Posts Tagged: Marketing

Marketing has never been harder than it is today

There are more start-ups being launched than ever before, while at the same time there are more ways to reach an audience. As a result, consumers and companies alike are being bombarded with marketing messages…whether it’s in a social media newsfeed, in an email inbox, or through content marketing. Cutting through that noise has become really difficult.

At the same time, the marketing strategies have become more complicated to excel at, particularly for small start-ups with minimal resources. There’s always been an inherent tension in marketing: on one side, the creative, free-thinking, “sudden genius” that builds a brand over time, balanced by the data-driven approach that relies on metrics like conversion rates and methodical a/b testing. Like the Yin and Yang, one cannot exist without the other. But both camps have dramatically changed over the years – which makes today’s marketing so complicated.

First, on the creative side…

Consumers today expect to have a different relationship with brands and businesses than in decades before. Social media essentially gives consumers a megaphone and they expect a two-way dialogue. Perhaps more importantly, consumers are looking to connect with the human side of a business, and only want authentic stories and messages from their brands. All of this requires a new tool set: marketers need to dig deep to become authentic storytellers.

On the data-driven side…

Just a few years ago, metrics folks mainly focused on search engine marketing (including both paid and organic) – with the single mission of appearing higher in rankings and getting noticed in a search engine’s results. Today, there’s a whole new landscape. With social media, there’s an explosion of micro-targeting opportunities. For example, marketers can hone in on new moms of a certain age or married men who drink coffee and own a dog. Likewise, mobile has introduced a completely new distribution platform with a very different set of rules than traditional search engine marketing.

The bottom line

It’s difficult to find the right talent to fill both the creative and data-driven roles, much less to find the Yin and Yang in the same person. Few CMOs in large companies would consider themselves to be strong in both disciplines.

As story-telling and hard-core data-driven marketing become more important and more complicated, we are looking for founders that are great in both disciplines, or at least recognize that both camps are necessary to gain attention and relevance with today’s audience.

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How to manage your inside sales team

For many SaaS companies, the effectiveness of the inside sales team is the key to scaling up. After all, other marketing channels often either hit a ceiling (i.e. inbound marketing, PPC, etc.) or simply aren’t efficient enough (i.e. all offline marketing activities).

However, managing an inside sales team is tough and you need a well-oiled machine in order to get customer acquisition costs inline with other marketing channels.

The best book I ever read in this area comes from Aaron Ross and Marylou Tyler: Predictable Revenue: Turn Your Business Into A Sales Machine With The $100 Million Best Practices Of Salesforce.com.

The general premise is that companies need to specialize all the different activities involved in the sales process. They should have a dedicated person/team who is responsible for prospecting and generating qualified leads. And quota-bearing sales reps should be exclusively focused on engaged leads (meaning no prospecting).

Here are a few key tips from the book:

  • Get really clear on your ideal customer target and focus on generating good lead lists – both by using external databases like Data.com or ZoomInfo as well as by collecting customer data from the web (and ideally augmenting information by merging all data sources)
  • Targeted unsolicited emails are more effective than cold calls. Use simple text-based emails (not fancy HTML-email templates) and target an 8-12% response rate from high-level prospects
  • As mentioned above, separate roles should be used for prospecting for leads (sales development reps), following up with inbound leads (market response reps), closing deals (account executives), and maintaining accounts (account managers). Delineated roles drive better results and specialization of skills. Perhaps even more importantly, breaking up the roles yields more measurable results.
  • Use the following metrics to benchmark your own sales organization:
    • A full-time sales development rep should create 10-20 qualified leads per month
    • A full-time market response rep can handle 400 inbound leads per month

I recommend every founder of a SaaS start-up to read this book. It offers a great mix of high-level strategy and practical implementation advice.

P.S.: If you want to talk to somebody that has a lot of experience in sales, I strongly recommend speaking to Gabe Luna-Ostaseski on Clarity

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Urgency and confidence

We have all seen numerous times how a good call to action can increase the conversion rate of a website. And we have also learned that trust elements (like a clear return policy) are equally important for conversions. Both work because consumers react best to the two underlying concepts: urgency and confidence.

