Have you ever been all dressed up with no place to go? That's a common scenario for startups in today's distracted world. Founders, who are often experts on their product or service, learn quickly that a great concept and a strong team aren't enough to get their beautiful company to profitability. The hard part is getting anyone to notice. In this episode, we explore some of the commonly held axioms of marketing and see how they apply to 2021 startups.
Good afternoon, Joe.
We’ve covered a lot of topics in these podcasts from term sheets and valuations, to predicting the future of startup funding. One thing we have not discussed however, is marketing for startups. Do you think a startup needs a marketing plan?
Well Joe. I have a lot of opinions and some experience and expertise in that, but you’re the marketing guru, and industry expert. You’re recognized so, by the startup community. So, I’m going to turn around and ask you the question. Do you think a startup needs a marketing plan?
Dave, thank you. Nobody’s ever called me an expert at anything, other than eating tacos. So, I can level in up here. Before I answer that question, I’m going to update my LinkedIn real quick, with that new accolade, because the other one wasn’t playing really well. I think you have to write down what your intentions are for your marketing, so that people can play along, and you can all follow the same script.
I recently read a post by HubSpot titled, Startup Marketing Strategy: 18 Ideas and Tactics that Actually Work. I’d like to go over some of those, and get your feedback on some of the things that HubSpot says. First thing they say is, to use smart goals to focus on business-critical goals upfront, basically. Smart of course being specific, measurable, attainable, relevant and timely. How important is that?
I would say that’s necessary, but not sufficient. Obviously, you don’t want to make goals that are not specific, not measurable, not attainable or not relevant. So, it acts as a check and balance for that. But at the same time, just like you might follow a script on how to write a novel with a beginning, a hero’s journey, a climax, an end or whatever, it doesn’t mean the book’s going to be any good just because you follow that framework.
Next, HubSpot says that a startup needs to create detailed documents to distinguish who their target buyers are. Now, what do you think of that?
Those are called buyer personas. They are important. I wrap that into the large topic of product market fit. Most good founders are obsessed with product market fit. That’s a balance between understanding what the needs are of your potential customers, or your community. But also, having the awareness that you can create some blue ocean need and some blue ocean value as well. But yeah, understanding who you’re building this company for is critical.
Great. Another point HubSpot makes is that a startup should have a clear and compelling message. How important is that?
I would augment that, or maybe change that a little bit. That’s a clear and compelling feeling or clear and compelling value proposition that you make. People get a little bit too tied up with the words, but if you’re trying to make the trendiest club in Miami, you’re not going to put a sign upfront that says, “We’re the trendiest club in Miami, right?
You’re going to do probably, the opposite of that. Really, it’s about making sure that you have a very poignant and potent feeling that is evoked in people that you’re targeting. That’s what I would call a clear and compelling message.
They also talk about creating a contact marketing strategy, to generate leads. You’re an expert in that. What do you think?
Contact marketing strategy. Again, this little bit as with a lot of these depends on what kind of product space you’re in. But, one key element that shouldn’t be overlooked with having your own set of contacts and reaching out to them directly via email is that, you own a platform. One of the biggest risks that startups take is that they build a huge audience on somebody else’s platform like YouTube or other social media platform. Then maybe something goes wrong there. They could get de-platformed. As we’ve seen some pretty big names do happen to recently. Keeping folks and building this on your own platform is just a sound strategy. It also let’s you take them on a journey.
A lot of times, people will build what’s called a drip campaign, where they’ll say, “First contact with this person, they get this email. Then a week later, we follow up with the next email.” Then a third one, and so on and so forth. That way, you’re actually controlling as much as you can, a narrative of the customer experience. That’s a really powerful tool that shouldn’t be overlooked.
That’s really great advice for the entrepreneurs out there. What about running ads on Google and Facebook?
Typically, with startups, these types of ads are not the most efficient way to build a brand. They should be thought of as a numbers-based strategy. If you know that this comes into building your funnel, and understanding your cost of customer acquisition, which of course is a big component of the marketing plan. But if you know that you need to expose an offer to X amount people, to get some percentage of those people to take the next step to learn about it. Then some smaller percentage actually go through the buy process. Then there’s actually people that fall after in the buy process. You need to know that too. Then ultimately, how many sales that ends up with. That whole change should be mathematically less than the revenue you’re getting obviously, from the ultimate sales.
If you have a product that you can tie your direct sale to. You can measure how much the ads are costing you. And how many sales come out the other end. If you can find that right formula where you’re profitable. Then you can essentially run until you get diminishing returns. Then unlimited amount of these ads, because you’re making profit for each one. But when it comes to straight brand building or building awareness. Then they’re usually too expensive.
