You are an aspiring startup founder who has been working countless days and nights on your new product. You want to change the world. You feel that your product will make a difference in people’s lives. It will change businesses. It will change how we do things. And perhaps make a dent in the world. But you want to share this with the world so that a) we learn about it and start adopting it and b) you make a living. These are essentially the two main valid drivers behind any new startup.
So, you ask yourself, how many people need to know about it? And how should they know about it? When and how often should I engage with people about it? These are a few of the fundamental questions a founder and a marketer will consider on a conscious and perhaps a subconscious level. Perhaps because you know that marketing failed others before you. Perhaps because you are just shrewd and diligent.
Marketing has failed so many businesses because so many businesses failed to understand marketing. What is marketing? And why do you need it? Why does it work for some and not for others? The biggest reason marketing has failed so many businesses is because businesses shift their focus from customer to tools and tactics. There are countless tools and technologies in the world of Martech today and they all promise you in one way or another, to help boost your customer acquisition. Most CMOs today focus on numbers, metrics, dashboards, technology stacks, automation and the likes. But a few keep their focus on their customers and solving problems. Technology is great but only when used to solve problems and help your customers solve a problem.
1. Focus on Life Time Value (LFV)
This is a drastic shift in how you look and perceive your performance marketing and customers, that will change your digital marketing game. Marketers need to move away from looking at their consumers and customers as a one-off transaction. In some business models, that might be accurate but for most, far from reality. For many, your customers can be a repeat buyer for a few years or possibly for life. Think about someone who is a NIKE loyal fan. They will always buy NIKE products. That’s a huge customer LTV vs. new sportswear startup that may view their customers as a one-off buyer. This is equally true in B2B. SO, how does this change the way you do things? You start focusing on your customer more than your product or service. The mindset shifts from what product or service we need to deliver to what do our customers need and how do we serve them better. It becomes about the experience (which is much more holistic) than about the product. This mindset will wrap your entire team (organisation) around one objective – serve your customer. The byproduct of this mindset shift is a customer who trusts you more and is willing to invest their money with you.
From an acquisition cost perspective, looking at the customer LTV also has a huge impact. If your ROAS is currently at 300% but you were only considering the 1st time purchase, you might revisit your strategy. By focusing on retention and repeat purchases, your ROAS can multiply which means you can afford to spend more and allow higher CPA (cost per acquisition) because you know your customers are more likely to buy from you again and hence your actual medium to long-term CPA is lower than it is.
2. The Customer Value Composition
Your customer value composition is the sum of different components of benefits (monetary and non-monetary) you receive from your customers in exchange for the products and services your business has provided them throughout their and your lifetime.
The objective of every business is to maximise both; the monetary and non-monetary aspects by maximising the conversion process from a non-monetary component such as reviews, endorsements or testimonials to actual sales transactions.
Your Customer Value = Life Time Monetary Value + Brand Endorsement Value
Brand endorsement value is about what people are saying about you. Every word and every comment your customers make about your business and brand is a transaction. The total sum of what your customers say about you makes a huge difference in where your business stands today.
How much your business is able to receive from your customers in both areas will ultimately determine your business and brand success and worth. In most cases, in your startup phase, your business will realize more value from your customers’ free marketing, that is word of mouth, user-generated content, testimonials, etc. As you grow, your business will start to realise more value in the form of money aka cold hard cash, revenues and profit margin.
What’s interesting is the relationship between both. In most cases, it seems that the latter always precedes the former. Customer happiness, satisfaction, engagement and endorsements always precede the true value your business is going to realise in the future. If your equation is more skewed towards money, you know you have to work on your customers’ happiness and satisfaction level. If you don’t, soon enough your /revenues will start to dry up. And the cycle goes on which brings us to the concept of constant and relentless focus on your customers by solving their problems and improving their experience.
3. Value trade-off
Everyone is looking for a bargain including you. Your customers are no different. Some businesses try to use dubious ways to trick customers into buying through manipulating their value proposition or terms or whatever the trick is. For examples, the retail industry is notorious for businesses that tell their customers they can get points or cash back, etc. to persuade them to buy. They make the process so cumbersome and sophisticated that people don’t bother applying. They even have a term for this called the ‘Breakage Rate’ which measures how many people did not redeem the offer that was provided. This idea was brought to light by Simon Sinek in his book, Start With Why.
Why do people buy into this? Because they are looking for a bargain. A bargain is essentially someone’s perception of the value they are getting in exchange for what they are giving, in most cases, money.
Growth = Inherent Value of your product + Effective communication of your product value
How much value does your customer bring to your business in exchange for the value you bring to them? For your business to grow, you need to work on improving the inherent value your customers are getting and work with marketing on amplifying the message. While so many other businesses focus on the opposite end of the spectrum, by offering discounts and price reductions, you ought to be smarter. Competing on price is a dead-end road.
4. Focus Content Marketing on your Minimum Viable Audience
A concept that Seth Godin often talks about is the Minimum Viable Audience which is essentially the smallest group of people who believe in what you do and offer and see value in it to the extent that they would pay for it and recommend it to others. For every startup, 100% of your marketing activities need to be focused on your minimum viable audience. Your job is to make sure these people are going nuts about what you do. You want to leave a mark in their lives because of what you do.
Content marketing is your biggest friend when you are starting out. There is so much content on the internet, yet we are craving for more. Not for more same old content but we are always wanting new valuable content. Depending on your audience, your content marketing strategy can be more geared towards entertaining, inspiring, creative, educational, etc. But the bottom line is, we are hungry for content. As you are starting out, content marketing can be your best friend or worst enemy. Your content marketing needs to address your minimum viable audience and tell them why you exist and why your products will improve their lives. Viral marketing became a thing when people came up with ideas and content that were so unique and ‘valuable’ that everyone was talking about them. You don’t need to become viral, but your content needs to perfectly resonate with your audience for them to start sharing with the rest of the world.
In the upcoming posts, we’ll be sharing examples and case studies of companies that nailed their startup marketing strategies and leveraged the concepts demonstrated in this article to grow and disrupt their industries.