The 5 Most Important Marketing Spends for a Start-up

As I work with a number of start-up companies, I am often approached by these hungry entrepreneurs (and their investors) to help execute a demand generation campaign,largely in the 'lean marketing' or 'growth hacking' mode. However, there are a number of prerequisites I demand of prospective clients at early-stage start-ups. These prerequisites are fully marketing activities, but also have cross-functional utility because it helps young companies get a sense for themselves before promoting themselves to the outside.

1. Market and competitive research

Useful to finance, sales, and product development, gaining a full understanding of the industries and individuals (personas) that are in the target market is critical. Young companies should know their customers as well if not better than they know their own product or solution. The same goes for the competition – there is always competition, even where the product, niche, or industry is brand new.

2. Positioning strategy

The world of marketing is ruled by Venn Diagrams. Understand the similarities, differences, Unique Selling Proposition, potential black holes and growth opportunities in your market. Know the desired customer behavior and how slow or rapid adoption would reshape the market and your own assumptions.

3. Go to market planning

Plan the routes to market and go to market strategy for each channel; direct sales, online, partner, etcetera. I am always surprised at the number of companies (even large ones) seeking to promote their solution before they even fully understand how they will sell and fulfill orders. Really.

4. Branding and identity

In spite of the myriad number of self-proclaimed designers and fiverr designs out on the market, leveraging the knowledge and experience of a professional designer is critical to bring the above three investments to the public. A designer that understands your market, what you are trying to achieve, the emotional bond you want to create in a customer, how colors, typefaces, and imagery interact. Great marketing is easily undermined by an identity that doesn’t reflect the marketing message.

5. Inbound/content marketing strategy

Finally, the first stage, 'growth hacking' promotional, demand generation actions begin with the foundations of the content management strategy that drives initial value and interest among your target publics. As content management takes some time to spin up, this should be initiated as early as possible, and ideally prior to product release, in order to drive demand upon release.

Once these five prerequisites are established, then, and only then, should any shorter-term aggressive promotional lead generation activity be undertaken. Excepting perhaps the days of being featured on Oprah’s Favorite Things, there are no shortcuts to effective marketing and sustainable lead generation for a start-up, or for any established company.

Fast and cheap and unsuccessful

New entrepreneurs. Committed to a diet of macaroni, peanut butter and cases of Mountain Dew for late night 'ideation' sessions. They tell me they're going to be better... because they're faster and cheaper. 

Copying what has been done before in a way that is faster or cheaper is a formula for long-term failure.

Faster and cheaper is not better. Better is better.  

Instead, the success formula is a disruption - a new way to look at things, a new way to define your market. Faster and cheaper is a natural order of established markets, so start-ups dedicated to this proposition will be overrun. Even if you go 'all-in', spend all the angel's money, live a life of sleep-deprived sacrifice to build the mousetrap, there is no guarantee of success if all you are chasing is a faster or cheaper way to do an old thing. Faster and cheaper are only useful long-term when they are outgrowths of the new and differentiated.

If all your new idea offers is a faster or cheaper way to do an old thing, think again.  

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The price is falling! The price is falling!

Just a note for the editors of marketing pubs out there: "how to market in a sagging economy" articles have been done. To death. Okay, we get it. Preaching to the choir here. Move on.

Its a valid subject, but most of these articles are promotion-oriented. What hasn't been discussed as much is the role of price strategy in a sagging economy, and generally. This especially occurs to me today because of a current client project, where pricing strategy is the current key gating concern prior to product launch.

Obvious Secret #1: Pricing strategy, especially in a weak economic environment, has little to do with, well, price.

Even in the best of times, great products, great promotions, clever ads and a loyal base can be undone by a misguided or misapplied pricing strategy. This is because left to their own devices, finance and sales executives will see sagging demand as a numbers issue and not a brand issue. Plus, it is expedient to react instinctively with a red pen (cutting prices) when profits shrink and sales falter.

Bad plan.

