Do B2B Companies Over-Invest in Sales and Under-Invest in Marketing?
A Google search will net you a glut of articles on which discipline you should hire first: sales or marketing. But that question seems like the wrong one to be asking. I’d argue that the more relevant question in today’s digitally dominated buying environment is, “Which should you invest more in: sales or marketing?”
Before I go further: Yes, these views are from a marketer’s perspective. But that perspective has been shaped by working with countless B2B companies—not just developing and implementing strategic marketing programs alongside my team, but helping CEOs figure out how to staff and fund initiatives that increase revenue. What I’ve learned is that more feet on the street rarely equates to more ROI.
The Harsh Reality of B2B Buying
Consider a few telling statistics on the state of B2B buying and the changing role of sales:
- 17% of a B2B buyer’s time is spent interacting with suppliers—not just you, but everyone you’re competing with (Gartner)
- 43% of B2B buyers would prefer to buy with no sales rep involvement (Harvard Business Review)
- 67% of the buying process is done before the buyer meets with sales (Sirius Decisions)
- 40% of an inside sales rep’s time is spent identifying a prospect to call (HubSpot)
A Harvard Business Review article theorizes that customers never wanted much interaction with sales to begin with, but for a long time it was the only way to get the information they needed to make a purchase decision. Gaining access to buyers is harder now because they’ve found an easy way around the sales rep. They’ll let you know when they need you.
Of course, B2B companies DO still need the sales function. But that function is starting to look a lot different, and it may not require as many FTEs as it once did.
How the Buying Journey is Reshaping Sales
With B2B buyers progressing far down the revenue funnel before they engage with sales, big inside sales teams that spend their days cold-calling and cold-emailing are becoming obsolete. So is the old model of hunting for buyers in the hopes you reach someone at the exact time they need your service.
Buyers want to gather information about your services on their terms, not yours. If you create too much friction they’ll move on to the next Google listing, unconstrained by geographic boundaries in this post-pandemic world.
Yet, as a colleague recently shared, many companies still cling to the idea that sales is a “have more, get more” proposition, believing that more salespeople = more revenue. That can lead to over-hiring, whether it’s inside sales support, business development reps, or other roles—especially in organizations whose leaders came up through the sales ranks.
One marketer recently told me that a sales rep at a comparable point in his career was logging only 20-30 hours a week, while she needed 12-hour days to keep up with her ever-expanding to-do list. And this is a highly talented, efficient, focused professional! That’s a sure sign that one company is over-hiring in sales while the other is under-investing in marketing talent.
If B2B buyers only spend about 17% of their journey interacting with sales, then B2B companies don’t necessarily need more salespeople to generate more business. It’s less about hiring more resource and more about deploying it differently.
So, how should B2B companies invest in sales?
- If your product is technical and customizable, think about adding a sales engineer who can engage in value-based selling that connects technical features to buyer needs.
- Closing deals is hard work and requires unique expertise, so a sales professional with a strong closing track record is a must. But since they’ll spend less time engaging with each buyer, you probably need fewer closers now.
- If yours is a relationship business, leverage your sales team to drive deeper, more long-lasting relationships with current customers. Get them focused on creating connections and building community with your company and your brand.
But Don’t the Metrics Prove Otherwise?
“Not so fast,” you might be saying. “My sales reps signed millions in new business last year. Why shouldn’t I hire more of them?”
It can be easy to fall into the trap of attributing revenue solely to sales since that’s the last touchpoint in the journey, especially if the request for a proposal follows a sales demo.
It’s a simple way to look at it, but not an accurate one. A more realistic model considers all the activities that bring a lead into and through your funnel and attributes revenue proportionally across them. Since marketing engagement accounts for about two-thirds of the B2B buying journey, the lion’s share of your new revenue should be attributable to marketing, not sales.
Let that sink in for a minute.
Most of the new revenue you generate is arguably attributable to the marketing that gets your buyer to the point of engaging with sales. Everything that happens to that point sets the stage to hand off hot leads that are ready to buy. And with data analytics becoming more sophisticated, yet easier to use, you can document marketing’s impact in terms of very specific metrics—like lead quality, conversion rates at each funnel stage, lifetime customer value, and more.
Not only is it incorrect to attribute the sale to the last touchpoint. It’s getting much easier to quantify the impact of every activity that led to the sale, including marketing. That’s incredibly powerful from a budgeting perspective.
What Does That Mean for Your Marketing Investment?
That brings us back to the original question of whether to invest more in sales or marketing.
The right-sized sales team for your company depends on many variables. Regardless of the correct number, investing in a sales team without investing proportionately in marketing is throwing money away. Without a solid strategy, a deep understanding of the ideal buyer, messaging that’s strategic and compelling, a marketing plan that nurtures buyers throughout their journey, and flawless execution, your sales teams won’t have warm leads to convert to customers.
And yet, many organizations over-hire in sales and under-resource marketing,
I’m not advocating that middle market companies build massive marketing teams. Quite the contrary. B2B companies should invest in marketing, but they need to be strategic about it.
For example, you need the foundational elements that growth marketing demands, like marketing automation tools and smart/AI-enabled technologies that enable you to scale, measure, and optimize your efforts based on what’s resonating with your ideal buyers.
And yes, you need to invest in staffing the marketing function, but that doesn’t mean lots of FTEs. A fractional marketing model is more effective for most middle market companies because it allows you to tap the exact skillsets and level of resources you need at any point. And a middle market company isn’t likely to need every marketing discipline full time, all the time.
No matter your budget, don’t skimp on marketing strategists since they set the foundation for effective modern marketing. An experienced Fractional Chief Marketing Officer (CMO) can conduct research and develop a marketing plan that is driven by strategy, focused yet agile, and 100% measurable. With a solid strategy as your guide and a fractional marketing approach, you can compete with much larger organizations on a more level playing field and drive new revenue, without adding sales FTEs.
With budget season here, it’s a great time to rethink old habits and determine where you’ll get the most revenue bang for the buck. For most companies, the answer is likely more marketing talent, technology, and execution, not more sales reps. When it’s done well, marketing can drive significant revenue growth and generate a high ROI.
Ready to focus your investment where it will generate new revenue? Schedule an introductory call with me.