HubSpot also mentions implementing a digital PR strategy. What is that?
That’s earned media. The idea there is, it’s better for someone else to sell you or to back you than for you to say it yourself. If I were to say I’m an expert at eating tacos, that’s one thing. But Dave says I am. You haven’t said it yet, but I can read it on your face that you know I am. It’s a lot more compelling to people. A, it’s great value. Even though I’ll tell you there’s cost in the effort. But the ROI on a little time spent to get into a national publication or a specific publication, or to get mentioned by an influencer or if any of those one to many channels passes the validity and the power of the channel onto your brand. It’s one of the best ways for young startups to get high-value, low-cost attention.
HubSpot also mentions the concept called, Customer Lifetime Value. It seems like it’s a little early for a startup to be worried about the lifetime value of a customer, isn’t it?
No, it’s actually a huge part of understanding your customer acquisition. If I’m selling my taco making kit. And I know how much I’m going to make off of that. I know I’m going to get refills, and eventually sell that taco, elbow brace to them as a follow-up purchase. Then I can say, some percentage of the people that are burning for me. So, the net revenue I’m going to get from them over the course of the next few years is X. That really then lets you understand what kind of effort you should be putting into obtaining that revenue. The one thing with startups – as with all projections – is you don’t have historical data to rely on. So, you are making projections for purchases a year or two down the road. Those should have some risk-mitigating decreases put into those numbers, but yeah, it’s really important to know how much are these customers worth, going forward.
What about SEO or Search Engine Optimization?
Search Engine Optimization is still extremely important, but it has changed. There’s a lot of places now that people use for search that don’t fall into the historical umbrella of SEO. The big one being YouTube. YouTube is right up there. It’s one of the larger search engines in the world. Making sure you have content around your product or your service on YouTube. Making sure that the descriptions and all the tags and all that are great. Another one in that line – if you’re interacting at all with Amazon – that’s important too. If whatever you’re making has a place on Amazon, that’s another place that people really spend a lot of time searching.
SEO is a great investment. It’s at a base level just making sure your website has the components of tagging, and has the components of awareness of key words. That’s about 80% of it. A lot of the service providers will say that you need to do a monthly service. There is value to a monthly service, but just a basic course on SEO. And just making sure the nuts and bolts of the website and the content you have now are set up correctly can go a long way to helping you succeed.
Good stuff. HubSpot also says that referrals are important, like word of mouth. Is there a way to make that a strategy versus just hoping that you go viral?
This comes to really understanding what the essence of your value is, and presenting that in a way that is compelling. The common-sense way to understand this is, just to look at yourself. What makes you want to tell somebody about something? Unfortunately, a lot of times it’s negative reasons. Avoiding those is important, but a lot of times, if there is a negative experience, how you handle it is really important. Some of the best word-of-mouth advertising comes from people who had a negative experience. Then that was alleviated or fixed by the company to the point that they were like, “Wow, that really impressed me that you took care of me in that way.” Sometimes, a word of mouth strategy comes up in customer service, which is kind of unexpected. That can be really powerful as well. But then you want to make sure that if you imagine what someone is going to do when they refer you or talk about you, what is that going to be? What is the thing that you are presenting that will be sharable? And make sure that you have honed that and made that as easy to do as possible.
A lot of other recommendations out of these 18 from HubSpot deal with acquiring customers, but they don’t really talk specifically about the cost of customer acquisition. I know, based on your questions that you always have in our reviews or when we’re talking to entrepreneurs and pitch events, you really focused on cost of customer acquisition. Can you elaborate on that?
Yes, and I think this is the biggest change. It is continuing to be the driving change in startup success right now. Historically – and when I say historically I mean even just anything five to 10 years, and before four or five to 10 years ago. If you had a great idea and a great team, you were 80% of the way there. And assuming the great team could execute your 80% of the way to success. Now, if you have a great idea and a great team who can execute, it’s flipped. You’re probably 20% of the way to success. Because the other 80% now is, how do you get the attention. So that anybody knows or cares that you have this great idea and this great team. With the advent of the long tail of media which is, if I’m into left-handed butterflies, I’m going to be spending hours on YouTube watching videos about left-handed butterflies. Which means, I’m not going to be looking at places historically that I would to discover your product or your service. Really understanding, for me when we evaluate companies, people who really understand how they’re going to get those customers. And ideally how much it’s going to cost, shows an important awareness to a critical ingredient of a startup’s success.
Any closing comments.
Yes, thinking is hard. And it makes me hungry. Let’s go get some tacos. The first dozen is on me.
Okay, let’s go.