Want to grow your startup? Focus on the right marketing strategies
Luca
Hello Martin! Nice to see you again. And thank you for joining me in this interview.
Okay, let me introduce what is expected from an expert in marketing like you: Marketing strategies and approaches aligned with the different start-up stages towards the scale-up one.
Martin
Hi, Luca
I would suppose that depends a lot on the type of business that you have. Isn’t it? Because if you’re a product-based start-up, then obviously, investment is even more critical in scaling up your production capability. In terms of testing, the market is more perhaps more tangible than maybe a service-based start-up.
Luca
I agree with you, Martin.
Luca
We are in the first phase, starting the activity, and we need to discover and create the value proposition. We also need to define which kind of problem we need to solve. What can help start-ups from the marketing point of view?
Martin
I think it’s very interesting that businesses can start without knowing what problem they’re solving in the first place. Thus, I use the word challenge rather than a problem. Because the challenge can be positive in terms of opportunity or negative in terms of a problem to solve. Businesses exist to help other businesses and people, consumers. People often have ideas, and then they try to find a problem to fit that idea. The only way to do that is to talk to people. Talk to existing customers, past customers, potential customers through observation, conversations.
The amount of time we spend getting clear on the challenge is worth it. Marketing doesn’t start with a product or service. It starts with a challenge. The value proposition is sometimes a bit tick-box in the way people look at it; entrepreneurs are not alone here. If you’re going to spend time documenting and working out your value proposition, make sure you do it in a meaningful way. So, the value proposition is simple:
· Who exactly is that you help?
· What is their challenge to overcome?
· What is the outcome achieved through your products and services?
Just that kind of elevator pitch or learning a value proposition needs to be hugely more complex than that.
Luca
Brilliant. Thank you. Let’s move to the second question.
Sometimes, entrepreneurs are called to prepare a document attached to the business model pitch containing much information. But if I remember well, what is missed is the marketing part. So, how do I reach that customer and show it in my business model? So what could be allocated in the business model from the marketing point of view In your opinion?
Martin
Marketing is often referred to as being two speeds. You have brand-building as one speed. Therefore, your marketing is to create awareness to get attention. And then you have demand generation (the second speed). You’re just getting known, or you’re trying to make a sale through marketing or get people to a sale. Most people’s problem in marketing is that they don’t do any of the brand-building activities. And they only focus on activation marketing.
There’s some research by Les Field and Peter Burnett in this space. What they say is that generally, it needs to be a 60/40 split. So 60% on brand and 40% on activation. Most people start marketing when they need to make sales, so they go 95% direct (activation). And, most marketing agencies will sell you that as well. Because most marketing agencies are tacticians and creatives, and therefore it’s in that direct piece.
My view would be that if you’re going to market a product or service, you’ve got to use to speed marketing, roughly on that 60/40 split. But also recognizing there is other research by the Ehrenberg bass Institute.
SOURCE: Ehrenberg Bass Institute
Ehrenberg bass Institute says that in a b2b space, it might be more 5/95, which is that people only come to market for specific products. What you need to do from a marketing perspective is to stay top of mind. If you’re building a business from scratch, yes, you need to make those initial sales. The research shows that a business that spends time on brand building and direct marketing over three years gets a better market share than focusing all the efforts on short ones. So yeah, so from a start-up perspective, marketing needs to have both speeds.
Luca
To summarise: the first activity is that you need to invest in your brand when you start.
And link the value proposition with it and then start to speak with customers? Am I right?
Martin
Yeah. If you were selling smoothies, what is the problem a smoothie solves?
Most people will talk about the product, right, it’s green has got 12 pieces of fruit in each cup, that kind of thing. However, the problem could be that people don’t eat enough vegetables or fruit or don’t have the proper lifestyle or the energy that they need.
Thus, they’re all the challenges that someone’s trying to overcome; they don’t have the time to create this stuff. And that’s what you market first. And then as, as your customers or clients get closer to you, you can talk a bit more about your product or your service. Most founders think that people fall in love with their products and services and want to hear about them. But people aren’t going online generally to search for your product or service. They’re typically looking to learn about their challenge, and more so, you need a bit of both.
