Marketing a Start-up

by Mark Waldin, Agile Marketing Executive What is guerrilla marketing and how do you do it? That was one of the core questions being asked by a group of entrepreneurs last night at the Think Tank event hosted by the Northwest Entrepreneurs Network (NWEN) last night on the Seattle University campus in Seattle.

At the event was a panel of very good marketers: Rip Warendorf – Senior Vice President of Worldwide Sales at Zango, Steve Brodie – Chief Product and Marketing Officer of Skytap, and Sally J. Vilardi – Co-Founder and President of Do My Reminders. I thought they were all well spoken marketeers. But I think the topic of guerrilla marketing went underplayed. So, here is my take.

What these people were asking was about marketing promotion and advertising – that is, creating awareness and interest in their product among their target audience. What they were adding to the equation was I don’t have the capital to fund it. This of course is a common occurrence among entrepreneurs. Further to that is that most people think of marketing dollars as risk money. They invest it but they may not see the return on it they were hoping for. This makes them skittish on borrowing to invest in marketing.

To get marketing without spending (much) money one has only one option: spend labor. This is the one thing that entrepreneurs have that they consider (almost) free because it is somewhat elastic (I can work longer and harder!). That’s it in a nutshell. Spend your labor dollars.

But guerilla marketing exists at the intersection of labor and low hanging fruit. There is nothing magical about marketing and like many activities the curve on expenses vs return is logarithmic. To get a few customers the cost per customer is relatively low but as you try to scale up to big numbers the costs increase exponentially to a point where spending more money yields almost nothing. Guerilla marketing exists near the origin of this graph where cost per customer is low or common parlance, the low hanging fruit in terms of marketing expense per acquisition.

To exercise your low hanging fruit one must look at each situation individually. It becomes a combination of determining a) who are the people with the most pressing need for my product/service, b) which ones are easiest to reach, and c) what low cost marketing vehicles exist for me to reach (some of) these people. Low cost marketing vehicles include using some of the following criteria:

• geography – people physically close to me are cheaper to connect with than those far away
• events and conferences – doing speaking engagements at organized events is free if you can sell your expertise to the organizers
• editorial – exercise the media to get articles written about what you are doing
• product reviews – if your product is of the right type you can get it reviewed by a publisher
• networking – also known as direct selling, work your network to make connections with potential buyers or people who know potential buyers
• flyers, door drops, sandwich boards – for the right product, cheap direct marketing pieces with a lot of labor can be effective
• blogs and industry pundits – work the blogs, online media, and the movers and shakers in your specific industry
• web site – create a web site, add useful content and make it a place people want to come to stay current
• forums – work forums, add your comments and suggestions and always leave breadcrumbs back to your site
• referrals – use the customers you acquire to get new leads. Being a small company is advantageous. Use being small as a tool to solicit help from your customers to get bigger. You’d be surprised at the results.

Bottom line is that guerilla marketing is good for a boot strap to get you going. It is not a scalable marketing method but is great when you are small and cash strapped. It is extremely hard work and labor intensive; be prepared to sweat. Realize that this is not a quick start method. Rather it is a convenience for people who don’t have the money to make a rabbit start. Plan accordingly. Last, plan your business beyond the guerrilla phase. Determine how long the guerrilla phase is going to last, how far it will take you, what you will do next, and what it is going to cost you when you do.

When you go about narrowing your target market, there are a few important things to keep in mind. Following these guidelines will drive success over the long run.
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Well defined – make sure your target is well defined with clear boundaries. The worst thing you can have is a mushy target definition that can be stretched and contorted to fit your needs. Such a target statement will cause you to begin including additional targets because they seem attractive at the time. A tight target will help you keep your discipline intact.

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For example, I started a business selling custom fly rods. Since I had all the components in inventory I decided to sell them as well. My target market was upscale serious fly fishermen. At times I thought about compromising the home page to push components in addition to the custom rods. I was tempted to work hard on improving the components section of the web site rather than enhancing the custom rod section. By having my target in focus I was able to avoid both of these distractions.

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Measured reach -make certain your target market is defined in a way that you can both quantify the audience AND especially that there are marketing vehicles to reach them. When I was VP Marketing for a major on line photo sharing site, we found that our best customers were sentimentalists. These are the people that create scrapbooks, save everything, and cry at weddings. It was great to know this but it also created a huge challenge to figure out marketing vehicles that reached this target cost effectively. Usually, the cost of reach increases when you can’t find a vehicle that targets that market without targeting a large group of others. For example, coupon mailers can be a good vehicle to reach home owners. If you are looking to reach people needing a new roof you have to realize that only one in twenty of those home owners is likely to be in the target audience. Do your best to select your market in a way where there are efficient marketing vehicles to reach them.

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Appropriate size – narrow your target in such a way as to have a market that is not to big and is not too small. In many cases geographic segmentation may be an answer. If the market is too small then the rewards and returns will not match your revenue requirements. If the market is too big then the required marketing investment could break the bank. Marketing is a game of reach and frequency. You have to repeatedly hit your target market with your message at a frequency that creates awareness and comfort so that when they are moving into a buying mode you get considered. If the market is too big then the cost of doing that could be onerous.

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When I ran marketing for a storage company we found that the best we could do to reach a prospect was about $.10 per impression but the closest we could narrow our market was down to relatively affluent adults. With 50 million people in our target market in the United States our cost of advertising at a frequency of 12x per year was $60 million. This was too rich for us. Instead we targeted pockets of population in specific geographic markets.

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High urgency – Sort your candidate markets for those that fit your product or service offering the best. Go for the audience that exhibits the highest need for the solution. Go for the one that will be most excited about getting the fix. You need to get through the evaluation, assessment and denial phases with your prospect as quickly as possible. The more obvious the solution to a known thorn the faster this will occur.

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When I was product manager at Texas Instruments we launched a calculator that did nothing but convert numbers between decimal, octal, and hexadecimal. At the time the only solution software developers had was to do the math by hand (or IBM mainframe). The product was a huge success and literally sold itself because the need was so great and the solution so perfect.

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Good channels of communication -look for a market that has good avenues of communication. The way you are going to lower your marketing costs over time is through word of mouth. This is why companies that own market share have trouble losing it, even when the screw up. You want to build word of mouth fast. Word of mouth is a factor of how interesting your product or service is to the audience and how much and frequently the audience communicates among themselves.

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At the storage company, we found that communications about moving and storage was not strong. There were few web sites, no affinity groups, and people didn’t talk about it at cocktail parties. What we did find was that real estate agents do talk about it, especially with their clients and we found that having a storage box sitting in a person’s driving spurred conversation that wouldn’t otherwise have occurred.

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With efficient communications you will have to invest less in marketing and you will be able to drive your marketing costs down more quickly than otherwise.

by Mark Waldin Agile Marketer - You have a solution that is clearly superior to other solutions a customer can choose from and you are looking at launching the product or service.  Now comes the hard part: marketing your product.  Whether your product is revolutionary or evolutionary it is going to be expensive to market it. To limit the cost of marketing and improve your chances for success it is best to narrow your market focus.

There are a number of advantages to doing this:

• Total promotional costs are reduced – because the population is smaller the dollars you need to spend to create awareness are reduced
• You can position your product better – you can tightly focus the selling proposition and benefits to the smaller market and make your proposition even more compelling
• You establish a beachhead – you gain a significant market share in a smaller market quicker creating a reputation and momentum
• You can leverage viral marketing – you gain critical mass within the market more quickly so that you can leverage word of mouth

What if your product or service is providing a better solution into a well defined market space with known competition and known solutions? You think you have a far superior solution to a problem that people are already buying solutions to.

In many ways, this is the ideal situation in which to be. The main reason is that people already understand the problem exists, have already consigned themselves to spending money to solve the problem, and are already on the look out for a solution that best fits their needs. What could be better?

The downside is that you are forced to spend energy (and money) altering the perception of the prospect. People will either have created a perception in their mind about the solution to a problem or they will be ambivalent. If they have developed a perception, then you have a harder battle.

People almost always hold only one core solution to a problem in mind. You say, “lawn service” and they say “tru-green”. You say “lawn mower” and they say “Toro”. You say “cruise line” and they say “Princess”. You get the idea. They may know of many solutions but only one emotes an immediate response. If you want to play in the consumer’s decision process you have to gain mind share at the expense of the core solution.

Doing this takes more than just being a little bit better. Because they have mind share you have to overcome all the intangible benefits that the consumer has subconsciously assigned to the incumbent. These include items like trust, value, quality… Your solution had better be so much better than the incumbent solution that it resets the playing field. If you don’t, it is going to be an expensive and difficult journey you are embarking on.