Startup Marketing is for Growth

I’ve been interested in studying how startups use marketing as an essential lever for growth. So, startup marketing will be the subject of my next few blog posts.

I recently asked a VC friend who has seen his share of startups why aren’t startups generally good at marketing, and he told me this via an email: “The marketing hire is the hardest hire for our companies to make. The failure rate is higher than any other.”

I asked him why? His response was: “because they are all led by product oriented founders who don’t value marketing“.

And about month ago, when I wrote a post on the pitfalls of native marketing, Brad Feld had an insightful comment, answering a similar question. He said:

“One of the problems with both small and large companies is that their marketing sucks and the marketing leader (CMO or VP Marketing) has a one dimensional view of their role. There are very few real CMOs who have a seat at the executive table, respect of their peers, and the real impact on the strategy of the business. Most end up spending their time doing what you call table stakes as well as thrashing around outside their own areas of competence.”

That’s a hard-hitting reality.

I didn’t ask CEO’s/founders because I know most would not admit their marketing isn’t great. Yet, there isn’t a successful startup that didn’t master some element of marketing in their journey to success.

• Facebook. Their early marketing was focused on getting developers to write Facebook apps. I recall those local meetings back in 2008 and 2009.
• DropBox. They mastered effective viral marketing, where each user was incented to invite others and each received value.
• AirBnB. They were known to have bot-harvested a ton of responses to ads on Craigslist pointing to their listings to bootstrap responses for their early users.

These all seem like marketing stunts or exploits. But they worked, and if you were to ask a marketing professional 10 years ago if these tactics were in the marketing books, you couldn’t find them.

So my first point is that startup marketing is very different from traditional marketing, in large part because of online/digital marketing, but also due to the fact that traditional marketing mostly focuses on established markets and competitors, whereas startup marketing is about creating demand for your product and acquiring emerging user segments, and that’s not the same as fulfilling demand for an existing need or market. In the same way that a startup is not a small version of a large company (said famously by Steve Blank in 2010), startup marketing is not a scaled-down version of traditional marketing.

Christopher Colombus didn’t have a plan or a map to reach the New World. He discovered it as he sailed along. A lot about startup marketing is being re-discovered. Some old rules apply, others are adapted, new ones are made-up, and some old ones are being tossed down. The key is in knowing which is which.

Allow me to digress for a minute.

WHAT DO I KNOW ABOUT MARKETING?

Depending on when you knew me first, you may think of me as an entrepreneur, a consultant, an author, or an old Hewlett-Packard marketer. True, my entire career at HP was filled with sales and marketing roles. But from 2006-2008, I headed up Cognizant’s global corporate marketing at a time when the company was growing at 40%, close to a mature startup’s rate. Most recently, in the past four and half years, with Engagio and Eqentia, I was deep in the trenches of startup marketing, as I filled the marketing role among other things. I don’t think we did too badly at marketing because our mindshare was a lot bigger than our marketshare. And in the past 2 months, I was entrenched with the Marketing group at Influitive, a successful B2B SaaS company for advocate marketing.

So, my experience with marketing is well rounded and hardened with first-hand startup experiences, in addition to having done it across four decades, from the 80’s til now. I’ve seen the big, small and medium sized type of marketing, with small, medium or large budgets, working with small, medium or large teams, faced various market positions from being leader to challenger to aspirant, and competed in small, medium and large markets,- both in B2B and B2C settings, and was a doer and a manager.

Each time, I adapted my role into the new environment, learned the new stuff and un-learned what was old or irrelevant. Most importantly, my experience with startup marketing is very recent and from the inside of the trenches.
#End of digression.

FIRST THING FIRST: PRE OR POST PRODUCT/MARKET FIT?

There is a key pivotal phase in the life of a startup. Before Product/Market fit (PMF), and After Product/Market fit. Marc Andreessen explains this very well in this 2007 post, The Only Thing that Matters.

Before Product/Market fit, you’re probably spending time getting noticed in the media and tinkering with marketing. That’s ok. You’re getting warmed-up. Marketing doesn’t really matter that much until you need to grow as soon as you achieve product/market fit.

PMF + Viral Value = Growth
PMF + Viral Value + Marketing = Hyper Growth

Product/Market fit happens when the majority of your customers tell you, not because you have a lot of users necessarily. Reaching Product/Market Fit opens the floodgates to the real possibilities of growth and opens the door to a variety of marketing activities.

I’ve depicted the evolution of a marketing and growth for startups in the following graph, to elicit comments. I will dissect this particular graph in a later post. I’m not sure it’s perfect, so any feedback would help to improve it.

The key point is that marketing is an evolutionary activity. Deciding what marketing levers to pull, and when is a function of the stage you’re at, and variables such as revenues, # of employees and # of users.

8 LESSONS FOR STARTUPS

Let’s go over key marketing factors at play and some of my learnings from the past four and half years running 2 startups, working at a 3rd, and interacting with several others. I will come back and dive deeper into some of these points and will add some new topics in future posts.

1. Online Marketing is only a starting point
A few years ago, digital marketing was part of the mix. Now, it’s an essential starting point for the new mix. But don’t do just do online, inbound or social marketing. Online metrics will tell you only half of what you need to know. The other half is the context you acquire and what you learn from talking to customers and users. And as long we live in a physical world, you will eventually need to address non-online marketing activities.

2. Viral success is not enough
Many startups start to hit the growth curve because some aspect of their viral exploits are working, and they start adding users like crazy, e.g. 5,000 new sign-ups per day, 10% growth per week, etc… Life is good. You’ve figured out customer acquisition, but that’s not a signal that you don’t need marketing. Having a large number of users or customers actually opens up new possibilities in marketing whereas a small number of users will have a limited viral impact.

3. Marketing starts with customer development
The more you grow and mature, the more marketing levers you’ll need to use (see the graph Marketing in Motion). That’s why, to Brad’s point above, eventually you’ll need a marketing person that is multi-faceted and not just peaked into online marketing tactics. But that person doesn’t have to come from the outside. They might have grown and evolved with you because customer development might be where they started. In other words, marketing is an extension of successful customer development.

4. Market your customers
As you grow, you’ll start to realize that your users and customers are doing wonderful things with your products. Now, you need to communicate their success with case studies, reviews and testimonials. Find out how your customers are innovating with your products. Uncover how your product has changed or transformed them, and start telling the world about it. Michael Schrage’s e-book “Who do you want your customers to become” is a quick read that helps you understand how your products transform your customers.

5. Market your position
That’s probably the single most important thing that companies miss the boat on. I can count numerous successful startups that have achieved market leadership, yet they don’t know how or haven’t been able to act like a leader. They aren’t marketing their position right. Marketing your market position is different than marketing your product. When you market your position, you need to tell everybody you’re #1. And if you’re not #1, then tell everybody you’re #2. There’s a marketing classic book Positioning: The Battle for Your Mind by Al Ries & Jack Trout. It’s the bible for positioning, and I keep re-reading it every 2-3 years since I first saw it in the mid-80’s.

6. Marketing is mojo
Magic is the unspoken part of marketing,- the art, the black magic, the surprises, the stunts, the charm and the sex appeal. Once you pass the required analytical skills, a marketer that is not creative is a dead marketer. Go dream-up some unique partnership, sponsorship, product placement, e-book, blockbuster story, viral hook, or something that no one expected. Do something that makes your competitors think: “why didn’t I think of that”, or that makes your VC say: “wow, that’s good marketing”.

7. Time vs. marketing budget
I constantly hear startup CEO’s saying they don’t have a big marketing budget. Fine. But initially, all you need is a time investment in marketing. That could be part of your time, or a part-time person that takes an operational role. There are no excuses for not spending time on marketing especially after you have launched. If you don’t have the budget, budget for the time.

8. Marketing is about iterations
As a startup, you know all about iterations. Marketing is no different as you focus on figuring out how to get your products or services in front of more users, day in and day out. So, you can apply the same iterative and experimental techniques as you do for your product. Try something and measure it. Then either discard it, tweak it, ride it or double-up on it.

MARKETING IS THE GROWTH LEVER

The hardest part of marketing for a startup is to take it seriously, to commit to learning it, and spending time on it. If you’re a young startup CEO/founder who has come from the product or engineering ranks, you probably don’t know what you don’t know about marketing (sorry…not meant as an insult, but based on my interactions). So the biggest challenge is to admit it and quietly learn more about it.

You don’t have to figure everything out at the beginning. And beware that what has worked for others doesn’t necessarily work for you, because you don’t really know what their starting position or objectives were. Your marketing mojo must be unique and original to achieve maximum impact.

After Product/Market fit, you still need to reach the point where your marketing spend is in line with your revenues, whether you’re driven by an Average Revenue per User (ARPU) or Monthly Recurring Revenue (MRR) metric. Take your top line budget, or projected revenues and assume you’ll spend 5-10% of it on marketing. Be aggressive with marketing, and let it lead your revenue, not lag it initially, because it’s a lever of growth.

As a marketer or a CEO, your goal is to spread the product around and become a big company, right? So, if you want marketing to become a big lever of growth for your startup, then start giving it a bigger piece of your mind.