Luca
Thanks, Martin. Let’s move to the next point. Once we have discovered the value proposition, the company tries to define what the market needs are. And from here, you also create or choose the channels to distribute services and products, fine. Do you think that this activity for market needs requires any marketing activity that allows the analysis to speed up the process to get information and try to keep in touch with the customers?
Martin
In the marketing journey, I think the most important thing is the market need because you might have the best product in the world, but if no one needs it, you’re not going to sell it. Before this call, I spoke with a client who is working on this whole piece around segmentation, targeting, and positioning. He is spending the time determining if there’s a total addressable market and which bit he will go after when you’re a start-up because what you want is traction. So you can scale in the later stages in terms of broadening whom you target. Still, in the early stage, I would target those most afflicted by the challenge and able to invest.
I actually would not attempt to do anything to shorten it. Because I think that the more you try and the more you can iterate and retesting the hypothesis that I come up with.
Luca
During the analysis of the presentation pitched, I have discovered that everybody is in a hurry because they don’t have enough funds to make the right time to understand market needs and build the brand value. Still, sometimes they are also pushed by the ego and the final goal to be billionaires.
Martin
Yeah, and I think it’s our role to tell them that it takes time to become a trusted adviser. However, sometimes people want to speed up the process, or they don’t want to hear it.
Luca
Perfect. Now let’s speak about market access. Once you have an idea and have tested it, you need to create some strategies; you need to choose how and what your marketing can do? What are the strategies for a start-up in this phase?
Martin
I suppose it depends on if you’re a product or service business, in terms of what routes to market are available and whether you’re going direct, whether you’re going to go through partners, through a supply chain. So, it depends on what your product or service is and who and what your market is. It’s about thinking of your specific market and all the different opportunities that will get you in front of your ideal customer.
Luca
This can resolve the problem that entrepreneurs don’t know how to articulate the challenge they face, which potential clients or customers are. They don’t even know how to explain it. And then, when you’re looking to access a market, you must create that clarity amongst maybe your supply chain or people that are going to get you in front of it. But you’ll only find what the market is by talking to the market; you can get in front of the market; we’re looking at all the people that interface with your ideal customer. This is your message then: thinking outside the box a little bit.
Luca
Good. Now we are at the stage of a minimum viable product. So, we have a value proposition, okay? And minimum feature either referred to a product or service. What approaches could make sense to invest money in this phase to generate the first revenues? And what must be done to avoid mistakes due to the hurry created by the need to sell?
Martin
Yeah, so I think that the easy answer to that is prioritized requirements. So, this is a list of the service/product’s capabilities, if you like. But what they don’t do is prioritize them first, in a meaningful way. They might prioritize by high, medium, and low, which is meaningless. Rather than using, say, a Moscow analysis, the prioritization of requirements is made with the Must do. Should do, Could do. This could clarify what you include in each iteration or version of the product if they do any form of prioritizing. The other thing they do is only base on product/service requirements rather than the market need. So, your product or service might be able to do five different things. And you’re excited about a thing one, but what the market wants is thing number three. Suppose you want to gain traction, make sales, get more money to deliver all the other capabilities. In that case, it is fundamental to prioritize requirements with a client-first mentality, and this would be my advice.
Luca
Excellent, and thank you. And what actions can you see here as pure marketing tactics?
Martin
From a marketing perspective, it would be to take those requirements around features of a product or service because they help you overcome a challenge, problem or opportunity. Your marketing is about precisely that. You’re making noise about the challenge, the opportunity, the features of your product or service, and the outcome. From a marketing perspective, talk about the right things.
Luca
So, all the other actions can be digital, right?
Martin
If you’re clear on what the messaging is about, the channels you choose should be the channels where your clients are. When it comes to marketing channels, most people think, “Oh, well, I’m on Facebook. So we’ll advertise on Facebook; who cares what you’re on? “But, where are your customers and clients? That’s the channel to choose.
Luca
The misuse of Digital channels is evident, Martin.
We are heading to the last two points: The product /service launch and the scale-up stage.
What should be considered when launching a product, from a marketing point of view, And then once you are into the market you want to scale up, what should you do?
