Monday, April 27, 2009

Sales, Marketing and Developers

Probably the biggest reason why startup IT projects fail is that only the technical work is calculated into the project, but sales and marketing is forgotten. This is especially true when the founders are technical guys themself. For example programmers and server administrators. They usually think that an elegant technical solution and a clever service itself is thrive automatically people to using it. (To be honest I have also made that mistake in the past.)

Remember the view of Dilberts boss: "Everything that I don't understand can be done by one person in 10 minutes." This goes for techies planning sales and marketing.... and also vice versa.

But what should be the percentage of work spent on the technical solution compared to sales and marketing in a successful SaaS project? Should there be two, three or perhaps six sales and marketing persons per one programmer in a startup? Do you know if there are any statistics on this subject?

How about hosting and IT service providers? Should there be more sales and marketing people and customer service people than system administrators? In MicroLink's case the number of sysadms and IT-specialists is far greater than the number of sales, marketing and customer service people...which of course means that our customers get technologically great service that is not too expensive as we don't keep too many sales and marketing people on our payroll. :-)

If we look at statistics then the services industry calculates for 65% of western economies GDP. Can this be translated that for each techie there should be 2 sales and customer-service persons as an average?


Jüri Kaljundi said...

While not an exact metric for SME's, you can learn a lot by going through the public companies P&L's.

In very rough terms, years ago it was more or less 1/3 sales and marketing, 1/3 R&D, 1/3 general and administrative.

For example for Google in last quarter those figures were 433m vs 641m vs 448m. For MSFT R&D was 2.3b and SGA 4.5b. Smaller and closer to home, F-Secure has R&D of 33m vs SGA of 72m.

My suggestion is always to count about 1/3 on R&D and the rest on SGA.

The 2/3 is what Estonian companies usually forget from their business plans :)

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