Sometimes lessons learned best are the hard ones. Since we started Gaslight, we’ve done very well at leveraging personal networks to drive sales. All of us have been “in the business” for a long time and have made a lot of contacts, which has helped us find leads that turned into sales. We’ve never had a dedicated sales person or team, but rather attacked selling as a team sport. That worked out great until April of last year.
In December at our holiday open house, I was fortunate enough to meet Avi Ram. Avi is an interesting guy that’s built successful consulting companies in Europe and is now working as a mentor at Cintrifuse. I had the pleasure of getting together with him for coffee and something he said really put all the pieces together for me. He said even if a company is fortunate enough to have a great referral network, at some point, that network runs dry. A company with an okay network will run dry in about two years, and for those with deeper networks, maybe around four. Why was that significant for me?
In April of last year we had two clients abruptly decide to stop work. This is a common occurrence in consulting and if you’re ready for it, it’s not a big deal. We weren’t ready for it. We had fallen in the all too common trap of relying perpetually on our referral network and well, the well had run dry. We found ourselves at one point under-utilized by 50%, that hurts when you’re committed to a payroll. Fortunately we’ve never borrowed money and had a healthy reserve fund, so we had plenty of runway, but it’s not cool to see the results of hard work slowly drain away, especially as an owner. What did we do wrong? We simply hadn’t understood the level of importance and attention we needed to place on sales. At least that’s what we thought. What we learned over the next 2 quarters, I believe, was probably the most important thing for us to learn as a young company in order to build something sustainable.
Sales Isn’t Marketing
Sales and Marketing. We say it, we think they’re the same. We refer to these two activities as if they’re one thing. Admit it, most of us do this all the time. We thought we had taken our eye off the bouncing sales ball, but that was only one piece of the problem. If you miss the distinction like we did, it’s gonna be painful at some point.
Marketing is the megaphone. It’s the loud voice that says, “I’m here, I’m awesome, and we should work together.” I know there are marketing peeps reading this and shaking their heads, but this is how I understand it. Standing on the mountaintop and yelling. It’s about letting the right people know that you exist. Sales is different.
Sales is anyone you’re talking to that can pay you money right now. They have a problem to solve and you have a solution. The discussion is around should they pay you their hard earned money to solve their problem. This is the end of the cycle, not the beginning. We got this, but we hadn’t really understood the full lifecycle of producing revenue.
Know What You Don’t Know and Find People Who Do
Sure, we sold our services, or we wouldn’t have made it 4 years as a profitable company. But we hadn’t really payed any attention to marketing. We were certainly doing things that could be called marketing by accident, but we had no real strategy. No real focus on these activities because we didn’t understand it. It’s okay to not understand something. Smart people recognize that early, and seek out people that do understand. All I can say is we’re getting smarter.
Our team got together and tried to identify what we didn’t understand. Our goal was to clearly know what we didn’t know and find people who did. We put a marketing plan together, but quickly realized we were really bad at describing who we are to those who don’t know us yet. One of the best decisions we’ve made is to find a person that could help us communicate. We started working with Michelle Taute. Michelle has been fantastic at helping us form strategies around words. She is helping us to continue to refine our message and speak to those we’d really like to get to know. We began to put focused attention on marketing and continue to do so, but understand, the payoff with marketing has a much longer lead time.
Marketing Isn’t Sales
There’s something missing here. There’s another step in the lifecycle that I really never understood until recently, which means I really didn’t understand the lifecycle of revenue generation at all. Marketing doesn’t equal Sales. The funnel really looks like this:
Marketing -> Biz Dev -> Sales
If we look at each of these as defined activities, we make the same mistake with lumping marketing with sales as we do lumping business development with sales. Let me explain.
Biz Dev is the activity of building relationships with people whom might be your customers someday. If marketing is talking to a larger audience, biz dev is taking that same message to a more intimate audience. The funnel is getting smaller. Biz dev is about specific conversations with people. Is this sales? Not really. Similar skills for sure, but this is the building of relationships that could turn into a sale at some point. Biz dev is strategic like marketing, but not as tactical as sales.
What am I really saying? Marketing, Biz Dev, and Sales are three distinct activities. Marketing is speaking loudly to a specific audience of people to let them know you’re there. Marketing helps generate opportunities to start having more specific conversations with people that could be your customers in the future. That’s business development. Over time, some of those relationships will turn into conversations about paying you money. That’s Sales.
Always Be Selling
What we learned last summer was you can’t short cut this lifecycle. Sure people will pop up that you’ve never met before that are ready to pay you money now because they understand quickly you can help solve their problems. However, you’ll never build anything sustainable if you rely on this happening. This is the mistake we made. There really are no short cuts. Start making lots of noise. Start scheduling lots of coffee and lunch meetings. Never stop. If you do this, you’ll always have opportunities to sell what you do. Keep in mind if you haven’t been doing this, it’s going to take a while for the funnel to fill.
What happens when you begin to understand this? Well, the 4th quarter of last year was our best revenue quarter all year, and we’re booked out with work through the first quarter of this year.
The cliche is… never stop selling. Really, it’s not a cliche at all, it’s just not enough. Never stop marketing. Never stop building new relationships (biz dev), and never stop selling. Once you get this right, you get to decide how successful you want to be.