The biggest marketing mistake made by startups

Well the issue for many startups is cash.  You can make the same argument about pretty much everything a startup spends cash on...  we tend to buy used, outdated equipment, we hire who we can afford (not who we want), we hire less staff than we need, slip schedules, do without things we know we need.  We sacrifice in lots of areas, marketing being only one of them.  So, yes, we get it... we'd like to be in a position to buy the best of everything and yes, we understand that it would save us money in the long run and be a wise investment of our resources.   But, we're often trying to make payroll while juggling a myriad of other critical expenditures that are all competing for the meager resources most startups run on.  So, if you think CEOs are just too dense to "get it", you may be missing the point.  Perhaps instead of telling us what we're doing "wrong" you might find a way to provide services tailored to these realities.  There are a ton of ways you might do that, and not all of those involve cut-rate services... In addition to having started or contributed to many startups I also offer my services to such.  In those cases I often structure my fees with an eye to their cash-flow, either deferring some of my fees or limiting the scope of my efforts.  In some cases it's a risk, but as they grow they become loyal and valuable clients.  Personally, I find that most startups do get it... they would happily invest in valuable services if they could find a way to do so.  Entrepreneurs, are can-do folks, so if we can't afford it, we build it (it may not be nearly as good and we're okay with that as long as we're moving forward to get to the day when we can afford it).

not something i've paid a lot of attention to, but now that you mention it:

My 2 cents:

First of all, you have to realize that as an entrepreneur, there is no shortage of people that are telling you that everything you are doing is wrong, and there is also no shortage of people that are willing to sell you services of unknown value.  The reason that people tend to be extremely conservative with cash is that if you make a decision not to spend money and that turns out to be the wrong decision, then you can correct it later.  Alternatively, if you spend money and that turns out to be the wrong decision, you can't fix it because the money is gone.

Also coming across as an "expert" is also not going to work.  Entrepreneurs encounter tons and tons of experts.  It turns out that a lot of them have no idea what they are talking about.  If you want to establish yourself as an expert, you need to have a good track record, and show specific examples of startups that have used  your methods and have found success.  One recommendation by someone that the entrepreneur trusts makes all of the difference in the world.

Another effective approach is to come up with specific strategies and tactics.  For example, if you have an app, go out onto a street corner and ask random people what they think about your app, or put together a focus group.  There are some cheap and easy tactics for doing marketing, and entrepreneurs are more interested in finding new tactics than general discussions about strategy.

There are specific reasons why entrepreneurs behave in the way that they do:

1) Entrepreneurs care more about customer acquisition than retention, because typically you start out without have customers.  It turns out that most startups are going to go under even if they end up with 100% retention because they don't have enough customers to begin with.

2) For smaller companies, startups generally do not have free reign to do what they want with their budget, and their budget has to be an issue which they negotiate with the angel.  There is never enough money to do everything so the issue is allocating time and money to the most pressing issues.  Investors hate seeing money sitting idle in the bank, but they deal with this by making sure that the startup has only a minimum amount of funding.

Startups are under extreme budget and time constraints.  If you want them to spend more time at X, you will have to explain what gets cut.  If you allocate a media budget, then you will have to explain what gets cut.

Also it tends to be the case that the first thing you try, simply will not work.  There are a dozen things that can go wrong, and the first thing you try will have almost all of them go wrong.  In that case, the big thing is to just stay alive until you find something that works correctly.

3) The problem with branding is that you will almost certainly get it wrong the first or second time.  You can spend a lot of time coming up with a brand, throwing it out, and finding that there is no market for it.  The other thing is that unlike large companies, startups can distance themselves from a brand rather quickly and easily.

4) Finally when taking with startups, the first thing that you need to mention is the ten things that you tried in the past that didn't work.  Rather than marketing something as "Ten things you are doing wrong" it's more effective to say "Ten things that I did wrong and what I learned."  The thing is that entrepreneurship is characterized by repeated failure until you get something right.  If you don't admit your failures, then you lose credibility with this audience.

5) Also be upfront with what you are doing.  It sounds to me that you are promoting a marketing consulting business.  Nothing wrong with that, but it helps to be upfront with that.  The problem what you are doing is that if you start posting something and it annoys your audience, it doesn't give you much credibility as a consulting firm.  A better approach would be to ask "I'm starting a marketing firm focusing on startups, what do you need?"

As a PR agency that works with a ton of startups, I also see the same thing that Peter sees.

The first problem is, most startups are driven by engineers. Thus, their preconceptions of marketing are usually already skewed right off the bat.

Amen to Peter!

Marketing knowledge and skill, like any profession, is acquired over years and years of experience. If I thought I could teach it to someone with a few PPT slides or by giving a 30-minute webinar, I would (and get rich in the process!).

It's less of a "secret sauce" than it is a strategic way of thinking about a product or service, understanding the target audience (and their mindset), having insight into the competitive landscape, and then developing the USP (Unique Selling Proposition) for your product/service. You must then identify the best way to craft a creative message that will resonate with that target audience -- and marketing must determine the most APPROPRIATE (not necessarily the cheapest!) channels to push that message so it will reach the target.

And no, sadly, freebie social media is probably not the be-all and end-all, media solution. But neither is spending needless amounts of money pushing it to a broad audience.

It's hard work finding where your target consumes content. And it's even harder to craft a message that will attract their attention and stimulate them to take an action. If it were easy, everyone would do it. :-)

Hire a professional with LOTS of experience, and make sure they give you rationale every step of the way.

Finding fifty dollars. People will talk about how they found money on the ground in a store, or won a big prize at a casino. But they generally won't include information about the wasteful purchases they might have made while in the store, or how much money they lots in the casino. Most marketing performed in the passive income niche is focused on how much money a person can earn with x software program or ebook, and will downplay that the promise of riches will come at a cost of $10 or something outrageously low. As soon as the purchase is made, the buyer is then presented with opportunities for an upsell on a product that costs more like $100 to $500 depending on what it is. The sales copy will focus on how since the person has already invested some small amount, they might as well invest more to improve their chances of making a bunch of money in the future using the information and/or software being offered to them. This works effectively to convert many people because they are focused on what they could earn, rather than what they have already spent. It's not necessarily wrong though the time investment necessary to recoup the investment into material and/or software being sold is and then start reaping a profit, is usually higher than the sales copy leads on.

I agree with Chris.  The biggest mistake that I see is not starting with the strategy/plan step by defining the brand, the consumer, the competition and the POD and then letting that guide the strategy and tactics.  

Thanks, Peter, for bringing this common sense and clear-eyed perspective to startup marketing.  All too often marketing is an afterthought when it's actually already embedded in the startup process from conception.  Chris Taylor's comment: "There's an age-old question that gets asked about products/services - is it an aspirin or a vitamin? Typically (not always) it's easier to sell the value of an aspirin to take away pain than to sell a vitamin." gets right to the heart of the question entrepreneurs should be asking in the earliest stage.

In our case, we found a much more compelling problem to be solved and our business model went through a transformation when we participated in an incubator program and we started working with our marketing guru.  The problem and the corresponding solution was right in front of us but it took an expert to bring it into focus and completion.  So now our marketing can proceed with real integrity in an integrated way. 

So here they are, the 5 marketing facets that startups can do well at: