04
MAR
2016

Ready to Fire the Sales Team (again)?

Market Development vs. Business Development

Do You Know the Difference?

Although these two titles and responsibilities appear to be the same they are not. It is with this assumption where the misunderstanding of the difference between the two begins. Both roles are necessary at different times in the technology adoption curve to achieve Product-Market Fit (PMF). Market development is exactly that, researching the market to gain the knowledge and insight into the current state of it as it pertains to the viability of your current solution. Early stage companies should do this first and foremost as should larger later stage companies when they have a new product or service they are looking to launch. By the way, this is typically not a product marketing type of person who can fulfill this function. It typically is a highly skilled person who has both sales and marketing experience; we call them “smartketeers™”(market oriented sales people).

Many times market development does not create immediate revenue so the next big mistake companies make is to set revenue metric KPI’s on market development activities when this is better reserved for business development efforts when the market fit is fleshed out and early adopter trials begin. Even in the business development stage, KPI metrics should be based more on management by objectives (MBO’s) versus pure revenue until the company hits the ramp stage after crossing the chasm.

We see the above mistakes constantly made by early to later stage companies and it is marked by the hiring and firing of as many as two, three, even 4 successive sales and marketing teams by the executives and their boards. Sales by definition is the life blood of any company so it has the easiest and most tangible metric to measure performance by versus any other part of the organization. As a result, we have seen numerous top flight sales teams blamed for not achieving revenue only based metrics due to their “lack of selling skills”. The root cause (PMF) for the lack of sales is never looked at when it should be the first thing looked at.

The lack or poor performance of sales is usually a clear symptom something else is wrong. So the successive hiring and firing of sales people is a clear indicator the management team and its board do not understand where they are on the technology acceptance curve. We have rarely seen bad sales or marketing professionals at these companies. What we have seen is that they are engaged in the company too early in its life cycle (pre-PMF). These teams are best hired after crossing the chasm after (post PMF) when the ramp stage occurs.

The reality is deploying the wrong type of resources at the inappropriate time leads to frustration by the CEO, its Founders and the Board of Directors. If any of these entrepreneurs looked back at their prior successes or failures to analyze them they would easily see what has lead to their respective outcomes. Many times the product is not tuned for the market or the market is not ready for the solution yet, in essence a lack of PMF. We have even seen in some cases both! Understanding the difference outlined above will save not only tremendous amount of frustration, but precious capital as well.

Michael Centrella

Managing Director, Momentum Technology Partners 

About the Author

Leave a Reply

*

captcha *