Marketing Strategy · Marketing

The biggest marketing mistake made by startups

Peter Bray CEO at Bray & Co

March 1st, 2016

Time and again, I see startups create really, really bad marketing. I say this as someone that used to run big agencies and now works with a lot of startups.

Often they think that because they know how to place adwords, or use Photoshop, or use social media, or buy media, that they know how to create marketing. That is not marketing. That is mechanics.

Marketing is behavioral science, which separates the good campaigns from the bad. As an example, which will people remember more, losing fifty dollars, or finding fifty dollars? If you don't know the answer to this, you shouldn't be creating marketing campaigns. If you can edit together a video, that doesn't mean you can create a marketing campaign. A graphic designer is not a marketer. If you can place Google adwords, do you really know what triggers to use to elicit action?

The irony is I come across a lot of startups so focussed on minimising costs, they don't realise they are costing themselves far more by producing media instead of producing advertising. Marketing strategies are not just how and where you spend, but more importantly what you say when you spend. The emphasis needs to change from cost to value. And the key point: average marketing activities severely restrict growth, and it stuns me how many startups don't have a qualified (read NOT a "social media expert") marketer on their board.

So which is it, finding or losing the fifty dollars?

David Pariseau

March 1st, 2016

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  we tend to buy used, outdated equipment, we hire who we can afford (not who we want), we hire less staff than we need, slip schedules, do without things we know we need.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).

Rob G

March 1st, 2016

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

1. If what you say is true then it seems the marketing world and its myriad of 'experts' has done a poor job of marketing to startups - convincing startups to focus on value rather than cost. OR maybe we really are a dumb as you say we are. 

2. necessity is still the mother of invention:  David P said it well, often it is not that we startup founders prefer not to hire the marketing expert, it's that our budgets and time are limited and we prioritize our expenditures - apparently marketing in "the right way" is not high enough on the priority list.  Perhaps someone should prove us wrong.  That could be because many of us have experience with spending money on marketing experts who's value does not pan out. I'm sure there's plenty of blame to go around, but once bitten twice shy. A pay-for-performance model would surely open some eyes and wallets here. 

3. for many startups, especially those in the b2b world, marketing is not the most efficient use of limited $$ to generate revenue.  It's often difficult to directly correlate marketing spend to revenue, especially in the b2b world.  A pay-for-performance model would surely open some eyes and wallets here. 

4. It strikes me that posting a chastising note to a bunch of startup founders telling them what they are doing wrong and that they are apparently less than intelligent due to their tendency to produce "really bad marketing" without clearly articulating how to produce "really good marketing" (other than to hire marketing experts) is perhaps not the most effective way to endear oneself to prospective clients.  Nor does it provide any proof points to establish yourself as a true "marketing expert". just an observation... although i've never tried insulting prospects prior to attempting to engage them.  Let me know how that works out. Although you have succeeded in starting a conversation which is the first step... right?  

Bettina Bennett

March 1st, 2016

My 2 cents:

1. I'm with Tamika: It would be great to learn from the marketing experts in this thread, what those "mistakes" are that you are referring to, and how to avoid them. That would be really helpful.

2. Not all startup are created equal. For example: We are a (mostly) self funded/bootstrapped startup that actually runs on revenue, not a SV venture backed, millions of $$ in the bank kind of startup. Our technology is used by companies to make people fall in love with their brand. Since we have to make the $$ before we spend it, our marketing budget is kind of small. It's not that we DON'T WANT TO SPEND the $$, it's simply that they don't exist (yet). We talk with marketing agencies and experts all the time (frequently they are the ones re-selling our technology to their customers), who tell us all the things we need to do to grow from a marketing perspective, and that we need to pay them to help us get there, but they are not sharing in the risk we take. 
The model is still: We pay a marketing agency or expert, and there is no shared accountability for the outcome. So maybe the solution is to offer marketing services to startups for a piece of the results? IOW: we will help you with marketing strategies to grow your revenue by X, and we'll get Y% of that growth.