Unstudied discounts are not as easily undone tomorrow as they are done today. Price cuts are a short term solution to a larger, longer term issue; that is, the product hasn't established the brand position to maintain margin in a discount environment. Understand that price cuts are welcomed by consumers but always create subtle dissonance - an inability on the part of the consumer to properly relate price to value, so when the market returns upward, as it always does, this results in a nearly Sisyphean effort to re-establish a brand position held prior to the discount. Pricing is not a cost issue - it is a value issue.

Understand the way customers make buying decisions and become far more visible, and more efficient, in delivering on these criteria; this will always be more effective in building recession-proof brands. This is because pricing is a long-term strategy, not a short term tool. When the economy sours, there are other levers to pull - operating costs, added value, extended hours, free upgrades. Think about supplier pricing and work new billing models to manage cash flow. Invest in money-saving IT investments such as Unified Communications and collaboration products. Reevaluate your market position and consider new marketing initiatives to go after markets competitors might have recently abandoned. Fire some costly customers. Adjust invoicing offers and procedures to improve cash flow and reduce defaults. These tools and others are manipulated in good times and bad with far greater flexibility than price, which can only move in two directions: up, or down.

Its easy to be Chicken Little and think in blocks of fiscal-quarter-bound panic over a current fiscal situation, but creating and applying the right principles for pricing allows for decisions that over time not only weather current storms, but position a company for consistent growth over the long haul.

How much green is there in green?

In a recent price sensitivity analysis conducted by Rockbridge Research, it was discovered that most consumers would purchase a product indicated as 'green' (environmentally friendly) over a 'regular' product of the same type, but only if they were the same price. The study concluded that overall, "...as the green product’s price increases, consumers’ inclination towards it decreases."

Not surprisingly, specific audience categories offering unique attitudes toward the 'green movement' differ in the value they place on such products. Six distinct consumer groups within the overall adult consumer population were identified, with “Green Tech Leaders” willing to pay far more for a green certified product, while “Anti-Greens” are not willing to pay much more at all. That alone is interesting as it still indicates a willingness to perhaps consider the positive social implications of buying green even to those who do not value it themselves. This indicates that green product attributes are valuable, but not widespread enough to accommodate anything but a modest price adjustment.

From a share prospective, a green alternative may move the needle. From a margin perspective, this study indicates that their isn't yet much green in being green.

To learn more about Rockbridge’s Green Technology Segmentation, click here.

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The Hype Cycle

Although an awesome marketing name for a chrome and flame-painted chopper, the hype cycle is not a creation of Orange County Choppers, but rather a term of the Gartner Group research firm and refers to their interpretation of the development, maturity, and adoption of technology.

You know, the path between 'slideware' (unproven ideas that only exist in PowerPoint slides) and 'general availability' (store shelves).

Speech recognition is one of these technologies. In 2000, they were admittedly my slides suggesting that a speech platform was 'around the corner'. In 2003, when they were Microsoft's slides (with the introduction of their speech server) and again now, these slides are re-issued with a Google logo.

I know a lot of earnest people in the field of speech recognition and I know they spend a great deal of time refining and improving speech recognition capabilities in myriad applications. In this article, you'd think that a decade of inprovements, trial and error, and frankly, millions of VC dollars hadn't already been expended when Larry Page and Sergey Brin decended from the heavens, touched the complicated technology, and made speech 'finally viable' with Google Voice.

Speech technology is already a viable (and functioning) technology. But I also understand that there is a required ecosystem of hardware, software and services in speech technology to make it 'work' as a fully-functional platform of the future, in spite of the hype that accompanies a Google launch of anything from a phone OS to breadsticks. ("Peak of inflated expectations" in graph.)

It is a gentle reminder as product marketers, we understand that it is as important to build expectation and excitement at a launch as it is to control those expectations. The marketplace doesn't allow marketers to underperform to their promises, a lesson we knew but were (supposedly) reminded of with the Internet bubble. As this article points out, and Microsoft discovered, speech is a human construct that requires a great deal more than money and technologists - even Google money and Google technologists - to make it meet the long-held expectations we have held for speech as an interface in the near term, and to overcome the long-held cynicism that a future feature-rich, reliable 'speech-driven platform of the future' will now have to overcome to establish a marketplace. Speech has sat at the peak of inflated expectations long enough. It desrves to grow, but only if allowed to drop into Gartner's "trough of disillusionment" first (graph).

