The founders of a technology company were bewildered and somewhat frantic at a recent meeting. They had spent tens of thousands of dollars to construct a product and build a sophisticated website to sell it, yet they’d hardly had any sales or even traffic to their site.
I started with some essential questions to get to the heart of the problem:
- How do people find your site now?
- Who’s your target market?
- How do you plan to drive traffic and customer conversions?
- What kind of revenue are you expecting to generate?
I also asked them my broadest question of all: "What does success look like to you?"
The founders couldn’t answer.
I have nearly 20 years of experience developing and running marketing programs for Fortune 500 companies as well as helping new and established companies launch products. However, over the last few years I’ve become increasingly alarmed about how common my conversation with those founders has become. Whether entrepreneurs are aiming to make a living or make millions, these brilliant and creative people are so focused on the development side that marketing is an afterthought, if it’s even a thought at all.
The end result is usually a product that works for a few people and not a mass audience. Or, if it does work for a mass audience, the right message isn’t getting across. Or it runs up against direct competition. It’s a mistake for startups to think that if you build it, customers will come.
Marketing Strategy Basics from Day One: The Big Picture
Startups aren’t the only ones to eschew marketing. Even General Electric didn’t include marketing in its initial business strategy
until about 10 years ago. Everyone, from the largest company to the smallest startup, needs to implement the core fundamentals of marketing, and those principles can easily align with the entrepreneurial spirit. The end result is a product that people will discover, find useful, and purchase.
Ideally, companies should build in marketing from the beginning. But for my startup clients, or for anyone who has an established product but sagging sales, it’s not too late. Below is a course of action to reverse-engineer a marketing plan.
1. Write a business plan
. So often I see people come up with a great idea, run it by a few friends "in confidence," get good feedback, and then throw all their energy and money behind building and manufacturing. Many people debate whether entrepreneurs need a business plan at all, but my experience supports recent research: people who spent the time to write a business plan
– and it can be as short as a single page – were two-and-a-half times more likely to actually launch a business. "Early planners...are doers," say Liao and Gartner, authors of the study.
2. Know the brand value proposition. I’ve gone to numerous entrepreneurial events where enthusiastic, up-and-coming CEOs explain how they built their product, how it works and all of the state-of-the-art technology it contains. But when it comes to articulating their brand value proposition, they go silent.
A brand value proposition is a straightforward description of who the product will help, how it will make things better for the customer, and why the customer would choose the product over something else. It’s difficult to express a brand concisely, but successful companies clearly define what makes their product different, who will buy it, and why.
For example, on the surface, the popular game Words with Friends is simply a digital version of Scrabble. However, the game differentiated itself by (1) being available on a global platform (Facebook) and (2) making it possible to play Scrabble with anyone, worldwide. A proposition can be cheaper, greener, better quality, or faster. Just about any aspect can differentiate a product; but a product needs to provide a unique value or benefit to customers, or they won’t buy it.
3. Take customer segmentation seriously. Customer segmentation is one of the backbones of marketing, but when I ask the question, "Who’s going to drive your revenue?" I can’t tell you how often I get the answer, "Everybody."
"Everybody" is never the answer. There will always be people who don’t need or want a specific product. When the focus falls away from the customer, companies either end up designing a product that doesn’t solve customers’ needs, or they are unable to get their product in front of the right audience.
The other reason to focus on customer segmentation is that the technology to identify and target customers is more sophisticated than ever before. Picture this: a new mother receives a coupon for diapers on her smartphone as she steps into a big-box store. This technology, allowing companies to achieve hyperlocal targeting, is already making its way into our daily lives. With Big Data, businesses can construct an even tighter profile of potential buyers. They can create marketing materials that are highly relevant to targets and reach them at the exact right time and place with the right message.
4. Know where the product stands in the market. Is the product something completely new that will create a new category? Or is it trying to break into a crowded market? Whatever the product is – a category builder, a "me-too" product, a share stealer, or something in between – every startup needs to know where its offering stands in the marketplace. Not every product needs to be a Facebook, which is a clear category builder. Before Chipotle, did anyone think there was room for another fast-food restaurant? A product’s position in the marketplace helps determine both the level of marketing a company needs, as well as the strategy behind marketing spending.
5. Leverage pricing as a marketing tool
. Pricing your product is about much more than revenue or meeting profit margin goals. Pricing is a major part of a product’s marketing strategy and long-term business plan. Knowing where a product stands in the market, who the target is, and the product’s brand value proposition will all contribute to price. Price is how products communicate value. If an item is perceived as luxury, buyers will often pay a premium. A "me-too" product can compete by entering the market with a sandwich pricing strategy
to avoid low-price race in a product category.
Pricing models today are almost infinite. If competitors charge a one-time fee, a new company can differentiate itself by charging a subscription. Companies can choose to discount a product or service in exchange for building up a valuable customer database. For example, the online dating site OKCupid offers dating services to clients for free. However, the company earns money by collecting rich data on clients and selling ads and data to others.
6. Remember that marketing isn’t free. The best marketing strategies can be executed on a small budget (digital outreach in particular can be very cost efficient), but some clients are still surprised when I present them with costs. Startups should price their products to generate enough revenue to support marketing. A general rule is that eight to 12 percent of a product’s gross annual revenue budget should be allocated to marketing, but that percentage varies greatly. A "me-too" product typically needs a smaller marketing budget than a product that is the first in a new category – the first company will need to spend money to both establish the category and introduce the product.
Final Steps: Marketing Strategy Details
Once the basics of a plan are in place, companies can strategize about the details and budget of the marketing plan, including where to allocate dollars (digital media, print, advertising, PR, promotions, etc.), as well as content strategy (developing content that will resonate deeply with the target audience).
People start businesses because they have an idea, a dream or goal that they want to bring to life. While it’s tempting to jump right in, stepping back to think about the big picture and actually put those goals and dreams in words via a business and marketing plan is worth the time.
When startups have a business plan, know their product’s brand value proposition, understand their target customer, and are able to leverage pricing and their product’s place in the market, it’s much more likely they will achieve success.
If you build it... and you have a solid marketing strategy... they will come.
Mike Lemon has worked with major marketing agencies, Fortune 500 companies from Nike to Mattel, OpenSky.com, as well as startups, to develop marketing strategies that achieve growth and profit goals. He is experienced in P&L management, turnaround situations, e-commerce, content strategy, and digital strategy.