Introduction
Marketing for startup companies can often be make or break. With the advent of the Internet, long gone are the days of “if you build it, they will come.” So how can you market your startup successfully, without the giant marketing budget of larger companies?
It’s important to remember the biggest prerequisite to successful marketing – having a great product. A great salesman can sell ice to an Eskimo, but without a solid product that solves an important problem, that Eskimo will not be a repeat customer.
Define Your Customer and Market
We covered these very important steps in Chapters One, Two and Three, but it cannot be understated. Once you have identified the problem you are solving and have determined that you have paying customers, it is time to start gathering as much data about your customers as possible.
It is common for entrepreneurs to believe their product is of perfect use for everyone and their mother, but in reality, almost all ideas have certain customer demographics that really drive sales. It is important to find out what those demographics are and who those customers are so you can market your product or service effectively.
“If you try to market your startup to everyone, you waste both time and money. The key is to identify a niche target market and go after market share aggressively.” [2]]
Your customers will give you a great starting place for determining the proper market for your startup, but there are a few other key aspects to consider as well.
Market Size and Wealth
A startup’s Total Addressable Market, or Market Size, is incredibly important not only in determining whether or not this opportunity is worth pursuing, but also if the company wants to try and court investors down the road. It is of utmost importance that the founders understand their customer demographic completely and understand how many potential customers fit that demographic or market.
Investors look at market size when comparing deals, and it often plays a crucial part in whether or not they invest. It doesn’t take a mathematician to figure out that the greater the number of potential customers, the greater the chance for making a large profit. Startups attacking a small market will have a very difficult time convincing investors that they will see a worthwhile return on investment.
In addition to the size of the market, it’s important to understand what type of money flows through that market. Are these customers willing to spend money? How much? Is that enough to justify pursuing the opportunity or investment?
Market Competition and Value Proposition
In some markets, the opportunity and market size are so attractive that there are already a bevvy of competitors in the space. What type of market share is left for your startup? Does your startup cut through the clutter and emerge as a dominant player in the space?
The key aspect in entering a crowded market is value proposition. Does your product provide a large enough benefit, while also being unique enough to stand out in a crowded market?
Repeatable, Trackable, and Scalable
Recently, the concept of “Growth Hacking” has been getting a lot of attention as the future of marketing following the growth tactics of Sean Ellis (in fact, Ellis coined the term). The term has taken on a meaning to mean a certain hybrid between marketer and developer (thus the term “hacker”) and originated within technology startups. However, a growth hacker does not need to be a developer, as Ellis explains.
Growth hackers in startup companies find ways to use incoming data on their customers or users to determine their best practices for acquiring new customers. This is possible due to the new nature of what a product can be. For a long time, products were physical goods – such as a book, hammer, or deck of cards. Now, products are often lines and lines of code that lead to a functioning online platform.
Because of this shift, products can now play a role in their own adoption. Take for example the plethora of APIs (Application Programming Interfaces) available to developers. Many sites now incorporate a “sign up with Facebook” or “click here to Tweet this article” buttons. These functionalities are ways for those products (Facebook and Twitter) to aid in their own adoption. They market themselves, and these channels can be automated.
Trackable
Through APIs and other analytics tools such as Hootsuite, MailChimp, Google Analytics or KISSmetrics [link to Supporting Content], founders can track their best sales channels and campaigns. A campaign is any update or Call To Action through any channel – for example email, Facebook update, Twitter update, blog post, or video. By installing analytics into your social media or outreach tools, you can understand where your traffic is being referred from and focus on the most effective campaigns.
Almost all analytical tools such as Google Analytics or KISSmetrics will require adding a few lines of code from their platform into your own product. It is extremely important to be sure these analytical tools are dedicated to maintaining fast load times as to not slow down your product and diminish its value.
To successfully track your startup’s success, you need to determine your Key Performance Indicators, or KPIs. There are tons of vanity metrics out there, such as likes, shares, followers, etc. However, these in most cases do not give a true measure of anything; you must define what success is for your startups.
Let’s take for example a startup that wants to acquire 50 users this month. This may seem like a daunting task, but tying it back to other, more palatable metrics can help. If you estimate a 5% conversion rate, you know that to get 50 users you will need to get your product in front of 1,000 people. Choosing relevant and measurable KPIs to work towards is crucial to early startup success.
Repeatable
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If your process involves salespeople, you can add new hires and they can achieve the same productivity level as the original sales team.
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If it’s a touchless web sales model, your web traffic converts in a predictable way through your web site.
Scalable
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You can increase the sources of your leads and/or web traffic without reaching a near-term limit.
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The resources (e.g. salespeople) in your conversion funnel can easily be scaled without reaching a near-term limit.
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Your cost to acquire a customer (CAC) is significantly less than the amount you can monetize them over the customer’s lifetime.
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In a SaaS business, I recommend that lifetime value (LTV) should be more than three times higher than CAC.
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It should also be possible to recover CAC in less than 12 months for a capital-efficient startup.