To be certain, speech will drive a viable comprehensive OS platform one day. Just not this Thursday. Or next.

Lookin' for latte in all the wrong places

When I was last in Zurich, in 2006 (negotiating a settlement regarding trademark infringement by Swisscom - shame I don't ski) I took a few hours to explore the city on foot. After I had passed the fourth Starbucks, it struck me that I had likely traveled 16 to 20 city blocks, so made my way back to the hotel. I had counted my distance in Starbucks, not blocks. The same could have been done in every American city and virtually any other city in Europe. And then.

Three years later, Starbucks has shuttered hundreds of locations worldwide and what was once an iconic brand and a unique experience now looks to McDonalds Value Meals for salvation. The thinking must be that they are looking for ways to ingrain Starbucks into our routines the way McDonalds has done. Yet in addition to the grab and go $5 latte market, Starbucks was always a destination for the self-employed, the freelancer, the coffee networking types to meet and discuss business. With this in mind, just how much business do Starbucks executives think is conducted at McDonalds?

In the interest of fairness and full disclosure, I am not privy to extensive research regarding Starbucks customer base. Anecdotally, however, these types of meetings, good for about $10-15 a table and high table turn, are a critical market - and in my neighborhood, Starbucks are losing these common meet-ups to Paneras Bread. Paneras welcomes this type of guest with large tables and free wifi, which activates with a polite reminder regarding etiquette in the use of the facilities. (Starbucks is still trying to wring revenue from agreements with AT&T and T-Mobile.)

There are other local restaurants, regional and national chains that serve a similar market, but few are as effective as Panera at creating an environment as specifically well-suited to the needs of the increasing legions of the 1099 workforce.

Last year the 1.3 billion (revenue) Paneras stock soared from $32 a share in January to about $50 a share at the end of the year with a debt-free balance sheet. McDonalds, meanwhile, struggles with systemwide sales off by 4.6% in February. McDonalds might be aspiration for Starbucks in size and brand ubiquity, but Paneras reflects the needs of its customers.

In latte as in life, it is important not only to understand your competition, but to be certain that you've properly identified who they are.

...dogs and cats living together - mass hysteria!

Along with this post's title, one of my favorite movie quips, offered in deadpan delivery by Howard Ramis in Ghostbusters, is "Sorry, Venkman, I'm terrified beyond the capacity for rational thought."

Yet this is a lot of what we've been hearing lately from colleagues and pundits. But this isn't the End Of Days brought about by the Sta-Puft marshmallow man, but rather it is a long overdue reminder to focus, work hard, live within our means, and reprioritize.

While things will change over the next days and weeks, and some of it may perhaps eventually change my tone in this post, right now I'm not seeing a lot of bad news so much as a lot of fear and uncertainty, and opportunity always arrives with uncertainty. Buy into the fear and sell into the optimism. It's Warren Buffett's approach for the markets and should be all marketers' as well. Our response to a difficult situation changes our ability to handle it.

No doubt, things are going to stink in the near term, because marketers have by and large never properly positioned themselves or the function for the key role it should assume during a market slowdown, opting instead to stammer defensively and nervously paint lambs blood above our office doors. Still, a ten trillion dollar debt should worry us. The potential for a nuclear Iran is disurbing. Climate change has me checking under the bed for the bogeyman and Al Gore.

But this? Nothing that a little ingenuity and informed strategic thinking can't overcome. Now is not the time for marketers to be running for the exits. Companies that spend this time looking for greater efficiencies and new approaches will maintain in a slowdown and position themselves for exceptional share growth when the money starts flowing again.

There are a number of studies to support this. Download a few. Discover specific ideas. Seek knowledgeable advice. Recalibrate.

Smile.

Supercomm Returns

Remember Supercomm?

'Back in the day', as I catch myself using phrases my father once did, Supercomm was the 'it' event of the telecom industry. It was the type of event where if you were in the business you had to launch something, or close a deal, or both, and then come back year after year with a bigger, better display - this show sucked the life out of many annual marketing budgets. And like car shows and builder shows, long before American Idol it was a haven for singer-dancers to take a break from waiting tables and be discovered in an exhibitors booth – by showcasing their unique talent of staying in key while rhyming "Motorola".