Martin
I think there’s a couple of things to think about here. One of them, as part of the launch, is pricing. And I don’t think you can ever really move your price up. And when people get desperate, they move their price down through promotions and such forth. And what it does is sell to a different audience. It’s not the same audience buying cheap; you end up just attracting a different audience. Thus, to scale, I think you need to get your pricing right from a launch perspective.
The other thing in terms of launching is making noise, making people aware. If you’ve got the money behind it and are product-based, you can use influencer marketing. Because what we’re trying to do, right, is to build an audience because it’s that audience that will buy something. And the way I look at it is you can either build an audience or buy it. So you could spend ages on LinkedIn texting people, or you can pay for ads to put it in front of more people. To build or buy.
Depending on the channels you use, I think when you launch, you want to leverage the brand’s value for the people who are buying from you as quickly as possible. If it is an influencer, then you’re gaining access to their credibility. Suppose you’re selling a service to a corporate, then as quick as possible. In that case, you want to make sure you can have a testimonial, you can have a case study, and at the point of sale, I would make that conditional. As part of this, we’re going to give you a 3% discount if you promise us a case study within six weeks or something like that.
Because many of you are selling services to corporates, many of them don’t allow you ever to mention them. This is a shame, and that’s just corporates getting in the way of people. And so, at launch, you want to make sure that as many people as possible know about the fact you’ve launched, which means leveraging other people’s audiences. [TTLLC5]
And then, from a scale-up perspective, the first danger is overtrading. I think if you get your pricing right, you’re less likely to do that. Because there’s enough money in the business to grow your business as you go. I think it’s ultimately doing more of the same thing. It’s different for a product business. In a services business, you’re generally just scaling people typically. And that then goes into what your people model is, the leverage pyramid, all that type of stuff.
So from a scale-up perspective, I guess it’s just more of the same in terms of your marketing channels that you chose earlier to support the launch. By the time you get to scale, you might add some additional channels. You might have chosen a single social media channel. You might have chosen to do everything online and, in the world of traditional marketing, nothing.
You might try different things; you could afford to attend some exhibitions and sponsor some stands or things like that, which are pretty expensive to do. You probably shouldn’t be doing it in a launch perspective.
Luca
From the data point of view, what are the key metrics that entrepreneurs need to consider and transfer to the investors for launch and scale-up?
Martin
From a marketing perspective, you’ve got things like ROI, so return on marketing investment is the second element of ROI. You can only really measure ROI on direct marketing activities; you can’t measure it on the brand. I heard a good example the other day. If you were trying to measure the brand value of having a brick-and-mortar store on the corner versus in the high street, you’re not going to get them both and then you need to work out which one worked. You can use ROI on direct marketing,
Other metrics can be related to the audience. How big is your audience? How many followers, newsletter subscribers, website visitors, to you have an idea of who might you be able to sell to?
It’s the same way with book publishers. They want you to have an audience before they’re interested in taking you on and then giving you an audience. Because their audience will be people interested in publishers, whereas your audience will be interested in your topic, and this is what people misunderstand. They think,” if I get a publisher, they will bring the audience,” but they don’t have the audience. Publishers expect you to bring it. Ultimately, build an audience to sell them something from a metrics perspective.
Luca
Is this a sort of audience valid both for launch and scale-up?
Any particular audience for scale-up? Other specific elements to be considered?
Martin
Do you want to know the leads provided by marketing? The ratio of converting leads to sales or getting qualified by sales rather than converted. And again, that depends on your style, your type of business. Your marketing brings qualified leads if you’re in a services business, say a b2b services business. So I’d want to know what ratio of lead generation qualified is converted to sales because it can be said that your marketing is bringing in the correct type of lead.
Your sales team’s ability to close those leads is a different thing. So, it’s about the win ratio because they want to hear something positive. And most people make it up anyway. They’ll say 90%; it’s just not possible, right? If your win ratio is 90%, you’re not trying hard enough. It is relevant to show your ratio of marketing qualified leads to sales, a win ratio because it could well be that your marketing is targeting the wrong market. And you then found the answer in the sales process. Yeah, so that’s why I think a close understanding of the metrics for sales and marketing if they’re explicitly separate is essential, and again, it depends on the product or service.
Luca
Dear Martin, the interview is completed. Thank you very much.
Martin
Okay. I hope that was helpful to you.
