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Four Crucial Sales and Marketing Decisions for Software Startups

By September 15, 2015Article

Startups often face major challenges in go-to-market planning and sales/marketing strategies – right at the time when their actions are make-or-break for success. SandHill studied these issues in recent years with interviews of advisors and startup CEOs. Here is the best of their real-world experience and advice for today’s entrepreneurs and startup leaders. 

When should a startup hire a chief marketing officer? 

“I’m often asked when it becomes important to have a chief marketing officer rather than the startup CEO driving the go-to-market initiatives. The answer depends on whether or not the CEO has a strong background in marketing and go-to-market strategic planning. If she does, as long as the demands of the business do not take her away from acting as the CMO, there is no reason the CEO cannot continue to handle the marketing role. However, if there isn’t enough time to act as the CMO, or the marketing opportunity and the company grows to the point where a full-time CMO is required, the investment in a CMO is justified.” 

(From Steve Pogorzelski, CEO, ClickFuel; read article) 

“Don’t hire a CMO too early. It’s common to see recruiters beating the street for CMOs after a Series A or B round of financing. Why? Because the CMO was baked into the funding plan as the answer for how the company will build a pipeline and capture the top-right position in the Gartner Magic Quadrant. In all fairness, hiring a CMO early can be a smart move in consumer markets where marketing serves as the primary revenue and traffic generation channel. However, in early-stage B2B companies, the product/market pairing takes time to form. 

“Take time to build out the product and confirm the problem you are solving before hiring a CMO. Hiring early can create a “make-work” problem. If there isn’t a business to grow, time gets filled with press releases, webinars, VIP events, etc. Before you know it, you flush 12 months of time and 24 months of your marketing budget with no tangible results. If you have any doubt on hiring early, take your CMO budget, chop it up and hire a great product marketing director and campaigns manager. They will be busy building pipeline and sales materials while you bide your time for the big hire.” 

(From Dave Peterson, co-founder and partner, Play Bigger Advisors; read article) 

Hiring and managing the sales force 

“Startups face a challenge when they move from initial selling based on the founder’s passion to hiring and managing a sales force. It’s hard to hire the right people the first time out. Also, the natural expectation is higher than realistic.  

“Entrepreneurs are optimistic, aggressive, risk-takers, and they have high standards — all of which are good things. But they usually overestimate how fast salespeople can get up to speed and how productive they’re going to be. They don’t realize the day-to-day management it takes to train and effectively institutionalize a sales force for value metric behavior, competitive position behavior and delivering metrics to win. They vastly underestimate this effort.” 

(From Peter Sobiloff, managing director, Insight Venture Partners; read article) 

“If I had it to do over again, I would not hire the sales guys early on. I made the mistake of spending more money before going through the sales learning curve. As a result, by the time I completely figured out the game, I also ended up losing a lot of valuable money. I learned that you shouldn’t hire expensive sales guys until you have figured out the sales learning curve and can sell your solution in auto-pilot mode. 

“Sometimes VCs push startup founders to spend more and grow fast. But it takes nine months to deliver a baby. It is better not to press the fast-forward button at the wrong time.”  

(Bikash Barai, co-founder, CEO and director, iVIZ Security; read article) 

Because we conduct most of our sales with an inside sales force, we hoped we could scale that up to handle very large deal prices. But we learned that when you sell deals north of $100K, you need a lot more face time with the customer. I didn’t appreciate that at the time.” 

(From Dr. Tal Schwartz, Chairman and CEO, ClickTale; read article) 

Understanding who the target market is 

“Startups often mistakenly believe that the broader market is the same as their early adopter market. Early success will lead people into the false belief that they have found the magic formula when, indeed, they’ve only found the magic formula for a small part of the population. Geoffrey Moore and the folks at the Chasm Group very precisely developed the chasm theory demonstrating that the people who buy a product in the earliest stages are not the same people who buy it later on. You have to take that early success and turn it into some real research, which then allows you to know the complete whole product that the early majority really wants. 

“The other problem is one of articulating the value to the early majority. Early adopters know what they want. They will hunt it out, seek it, sit down and listen to long presentations and muddle through whatever the founder misarticulates in order to describe the product. And they’ll become intimately involved with tweaking the early product into what the early adopters want. But the early majority doesn’t do that. They don’t hunt and they don’t dig with early-adopter fervor. They’re not going to waste time wading through unarticulated value propositions.” 

(From Guy Smith, chief consultant, Silicon Strategies Marketing, and author of “Start-up CEO’s Marketing Manual;” read article) 

“If I could go back and do it all over again, I would invest into marketing right from day one – researching the target market and customer challenges. And I would research data around competitive positioning, or leveraging the right channels to target customers. I must say that marketing is the pivot for business.” 

(From Rahyul Chaudhari, managing director and CEO, Qualitia; read article)