Sales vs. Marketing/Product Driven Companies

When you look at your 3 favourite brands, do you ever consider what drives their revenue growth? For most companies*, it is one of the following departments that drives a majority of the company’s revenue:

  • Sales/Business Development
  • Marketing/Product

You may now be thinking that “Hey, our company has both of those departments and they both help push the needle” – awesome, but it’s likely that one department is pushing >70% of the growth, while the other department is supporting. When you take a look at some of the smallest and largest brands out there, you can likely figure out where their growth comes from – provided you know what to look for.

Below, we’re going to define and identify the two different models and when they are best used.

Sales/Business Development-Driven Companies

A Sales/Business Development-Driven company heavily relies on their Sales and/or Business Development department(s) to grow the company. Their target market generally requires a lot of hand holding (high-touch) to complete a purchase. Marketing will support by driving leads but will generally have a hard time closing end sales due to the industry and target market.

Example: A good example of a company like this is any automotive dealer. A large majority of consumers won’t purchase a car without going through the sales process with a sales rep first. This is because the price is high and the product (the vehicle) can be difficult to completely understand.

Marketing/Product-Driven Companies

A Marketing/Product-Driven company heavily relies on marketing, product development and/or branding tactics to drive their revenue growth. Their offering is generally lower priced and their brand is recognizable to the target market. There may be sales associates available to help customers that require it, but marketing drives customers a majority way through the purchasing process.

Example: A good example of a company like this is any clothing retailer. When people purchase from a clothing store, it isn’t because someone cold called them, it is because they like the brand and/or received some marketing/promotion incentive.

Are B2B Companies Sales or Marketing-Driven?

Before the internet, almost all B2B companies were sales driven companies. They had to be, as sales reps had to develop most of the business and walk buyers through the purchasing process. To this day, a majority of B2B businesses are still sales-driven but we are starting to see more marketing-driven B2B companies.

Examples:

B2B sales-driven company: Take a look at HRDownloads as an example. We’ve been on their sales floor and the amount of calling going on there by their sales reps is crazy. Their offering is priced on the higher end and requires a bit more hand holding to close a deal.

B2B marketing-driven companies: Take a look at our company (Visitor Queue) or SendGrid. Very few sales reps in the company with a majority of the head count being made up of Marketing or Product professionals. The offerings are lower priced and self-initiated.

Are B2C Companies Sales or Marketing-Driven?

Similar to B2B companies, B2C companies can be marketing or sales driven organizations. However, we still find that a majority of B2C companies are generally marketing driven.

Examples:

B2C sales-driven company: Consider Manulife or other investment/insurance companies of this nature. They are generally higher ticket items with a lot of customization needed, which means that they will have an advisor assisting you the entire time.

B2C marketing-driven company: Just take a look at Walmart as an example. They’re a large retailer that hardly relies on any assistance for end-users to purchase. Most of us go there because we know the brand and/or we receive marketing content from them.

A split Between Sales-Driven and Marketing-Driven

As mentioned earlier in the article, it is possible that you have both departments that help drive your growth. It isn’t likely that it is a 50/50 split but both departments can contribute. This is more common within companies that have different product categories that require different approaches for revenue growth.

Example: A great example of this would be Wayfair. They are well-known for being an online B2C retailer that is generally marketing-driven. However, they also have a business program that relies heavily on account managers to drive growth (I’ve received many of these cold calls).

How to identify what a company is/will be

If you’re a younger company and you’re still unsure of what’s driving your growth, it’s about time you figured it out. Or, if you’re looking to identify what other companies may be, look at the following factors:

  • Price: what is the price point the offering sells for. Lower price points generally allow for customers to purchase themselves and not rely on sales reps. Additionally, in order for a sales-driven company to thrive, they generally have to pay commissions, which requires a higher price point.
  • Complexity: is the offering easy to figure out. If the offering is difficult, they likely have to have a sales rep assist with the purchasing cycle. If the offering is easy or self-initiating, they are a low-touch offering, which means they won’t need as many sales reps.
  • Industry/target market:  are the individuals being sold to savvy enough to purchase on their own. Some industries/target markets require more hand holding (regardless of the complexity of the offering) which means the company will need more sales reps assisting them.
  • Budget allocation: how much of their cost is going to sales rep salaries vs. marketing spend and salaries? If possible, look at the headcount and marketing initiatives to see where their budget is spent, the higher cost department is usually driving the most growth.
  • Competition: this one can be murky, but generally, the more competition, the more sales-driven they have to be. This is simply because people shop around, so the company will need a sales rep there to follow up and close the deal.

It’s impossible to say which one is better than the other because it depends on a number of factors specific to the company. However, for company alignment and budget efficiency, it is important for organizations to figure this out early.

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*For larger organizations, you may also consider the Merger and Acquisition (M&A) department within this list.

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