The Basics of Entrepreneurship, Part 4: Marketing
Marketing is an intrinsic part of any successful venture. It is the link between the customer and the company - both in learning what the customers want and in promoting both the company to both potential customers and returning customers. Everybody wants to back a winner, and successful marketing helps give them just that.
But wait... I know how to market! I mean, I see it all the time on TV and in magazines and newspapers, how hard can it be?
Sorry to take you down a notch, bro, but it's a lot more and a lot harder than that... when it's done it right, it really takes work. Think about it. How many advertisements can you remember right now? I bet you can remember a couple. What do you remember about them? Can you name the companies and products associated with the ads? If you can, that's impressive. Have you actually bought the product?
That last question's a doozy isn't it? You see television commercials aren't very useful for most marketing campaigns. They're expensive and they cover too many audiences. Most magazines and newspapers are just as bad - static advertisements that are directed at no one in particular in hopes that someone who reads it will be inspired to buy the advertiser's products. Such marketing campaigns are the product of lazy decisions and following the groupthink that is so common in bureacracies and big companies.
The Five Pillars of Marketing
Truly innovative marketing encompasses developing products that solve specific needs of specific customers and convincing those customers of their need for the products so much so that they feel a need to purchase those products. Such marketing encompasses five pillars:
- Know thy customers
- Pursue your customers relentlessly
- Incorporate customer feedback
- Get referrals
- Cross-sell
Know thy Customer
Sun Tzu, ancient Chinese wiseman and military advisor, is famous for saying "know thy enemy and know thyself". However, in this modern world I would say "know thy customer and know thyself". What I mean by this is that you must understand your customer and their needs and how you can help meet their needs in order to be both a successful marketer and a successful entrepreneur.
Don't listen to silly focus groups. Get in there and get to know your customers! Bob Jones, a brilliant marketer who's been leading product development of all sorts of nutrition bars over the last two decades, has a favourite phrase, "so we held some focus groups, but we threw out the moderator and actually asked our customers questions". It's great! He means that he actually went into a room with twenty or more of his potential customers, got to know them, and really learned their pain. He got to know the interesting tidbits that none of his competitors knew. For instance, with one product he learned that diabetics hate being treated like they're sick. Therefore, he packaged his product like an energy bar, which gave them both the peace of mind they wanted and treated them like adults!
When you really get to know your customer, you know what keeps them up at night, and you know the tidbits about them that will enable you to hold an advantage over your competition. I guarantee you that most of your competition is not this meticulous and interested in solving their customer's problems. That's why startups exist. That's why you can steal marketshare from big corporations.
Pursue Your Customers Relentlessly
That's right! Chase them down! Don't let them get away! You need to have an integrated approach to reaching your customers, one that both establishes your credibility and fosters their desire to purchase your products. I know, I know... you're worried that you're going to overwhelm them or seem to aggressive. I have too, but think about it: is it overwhelming when you see the CEO of GE on CNN talking about his company's new approach to product development, see some advertisements on television touting GE's new products, and then receive some mailers offering you discounted prices if you make a purchase immediately?
Maybe that's aggressive. However, it seems to me that chances are the only thing you will really take note of is the mailers. You won't really remember everything else, but you may think that GE is an innovative company with good products. That's what sets the stage for the mailers. The mailers seal the deal. They answer the "why now"... "Honey, if we don't buy it now, we may have to pay more later". That's ridiculous, but it is how people think.
There are three things to consider in any marketing campaign: Why us? Why our product? Why now?
Incorporate Customer Feedback
It's important to always improve your product. Remember, if you're successful, your competitors will be trying to emulate you as best they can. That means that you have to stay a step ahead of them by continuing to be the expert on your customer's needs. Therefore, you need to actively solicit customer feedback on your products and incorporate that feedback into new versions of your products. Happy customers lead to more customers and to repeat customers, so making extra efforts to look like you're taking their complaints to heart will go a long way to increasing the number of customers you have and through that, your revenues.
Get Referrals
If your customers like your products, they'll refer you to their friends and acquaintances. That's the marketing you can't buy! What's more effective than someone's good friend saying "hey, this product works really well for me" and in the reverse "man, I really hate that product, I can't believe I wasted my money on it". These references are probably the most powerful influencing tools you have access to.
Wait. How do I have access to that tool?
It's simple: give your customers an incentive for making referrals. If your products are expensive, you can give a gift certificate or discount a payment. If they're cheap, you can offer them a free perk or a one-time 20% off card. It's amazing how quickly people will sell out their friends. Especially since such referrals are now just a way of life and not considered actually selling out one's friends (that's another topic for another day).
As your marketing campaign matures, be sure to capitalize on those referrals to bring in the easy customers. It will show in your adoption curve and in your revenues, as well as in the positive review you will generate for the product.
Cross-Sell
The easiest customers you will ever acquire are the ones you already have. If they bought once from you, they'll buy again... as long as you don't make a lousy product in the first place. If you do make a lousy product, low numbers of repeat customers may be a signal that your product is lusy and needs to be reworked.
The cost for the average bank to acquire a customer is around $350. Other industries are similar. That means that it could easily cost you $350 to acquire each customer you get. How on earth are you going to make that back?! It's going to have to be by selling an awful lot to each of your customers. And that's exactly how you should do it! People are more likely to buy from a company that they've already bought from because that company's known to them, they know what to expect. That means that it's easier for you to convince your current customers to buy more products and services from you than it is to convince non-customers to do the same.
In the case of many products you can sell a service to compliment the product. For example, Dell sells service warranties and installations to its customers. These services are easy ways to take advantage of customers that are already making a purchase. How easy is it to install a desktop pc for someone? How about providing technical support for a service contract? That money's almost pure profit. You don't need any extra infrastructure to sell those services. So remember, integrate services and products to sell more to your current customers.