I’m surprised by how many B2B start-up CEOs are still building their companies the old fashioned way: First, they assemble a product team and build the product in stealth mode. Then, they hire a hot-shot direct salesperson to go out and sell it. They plan to build their marketing team after their revenue starts ramping and eventually hire a CMO / VP Marketing when they are more established. If you’re thinking “What’s wrong with this approach? Many successful companies have used it” then keep on reading…
Just Hiring a Rolodex® is Not the Answer
By hiring a sales leader first, you are probably counting on them to use their Rolodex® of contacts to hit the ground running. This approach usually leads to some instant ‘hot leads’ and even a few quick sales. What’s wrong with that?
Well, you should ask yourself whether these prospects and customers are truly in the center of your target? If not, then there are a number of reasons why this approach might not be the best one in the long term.
First, these customers, which likely span a variety of market segments, won’t provide a critical mass of references within your true target market. If you don’t keep a laser focus on your target market, you’ll waste sales bandwidth trying to force prospects down your funnel. It’s a classic problem where opportunistic sales may increase short-term revenue, but these customers and the accompanying lack of focus may ultimately sink the business. But, if you have a product in development and will soon need to generate enough sales to prove your product is viable, what’s the alternative?
The Internet Has Permanently Changed the Buying Process
According to DemandGen Report’s most recent B2B Buyer Behavior Survey, 51% of B2B buyers surveyed initiated contact with a vendor only after compiling a preferred list of suppliers. As shown in the accompanying chart, a range of materials—including web searches, vendor web sites, white papers, and social/peer reviews—are more frequently used at the start of a B2B search process than responding to direct contact from a sales rep.
59% of B2B buyers surveyed cited both the breadth of relevant product information and the educational value of that information as the most compelling elements of their chosen vendors’ websites.
So what? You already knew that you needed a website and some great content. That’s why you contracted that cutting-edge web designer and paid a writer to create some blog posts and white papers to put on it. You may have also hired a junior marketer who created some sales presentations and other sales materials.
Nevertheless, your sales team lacks qualified leads. They don’t like spending all their time cold calling uninterested ‘prospects’ and they’ve suggested buying some lists or contracting a lead generation or ‘appointment setting’ firm.
Why Buying Email Lists Or Hiring ‘Appointment Setting’ Firms is a Bad Idea
You’ve probably been bombarded by offers to sell you a ‘high-quality’ list of contacts. But resist the urge to be seduced by visions of an easy road to a robust sales pipeline. As detailed in a blog post titled Why Purchasing Email Lists Is Always a Bad Idea, there are a number of reasons why buying a list is always a bad idea:
- Your reputable email marketing vendor won’t let you use purchased lists
- Any email addresses in it that once had value have since been spammed to the ends of the earth
- People on a purchased or rented list don’t actually know you
- Your email deliverability and IP reputation will be harmed
- And finally, because you’re not a jerk
I hope it wasn’t difficult to convince you that buying a list isn’t the way to go, since you’re probably not interested in being blacklisted or labeled a spammer. But why shouldn’t you hire a good telemarking firm to quickly and easily generate some hot leads for your sales team? Here are a few reasons that come to mind:
The telemarketers are using lists that have been spammed to the ends of the earth- How many times have you picked up the phone lately when you don’t recognize the caller ID?
- How many times have you responded to a voicemail from a telemarketer?
- More importantly, the telemarketers don’t know anything about your target customers or the particular problem that you solve
- And—most important of all—your staff won’t be learning anything about your target customers or the problems they have
So, if buying email lists and hiring telemarketing firms is like taking a wrong turn down a bad alley, what should an upstanding start-up CEO do?
Hire Your First CMO / VP Marketing Early to Build You a Demand Generation Machine Before You Desperately Need It
By recruiting an experienced, analytical marketer early in your company’s growth, you will be making an investment in the people and processes required to build sustainable demand. For the details on how to build a modern, demand generation machine take a look at some of the posts highlighted in the following links, but let’s just say that target market definition and the development of buyer personas, a value proposition, product positioning, a content strategy, and a seamless marketing and sales funnel are essential steps in the process. These key activities—the tools of the modern marketer—won’t be accomplished by a list broker, a telemarketing firm or even your sales team, but they will be the first steps your new CMO / VP Marketing takes on the road to building your demand generation machine.
What do you think? Please let me know in the comments! I’ll be reading them all.
I agree with everything you said, except that you neglected to mention the importance of branding, positioning, and differentiation… and I don’t mean a logo. Branding.
Thanks for your comment Josh. Since most startup CEOs are focused on revenue generation and growth, so those are the functions I focused on in this post. However, I certainly agree with you that branding, positioning, and differentiation are all important activities that a CMO will initiate. BTW, love your website!