2016. There are more startups than money, talent or consumers can support or even VC money can fund. We’re reaching a point where the pendulum is swinging back in the other direction for startups to be profitable. I mean profitable beyond just on a cash flow bases. This should always be a goal from day one with your startup. Spending more money then you make to acquire a customer is a losing business model.
The question then becomes; how do you build a startup marketing engine to fuel your growth? Over the last 10 years I’ve worked around the world from Toronto to Sydney, Melbourne to London and now I’m back home in Canada giving Vancouver a run. One phrase that keeps coming up is how different I work then some of my colleagues in marketing over the last decade. I thought I’d share some of my thinking and how I work.
Answering how you fuel your growth can be the difference between being number one in your space and being dead last. Though you don’t have to be number one in your space to win. You could be number two or even carve out a niche focus within an industry that attracts customers to your brand. This isn’t a question of out spending your competition like Uber does because that’s not the reality of most startups in the world. Plus Uber is spending money to subsidies their customer’s purchases. Being number one or a leader in your space is a question of doing the following:
- Focus Your Marketing
- Position Your Brand
- Foundation: Build That Basement
- Customers: Know Them. Love Them
These are the areas in marketing that is going to separates A+ work that is going to shift your business from small startup to a rocket ship growth. Otherwise, you’ll have average or worse yet, mediocre marketing that most startups do and think they just have to outspend to win the war. Having my last startup, mopp.com, exit with an acquisition after I came on board after 9 month earlier is a testament to my process and data informed approach to marketing.
The problem with most marketing teams whether they are 5 or 25 strong is that most teams lack real focus. Most teams are trying to run faster up a treadmill that’s moving twice as fast as they are. In short, they are going no where. The reason they are moving that fast is because they are trying to do everything under the sun.
When your team is spreading themselves so thin that they can’t put the time involved with analyzing their work or worse they don’t know how to analyze their work. Then no matter how much work they do, they’ll never move the needle on the business. The best way around this is to get your team to focus and produce less work. This may seem counter intuitive but when you product higher quality work and analyze what worked and then do more of what worked. That’s just smart marketing.
Yes I said that, produce less work because your job in marketing is about achieving outcomes and hitting your KPIs. It’s not about doing another press release, launching another ebook or even being interviewed on another tech blog. Unless you can prove any of those outcomes drive more profitable business in the short and long run. You shouldn’t be doing them, even if your KPIs involve brand awareness which is a fuzzy thing to measure to begin with. The best way to build focus into your marketing team is by building a foundation that can’t be cracked except by an act of mother nature. Before you have a foundation you’ve to have a position for your brand.
How your position and talk about your startup matters. This is important before and even more after you’ve achieved product market fit. My friend April Dunford wrote a couple detailed posts about positioning and how most startups are doing it wrong.
The key for positioning is about understanding what your product is (and isn’t) and how you talk about that product with the wider market. You may call your product a widget but if customers who find value you with your product call it a yo yo. well you better rethink how you position your product if yo yos are going to drive your business forward. I’d highly recommend you read April’s posts about. You’ll be smarter for it and it’ll help make build your foundation easier.
The foundation in your marketing team should be the work that’s driving profitable growth in your startup right now. For every brand and startup that’s going to be a different tactic but the key to is get everyone on your marketing team to shift their focus on how to grow those channels and grow them until they are almost maxed out.
At Mopp we focused on search: paid media & SEO with a bit of content. At a lot of SaaS or B2B startups, they tend to look at sales as their foundation for growth. There isn’t a right or wrong channel to build the foundation of your startup on. However, what you don’t want to do is try and cover a 6 or 8 different marketing channels at once or try to cover every marketing opportunity under the sun.
What you want to do is test a marketing channel and grow it over time. Look at your analytics every morning and see what is and isn’t working with that channel, look for opportunities to grow your audience or push your growth faster. Once you’ve reach 6+ months of repeated customer acquisition. You’ve a strong foundation for growth started. As you build on your foundation and grow new marketing channels in your business. There is only one question left, who are you marketing too and are they even the right customer?
You’ve focused your marketing team around a couple marketing channels and built a foundation that you can count on for customers each week and every month. However, not everyone who’s buying from your business is an ideal or profitable customer.
Once you start building your marketing machine, you want to make sure you focus on customers who can help grow your business in a smart and sustainable manner.
There are a couple ways you can look at this data but if you’re doing a cohort analysis as you grow your customer base. The technique to figure this out is RFM analysis:
- Recency: How recently did the customer purchase?
- Frequency: How often does the customer make purchases?
- Monetary Value/Margin: How much does the customer spend?
Each one of these three measures is able to give you a good idea of how good any one individual customer is, however when used together it provides a strategy that can provide you with a great deal of information about where you are getting your profits from. Profits will always be your main KPI is your startup.
Revenue is important but without any profits to speak of you’ll be out of business within a few years.
If your startup keeps focus, positioning, foundation and your customers in mind as your team and brand grows. You’ll never waste time or energy doing work that doesn’t contribute to the bottom line. Profit and a happy & a healthy team above all else in your business.
[update] this post was originally published on August 28th, 2016 and has been updated with new content and republished.