This question has confused many business owners: if you want to increase your sales, do you work on your sales or your marketing?
Too many businesses keep their marketing and sales separate, thinking one does not impact the other. But one of the biggest reasons why you’re not generating as many sales as you want, or not getting as many customers as you want, is you’re not understanding the difference between sales and marketing.
So what is the difference between the two, and why is it important?
Watch this video about the difference between sales and marketing.
The Business of Marketing
People lump the term marketing and sales together to avoid defining them. But when you define it, you realize how much more important one is over the other.
Let’s start with marketing. It is anything and everything that you do to attract and keep a customer. Sales is what you do when you are sitting across the table face to face with a customer to convert that lead into sales or money. They’re two very, very distinct functions of a business.
Peter Drucker said it best when he said that “The purpose of a business is to create a customer.” Therefore, a business only has two important functions: innovation and marketing. Innovation and marketing are what produce results, and everything else is cost.
Stop Doing, Start Marketing
Everything else is cost so you should put more emphasis on marketing. Most entrepreneurs operate as what I call the doers of the business. They are doing the work, providing the service, making the widget, or inventing the product… and whatever time and resources are left over is then spent on marketing.
That’s the wrong thinking, like going through all the steps of planning an event and waiting until the last minute to figure out how you’re going to tell people about it.
Shift Your Identity
Let me tell you this: if you want to grow your company, you need to shift your identity. You need to put on a different hat.
You must go from being the doer to the marketer. Face it: you are in the business of marketing. If you’re in the real estate business, you’re not in the real estate business, you’re in the business of marketing your real estate service.
Or you could be marketing your coaching service or your consulting service. If you own a household appliances store, you’re in the business of marketing your vacuum cleaner or your refrigerator. Or you’re in the business of marketing your video filming business.
Whatever it is, you are in the business of marketing.
You need to make that shift from a doer to a marketer. Your focus is always on the acquisition, retention, and maximization of the value of a customer. That is your role.
How Much Is Your Customer Worth To You?
That’s what you do as an entrepreneur. You cannot just focus on getting things done because it’s not the thing that matters. It is the thing that sells the thing that matters.
That’s why when I talk to entrepreneurs, I ask them one question. I say, “What’s your marketing budget?” Often they give me a number between 1 percent to 10 percent. That’s when I know they’re not that serious about growing their company. They don’t get it.
Marketing is everything. Marketing is the business.
Business owners who really don’t get it answer my question with something even worse. They’ll say, “Oh, I don’t have a marketing budget, I grow basically through referrals.” I always say, “You mean hope.”
These businesses hope to get referrals. They hope that someone will refer their business to them. It means they absolutely have no clue about the importance of marketing.
Let me just say this, unless and until you have a predictable and consistent way of acquiring a customer, you don’t actually have a business, you have a hobby. You’re not a serious entrepreneur.
So how much should you spend on marketing? It depends on how long your company has been around, and your company size. If your company is less than five years old, you should be spending 12 to 20 percent of gross revenue on marketing, and this is just an estimate.
Where Does Your Target Market Spend Time?
Your marketing budget should include branding, social media, SEO, print ads, PR, and events. And this list is not even complete! Other factors to consider is the percentage of your marketing budget for each category. For example, around 40 percent for online marketing.
Whether you advertise on traditional media, such as TV, depends on your target market. Where do they spend a lot of their time? Are they on the road? Will they be driving and observing billboards? Do they watch shows on their TV or tablet? Do they listen to their radio? How often are they on their mobile device?
Answers to these questions depend on who your customers are. Just remember the 80/20 rule. If 20 percent of your marketing leads generate 80 percent of your leads, focus on that 20. That 20 percent will give you 80 percent of your results.
Final Thoughts On Sales And Marketing
So make that shift, knowing that if you want to grow your company, to create wealth, to build your business, or to build your empire, you absolutely need to know that you are in the business of marketing. You are a marketer of your product, not the doer of your business.
Ideally, the sales and marketing departments of your business should work together. One closes your customers. The other brings in and retains your customers. Understanding your ideal customer will help you determine the percentage to spend on your marketing budget.
Now, if you want to increase your sales, if you want to bring in more customers, you know where to put your focus.
Do you focus your marketing on online or traditional media? Comment below.