by the number of sales folk, you will see that you need a "partial" marketing person to complement the sales person.

Paul McCord has given some good advice, and (apparently since he is not familiar with my business model) he says that sophisticated marketing needs to wait until you are larger. But what is is that you are selling? You are not selling widgets, you are selling marketing services to sophisticated companies! By ignoring your own marketing needs, you are creating a massive "shoemaker's children' problem for yourself.

Personally, I'm on this forum every day, to be sure that I'm up to date on latest marketing technologies. One reason is: because I call on marketing managers every day (and have for over ten years) to sell marketing communications services, and need to understand the issues they face.

To quote my good friend, Bob Pallace, "it all works". Carol's idea will work. Randall's idea will work. I'm sure that fellow with the podcast has ideas that will work. (But the one thing which will probably NOT work is to try to mix all these ideas into a 'too many cooks spoil the soup' committee decision. Pick a proven strategy, and go with it.)

In selecting the strategy, you might begin by asking yourslf where you want to be in 6 months, in one year, in five years. Will you want the marketing outsourced at that point, or will you want a way to transition this in-house? Do you see yourself as the 'chief marketer' - or do you see that as a 'Vice President' style function? Do you relish the thought of setting metrics for sales activities, and holding people's feet to the fire - or is that not your style?

And you need to address (honestly) the budget situation. In addition to the salaries, folks will need "tools" to be effective (see my recent question,
http://www.marketingprofs.com/ea/qst_question.asp?qstID=16597 for some interesting and related discussions). You may need to buy lists, create marketing pieces, and so forth. And you need to have sufficient budget (and patience) to give whatever solution you pick a reasonable amount of time to succeed.

Good luck.
 
Posted by: greg Accepted Answer
2/11/2007 1:56 PM (CST)
Hi,

First - Align Your Marketing & Sales To The Nature Of Your Customer Buying Involvement / Complexity/Risk

The type of marketing and sales you'll do in your new start-up is going to be directed by the nature of your customers purchase 'complexity' and degree of 'involvement'. If , for example, your design services represent a significant buying transaction for your customer and it could lead them to lose out if they get it wrong - then your marketing and sales is 'high involvement and high risk'. In these markets you will need a 'consultative' marketing and sales process ( and team). 'Cold-calling' in this buying market is a no-no.

In complex business purchases, buyers will give their trust only to a business peer who provides them with a 'give-first' of valuable insight, information and resource that measurably contributes value to their current situation (i.e. their marketplace, industry, challenges, risks and competition, and financial position) and to their future state (where they want to get to). Structuring a sales force in this example is primarily about the appropriate type of seller needed – i.e. a small team of consultative sales professionals (drawn possibly from an advisory position to or in the targeted industry).

If your customer regards your product as a low involvement ( doesn't need much thought, appraisal) and won't result in a big loss if they get it wrong, then your sales approach is the '3D' one. Sales team 'demo, dine and discount' for volume sales. 'Cold-calling' can work in this buying market type.

Sales Remuneration and Management

Realistic goals are key and should be based on a sound understanding of the product category/industry 100–50–10–5 dynamic, i.e. it takes a pool of 100 prospects to extract 50 contacts to get in front of 10 interested customers and secure 5 sales closes. Open-ended earning potential really turns sales staff on. Ongoing motivational incentives keep the activity levels up.

Earnings for a salesperson involved in the consultative, complex selling process in the US are typically about $120,000; for relationship selling, they average $90,000; and for transactional, less complex selling, they average $60,000. How much of that is “fixed/basic” and how much is “performance” depends on whether team players are being sought and on the set of actions/goals the company wants to achieve (margin, new product take up, etc.). If a salesperson has to exercise a large amount of influence to get the sales, then a large proportion of earnings should be “performance”. Low-value and re-buy sales lend themselves to commission only, while big-value and one-off buys lend themselves to fixed pay.

Examples of monetary incentives for sales staff are a 10 per cent monthly pay bonus if sales are up 20 per cent on last year’s, a 20 per cent monthly pay bonus if sales are up 40 per cent on last year’s, plus an extra month’s pay if the firm’s financial targets are met. Examples of non-monetary incentives include time off, article in company newsletter, trophy at special recognition event, lottery tickets or tickets to concerts.

So the key question is ' what type of buyer transaction are you dealing with - a high involvement/complex/risk purchase or a low involvement/complex/risk buy. Then your marketing and sales processes follow from that answer.