Thoughts?

Joseph Wang Chief Science Officer at Bitquant Research Laboratories

May 1st, 2016

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?"

Edward M. Yang

March 1st, 2016

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.

For those who do understand the value of marketing, how to execute and test the various channels is the next hurdle.

This has become more complicated by the proliferation of marketing channels, creating confusion due to the plethora of choices. 

Here's a real-world example: we were working with a consumer electronics company who was launching in the US. Within 6 months we got them covered and reviewed in Engadget, Forbes, USA Today, Techrepublic and soon to be CNET, among many other places.

However they felt that their marketing dollars would be better spent creating high quality photos and videos that they then post on social media.

The problem, as I've pointed out to them, is that organic reach on social media is near zero these days. Their internal Facebook stats bear that out. Their preference is to focus on creating content which no one is really seeing at the moment.

The point of this isn't to say "PR good, social media bad". It's back to Peter's point about qualified marketers versus people who dabble with Instagram and think that qualifies them to drive an entire company's marketing strategy.

Carolyn Goodman President/Creative Director at Goodman Marketing Partners

March 1st, 2016

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.

Carey Martell New Media Expert and Entrepeneur

March 1st, 2016

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.

Peter Bray CEO at Bray & Co

April 28th, 2016

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

1. Pay attention to retention, not just customer acquisition.
It is all very well to focus on getting your CPA down, but if you aren't maintaining a great retention rate, you are in trouble. Great startups understand that the two areas need to work in parallel, and that you should have a retention strategy from the day you land your first customer.

2. Speak in terms of value, not cost.
Yes all startups want to keep the cash burn down, but great startups understand that going for the cheapest option every time may not make sense. It is always interesting to see how many people want low costs, in terms of talking about value. Investors want you ti maximize the leverage of their investment, which means maximizing the efficacy of every dollar in a relatively short time span. Investors hate seeing lazy money sitting in the bank because a CEO was not prepared to maximize value. On a side note, very few investors would prefer their investments to slowly bleed dry rather than find out earlier on if they are on a winner. Time costs.

3. Think early on in terms of reach
For many startups, adwords is a great place to start to acquire customers. But over time costs may become prohibitive or you may not see the volume you are after. You need more reach. In my experience online video is superb for acquisition and extending reach. Regardless, have a multichannel strategy from day 1. That way, if someone like Google changes the rules, your business is also protected.

4. The big truth about social media
I am fortunate to have broken the 1 Billion view mark over the years, more due to client's than to my own acumen. Over this time, I have developed a golden rule: if you want to maximize your social media, pay for it. It is foolhardy to build a marketing strategy on sharing and discovery. It is too slow, and too risky. How much great content is out there but hardly anyone sees it? How many campaigns have money spent on them from a production point of view yet are seen by few? Many! And the big brands are just as guilty of this mistake. If you want to maximize your return on investment from content you create, allocate media budget!! This is so important yet often neglected. Just having a creative budget without a media budget is a novice mistake which you don't need to make. In terms of what that budget should be, it is a depends of course, but some people use a 30 - 70 ratio of creative and production to media, however it is on a case by case scenario. If you don;t have paid media in your marketing plans, by strong advice is to change them.

5. Understand your brand
This is critical and directly impacts your CPAs and more. A question I often start with is if your brand was at party, what would they be wearing? It may seems like a strange question, but it is a great starting point. Does your brand reflect your customers, and who you want to be? Will people want to get to know you? Be honest with yourself, if your brand is wearing a brown cardigan at a cocktail party then you have some work to do. Your brand matters, there are direct financial consequence if you get it wrong.

Gloria Luna VP Marketing - Brand builder and creative problem solver

March 1st, 2016

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.  

Most founders want to jump right into the tactics thinking they can get sales momentum as quickly as possible.  The misnomer, of course, is that it doesn't typically happen "overnight" or by chance. And these important steps, when done right, will define their success down the road.

Glenn McCreedy Co-founder and CEO of Inara

March 1st, 2016

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.