“We’re still just getting started, so we really aren’t in a place yet to invest in marketing. We can’t afford to spend valuable resources just to have flashy advertising.” As a marketing communications firm, it’s something we hear from start-ups all the time. As entrepreneurs ourselves, we get it. Start-up is usually the most expensive phase of the business cycle and the time when revenues are lowest.
By the time the decision to set up operations is made, the marketing function has already experienced a significant investment – the product is well-defined, initial pricing is determined and a distribution plan is in place. Entrepreneurs by nature are great marketers; but they don’t often see themselves as experts with the marketing function in their own business. That’s usually because what they’re most uncomfortable with is the promotion of their product – the marketing communications function.
Being uncomfortable can often lead to assumptions and beliefs that help us justify our lack of confidence in a particular area. These are the top three misconceptions that I hear from start-ups:
• “We’re just a small company; so spending time developing a brand would be a waste of time.”
• “Margins are slim (or negative) right now; so we just can’t afford to do any marketing.”
• “Our product (more often a service) is sold through referrals, so we won’t need to advertise.”
No matter how big or small a business is, whether it’s B2B or B2C, or whether it distributes a product or provides a service, the brand is the most valuable asset it has. A brand is the only thing that can’t be duplicated by the competition. And yet, it is often the thing that is least understood by the business itself, resulting in whole product categories full of brands that all seem the same.
The brand is the sum of all the parts of an organization – the quality of the product, how the product is priced and what options are available, how the customer is treated, how the organization operates with its partners and suppliers, the way it treats its employees and the way it interacts with its community and the environment. Understanding how the sum of these parts positions an organization relative to its competition is the key to being able to articulate a unique brand position – one that gives buyers clarity and confidence in the offering promised by the brand.
Investing in the brand at start-up phase is not only important to the long-term process of establishing a differentiated position in the marketplace; it is also a key ingredient to building margin. It is often one of the only factors affecting margin that is completely in management’s control. Material, equipment, employee and distribution costs are all determined by the market. So is price, one might argue. But a strong brand allows an organization to lead the market in setting price norms. For premium brands, it allows a product to be sold at a higher price, and for value brands it helps build the volumes necessary to realize economies of scale.
For start-ups, in particular, success isn’t solely dependent on the positioning of the brand. It is also dependent on the share of voice – how loudly the brand promise is shouted from the rooftops. No matter how innovative a product, how great a service is, or how well-priced the offer is, if no one knows about it, it’s not reasonable to expect any level of success in gaining market share. It only makes sense that a brand that has no awareness requires more effort than that made by an established competitor. A real investment in marketing communications has to be considered a top priority in the business plan for every start-up, and should be a significant percentage of the operating budget. It must be considered in the calculation of margins, as an investment in creating margin, not as an afterthought that can be reconsidered later if margins develop to more healthy levels.
Even for the smallest ventures with modest revenue goals that are based on more organic referral sales strategies, marketing communications efforts will help make the most of every opportunity. Referral cards, corporate brochures, a database marketing program, and a strong website are fundamental elements that should be included in the marketing communications mix. But what happens when the network is leveraged to its outermost limits, when referrals just don’t fill the sales funnel full enough to support continued growth of the business? Marketing tactics that reach more mass audiences will need to be engaged to generate sales. And it won’t happen overnight. It will require a cumulative reach and frequency of your message to overcome the efforts of your competitors.
Good marketing strategies should be as much about identifying what tactics not to use as they are about identifying all possible tactics. With the advent of digital and social mediums and the birth of their hybrid forms, in addition to all the traditional mediums that have also evolved and morphed to be more effective and competitive, the choices of where to promote a brand are endless. With the intense fiscal responsibility by which a start-up must live, engaging in tactics that produce the greatest ROI is paramount.
Designing efforts that are effective in reaching the right audience – at the right moment during the purchase decision, with the right message and tone of voice – is part science and part art. It involves both urgency and patience. It should be measurable; but it also just needs to feel right. It requires keen insight, ongoing innovation and creative expression. It shouldn’t be simply about flashy advertising; it should be only about creativity with purpose.