Interestingly enough most sites have focused their efforts of applying the concepts of urgency and confidence only to their homepage and / or specific landing pages but not to the whole purchase funnel. One of the sites you can probably learn the most from is Booking.com. Booking is a division of Priceline and one of the fastest growing hotel reservation websites. You should take the time and look at their UI in detail but you will find urgency and confidence messages at every step of the booking process (see also the example screenshot below): “Last chance – only 1 room left”; “Best price guarantee”; “Free cancellation”; “recent bookings” are all messages that help to convert users on the spot.

So the next time you are thinking about UI and conversion rates, keep the concepts of urgency and confidence in mind – they are very powerful concepts.

 

 

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Market stage: stop developing features, focus on activating and retaining users

Image representing Dave McClure as depicted in...
Image by http://www.flickr.com/photos/joi/2659065551/ via CrunchBase

I finally got around reading Dave McClure’s investment thesis and agree with almost all he says. There is one especially interesting paragraph when Dave talks about the “market stage” which caught my attention as it has been the topic of discussion with a few of my portfolio companies as of late:

“Next, you’d like to be able to improve the user experience and engagement / retention, get them to increase their love for the product. If you can do this well enough, your customers will become your marketing… at very low cost. Even if you can’t get to strong word-of-mouth or viral marketing, you can still hopefully reduce customer acquisition cost by getting incremental social amplification. Regardless, your job is to discover SOME kind of scalable distribution channel that seems like it COULD be optimized to a point where it’s cash-flow positive at some point in the future. Hopefully this doesn’t take more than $1-2M and 6-12 months to figure out. But most of this spend should be on MARKETING channels & testing, NOT on adding more features… you can pivot to discover new customer use cases, but DO NOT keep adding features. in fact, you might want to remove them (see KILL A FEATURE). If it looks like you’ve got scalable distribution, even if not quite break-even, then double-down”

Product-driven teams often forget about the market stage and continue to add features and develop the product. But as Dave points out this is not where you create value at this stage in the life of your company (you should be even thinking about killing features instead). The “market stage” is really about scaling the existing business and more specifically about 4 areas:

  • Customer acquisition: how efficiently can you acquire customers at scale?
  • Customer activation: how do you move people from signing up to your service to actually using it on a regular basis?
  • Customer retention: how do you maximize the length of time that people use your service?
  • Viral loop: how do you get them to spread the word about your service / product to their friends?

Optimizing all 4 areas will literally require hundreds (if not thousands) of a/b tests for ad campaigns, landing pages, process flow, email copy, etc. and will take some significant attention to detail and metrics. But this is the only way how to scale an online business and entrepreneurs that don’t take this seriously will not succeed.

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4 key points to address in your startup pitch

I met with 10 early-stage startups in Seattle yesterday and it was a good reminder for me what some of the most important messages are that you want to bring across to an investor when you have a limited amount of time to present your company. Here are the 4 key points that I very much care about:

  • Company vision / elevator pitch: I too often get founders that cannot describe in 2-3 sentences what the vision of their startup is and what their company is all about. Make it simple and start the conversation with it. Otherwise, the investor will feel kind of lost as they don’t even know what you really want to build.
  • Team: everybody has a team slide but in an early-stage environment I really want to know who can actually build stuff (and see examples of what they have built) and who are the “suits” (and what concrete value they are bringing to the team). Your team is only 3-4 people strong so you better have the right guys on board to start this company and you need to bring this across to the potential investor.
  • Competitive advantage: think long and hard about how you differentiate from other sites out there. Too often founders overestimate how differentiated their product is when it is actually just a nice evolution of existing products that will have a hard time convincing users to switch.
  • Distribution: distribution often doesn’t get the necessary amount of attention and founders seem to assume that people will just flock to their site so really go through the different marketing channels and come up with a strategy that make the most sense for the product you built.

So keep your pitch short and simple and make sure to address those 4 points – it will sure help to make your pitch more concise!

P.S.: I had a great time in Seattle and am always impressed by the consumer internet scene down there – perhaps this will turn into more investments soon!

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