Greg
 
Posted by: Phoenix ONE Accepted Answer
2/11/2007 2:31 PM (CST)
I believe there is EXCELLENT advice provided in most of the respondents. But I think you are missing the genesis of the reason for the question:

"Where is the business plan, which should include a solid sales strategy and marketing plan"?

As the question states they are in the PLANNING Stages-

All of the responses are quite micro and beyond the scope of the current business' requirements-

Can we develop a Core Sales and Marketing PLAN to provide development ,growth and profit within the foundations of the Business Plan. Therefore

Why not develop FIRST develop a solid Founders Plan (PRE-Formal Business Plan) develop within that Founders Plan an incentive based program for bringing in a Sales/Marketing Talent(s).
Quite of bit of that could be outsourced -even to talents found within these forums.

Allow that person(s) to develop the CORE Sales Marketing Plan for the business - Provide that person (s) a % of the company for a given span of time with the founders having optional rights for buy back.

NEXT - develop a core group of "Outside" Advisors (Board of Directors) to provide guidance and compensate for specialty weaknesses the founders may have. Again, there is a great group of solid people within these forums who could do this for you (simply do your homework - talk with them and meet them).

Once you develop your Founders Plan and Core Advisors group building a business plan is a piece of cake....and within that ALL YOUR sales and marketing questions would be answered.

Take a look at the talented responses you were already provided without an incentive!

Good Luck and Happy Marketing!
 
Posted by: riddings Accepted Answer
2/11/2007 8:08 PM (CST)
First off, let me say I really like Carol's suggestion of having the person interviewing for the job create the strategy they would employ to generate sales...

Secondly, there is little substitute, for face-to-face contact in business sales. That being said, one important factor you shouldn't overlook when interviewing someone for sales is experience in the same/similar industry... With that experience should come past customers they should happily share with you that should be references. Sales is ultimately a completely results-oriented field. And results, isn't limited to getting the sale, it's also finding out if they would see this person again.

Compensation is something that varies with industry and specialization... Wouldn't you compensate someone with a million dollars if you knew they would get you ten million? Maybe, but not if your margins couldn't afford it... Compensation isn't always cash either... In our agency, we start new account reps at a minimal base salary, a commission structure that allows them to get off base within 2-3 months, and once they are off base it is sink or swim - they can never return to their base pay.

They must maintain a minimum level of performance, measured on new contacts established, and new business established, and maintaing an overall sales budget. For exceeding minimum expectations, we in turn, will provide perks like a company car (an Audi), a company paid vacation for two (a 10-day cruise), and cash bonuses... In our business, account reps must be constantly learning our business, it's complex and so are our clients, account reps must constantly be learning so they can properly represent a larger, and larger, portion of our business to clients, which ultimately opens larger and larger doors for them...

You must set a decent compensation level that is realistically achieveable by your salesperson, while also protecting your margins, leaving room for the occassional perks/bonuses. Also, remember, it isn't just the salesperson doing all the work... If you're a design firm, you have designers who also deserve perks and bonuses for doing their BIG part in helping create the products that help the salesperson look like the hero.

Design firms can be more expensive to operate than somepeople think; remember, you only have so much (billable) time in the day and only so much you can charge for it - and within that timeframe a whole lot of real expenses need to be covered... Be sure to look at the big picture of your business and find a compensation plan that fits it... Remember, good salespeople are hard to find and even harder to keep... And just as important as understanding the sales aspect, you MUST be sure you have the systems in place to get the work done effeciently, timely, and in budget.

Good Luck,
Richard Iddings
 
Posted by: kollipnick* Author Response
2/12/2007 7:28 PM (CST)
Hi All,

Thanks for all the great advice. I have received some good advice/ideas, especially on how to find a good sales/marketing guy and how to compensate him.

Our target market is sophisticated and I guess our selling process falls some where in between, as Greg puts it, consultative/complex selling and relationship selling. I think Telemoxie brings out a good point, as our sales mostly depend on the relationship building and networking, what if the sales guy quits. So it might be a good idea to have a part-time marketing guy.

Frank and Telemoxie thanks for offering to help, I would be contacting you in a few days. We are leaning towards having a part-time marketing person and commission based sales guys. Based on all the responses received over the week-end, I am pretty confident that I would be able to get more help from all the dedicated, hard-working and talented people on this site. Once our plans firm up I will post a project or contact some of the experts.

Thanks
Nick
 


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