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LTV should be calculated using gross profit (not revenue) after cost of goods, cost to serve and cost of on-boarding.
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Leveraging Social Media
Social media has begun to emerge as a preeminent medium for marketing businesses. With so many startups and established businesses trying to reach users through social media, it can be hard to be heard over the noise. However, creativity and best practices can give your startup an edge in the social media landscape – and it can be done for free!
One common pitfall of startups trying to leverage social media is the idea that they have to master all social media channels. Different social media platforms appeal to different demographics and characteristics – choose the platform that is right for you!
Social media is best utilized as a tool to engage your audience. Don’t try and talk at them – talk to them. Tell your brand’s story. If you can get your audience and users engaged, they will have a more positive affinity for your brand, and by extension, your business. According to KISSmetrics, 78% of social media users said posts by brands influenced their purchase behavior moderately or highly.
Another important aspect for social media activity is timing. More studies are being done on the effect of timing and best times to post to different platforms, with some of those findings published in the infographic below.
Highlights
Facebook:
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Saturdays are best.
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12 p.m. EST is the best time to share.
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0.5 posts per day is the best frequency.
Twitter:
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5 p.m. EST is the best time to get a retweet.
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1 to 4 link tweets per hour is the best frequency.
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Tuesdays, Wednesdays, Thursdays, Saturdays and Sundays are best.
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6 a.m. EST, 12 p.m. EST and 6 p.m. EST are the best times to tweet in terms of clicks.
Crafting Effective Calls To Action
At the end of the day, you need to make sales. While you may get your product in front of thousands of people and generate hundreds of leads, how do you turn those leads into sales? Your startup marketing needs effective Calls To Action (CTAs).
A call to action should be one of the most apparent and eye-grabbing parts of a website, packaging, or mailer. In other words, if you stand six feet away from your product or campaign and squint your eyes – your call to action should be what sticks out. HubSpot offers several suggestions for crafting a successful CTA for your: [8]
1.) Use actionable language. You want the reader of your copy and call to action to feel as if you are talking to them. Say things like “Click here to…”, “Download the…” or “Learn how to…”.
2.) Align your copy. If your landing page offers a free eBook, your call to action should be to “Download the eBook here” and not “Download our guide to […] here.”
3.) Outline your value proposition. Make your value clear to the customer. Why should they engage in your CTA?
4.) Make it time-sensitive. Create a sense of urgency in your CTA to capture the readers’ attention and drive a response.
5.) Design smart. Literally, make your CTA larger than other aspects of the screen or campaign it is involved in and in a prominent location. This plays into the squint test. In addition, your CTA could contrast from the rest of the page and should look like something that can be clicked.
6.) A/B Testing. Create multiple versions of your CTA and test it out among a test group. Which one is more compelling?
Conclusion
Marketing can make or break a startup – which is a tough pill to swallow with typically a small budget to dedicate towards marketing efforts. However, due to the new nature of product, the advent of technology, the development of growth hacking, and social media, it can be done more easily now than ever before.
With so many tools at an entrepreneur’s disposal, it is important to focus on what can be used most effectively and not try to be master of all trades. Determine Key Performance Indicators and track them. By focusing on Repeatable, Trackable, Scalable, your startup should be able to acquire users at an exponential rate. However, it is crucial to understand who your customer is and what market you are serving.
In the end, winners are often creative. What can you do in terms of marketing or growth hacking that others aren’t? How can you use technology to your advantage? In thinking back to our earlier Airbnb example in Chapter 1 [link to Chapter 1] and their use of Craigslist, you can see how creativity plays a huge role.
The most successful startups turn all of their employees, as well as their product and users into an army of marketers. Make your product sell itself, and the positive word of mouth will do more work than any marketing budget.
In the next chapter, we will discuss the current funding landscape.
References
[1] http://jonasgyalokay.com/growth-hacking/
[2] http://blog.kissmetrics.com/ultimate-guide-startup-marketing/
[3] http://www.quicksprout.com/the-definitive-guide-to-growth-hacking-chapter-1/
[4] http://gigaom.com/2010/11/27/accelerate-your-startup-a-repeatable-scalable-sales-model/
[5] http://beingyourbrand.files.wordpress.com/2013/07/how-brands-can-choose-the-right-social-media-platforms-for-their-goals-infographic.png?w=600&h=4537
[6] http://sethgodin.typepad.com/seths_blog/2006/04/ode_how_to_tell.html
[7] http://blog.kissmetrics.com/wp-content/uploads/2011/06/science-of-social-timing-part-1-sm.jpg
[8] http://blog.hubspot.com/marketing/call-to-action-optimization-ht
Source Twitter Handles
KISSmetrics – https://twitter.com/KISSmetrics (@KISSmetrics)
Sean Ellis – https://twitter.com/SeanEllis (@SeanEllis)
David Skok – https://twitter.com/BostonVC (@BostonVC)
Seth Godin – https://twitter.com/ThisIsSethsBlog (@ThisIsSethsBlog)
HubSpot – https://twitter.com/HubSpot (@HubSpot)