Sponsors TIA and USTelecom had split the event years ago, each claiming the mantle of Supercomm to fair to middlin' success, but in recent years their shows came together again as NXTcomm. Now, realizing that even years on from its heyday the name Supercomm has cachet, and with the June 09 Chicago event Supercomm is once again Supercomm.

According to the news release, TIA and USTelecom say the name change reflects recent developments in communications. That's a political statement in a political year. It's clear to me and other observers that the Supercomm cachet means a return to old style 'if you aren't here, you're not anywhere' power the organizers would like to regain. The demise of Supercomm was followed by confusion, weakness in both events, and general dissatisfaction with trade shows in telecom. I count myself among many irritated exhibitors who wanted TIA and USTelecom to reunite – which they did as NXTcom, then, now, properly, again as SuperComm.

Bring out the rented ficus and double padded orange carpet. I've clients to call.

The Mouse That Roared

I was recently speaking with a friend who found himself in near panic as he looked around and saw his four employees hunkered down, planning the next great score, mastering the next great presentation, closing the next big deal.

He panicked because he had just received 'the call'. Megamega Company was moving into his market space. All was lost. Or was it? How could he compete when a larger firm was moving quickly into his territory, now finally seeing the opportunity in what they once dismissed as 'crumbs'? As we talked, five key themes emerged:

First, he needs to change his mind, and those of his team.

The competitor can talk big, but he can talk 'niche'. They can talk resources, he can talk service. Every negative a positive, every obstacle an opportunity.

Second, don't mistake the competition as the target.

As much as he needs to make his negatives into positives, it is more important to make certain he can deliver on the real needs of the customer. He mustn't focus on the competition, instead learn the sweet spot that will address the majority of the customer requirements, and then additionally convince them that they need something only he is selling. Don't sell against the competitor, sell the customer toward a solution.

Third, learn to love Inspector Gadget.

Technology is an area that levels the playing field, and in fact often tilts it in his favor because it is far easier for small companies to deploy new technologies than for larger established firms that are, like legacy telecommunications carriers, burdened with the sunk costs of legacy technologies or are required to resolve ROI in months - harder when deployment is made across thousands of employees. He needs to apply technology to create competitive advantage, lower response times, provide data faster and more accurately to his customers. He isn't small, he's nimble.

Fourth, sell. Simply fill that funnel. Do not let one opportunity define a quarter. I knew a salesperson who, with the blessing of his bosses, spent the better part of a year chasing a single Big Fish like some Ahab manaically pursuing Moby Dick. Ultimately, the story ended the same. He needs to be able to create his own luck, seek out new opportunities, so that he can choose the battles he is most likely to win.

Finally, he needs to remain singularly driven on the vision and mission of his company. Every business needs to follow a vision of what they will be in 1, 5, 10 years. This will help him keep his eye on the prize, choosing the right strategies and investing in the right tactics to get him there.

It's not the end. The entry of a big player into a nacsent market legitimizes the offering for all, and the small players, like my friend's company, still benefit from first-mover advantage.

The ying and the yang

I hear all the time that if the customer were simply a, well-informed, and b, rational, a sale would be easy. Well, I'm here to tell you that these represent the two ways to make the sale, and both can be leveraged through effective marketing communication.

If your offering is indeed the smart choice for your customer, then by all means, help your customer get smarter. Educative sales, or consultative sales are effective in this vein, where your marketing communications are targeted toward speaking opportunities, bylines, blogs, and high-profile media relations efforts. This appeals to the educated, rational value buyer. Yer all rational buuyers have a streak of irrationality, so...

If your offer requires a change in impression, assumption, habit; or if you need to compete not on utility and value but on fashion and emotion (irrational) then by all means appeal to the emotions of the buyer - even in a business to business space - to drive out considerations on a strictly formal qualitative form. "Nobody ever got fired by buying IBM" isn't a commonly understood mantra because itt is rational, it is the result of the emotion of fear on the part of the buyer. Tap into fear, lust, comfort, or any of the other 14 or so emotional triggers and fill a need - albeit an emotional one.

Embrace the rational and irrational buying signals as opportunities, not barriers.