An excerpt from The Ultimate Startup Guide:
We launch startups.
Those are the first three words on our website and the essence of what we do. We may position ourselves as a marketing firm, but when you join a company as early as we often do (sometimes before they even have a name), you better bring a lot of general business sense to the table as well.
One of our clients once referred to us as his “VPs of Common Sense.” His logic was simple: you’ve got an experience base that I’ll never have, launching over 40 startups and working with such industry luminaries as Larry Ellison (Oracle), Scott McNealy (Sun), Tom Siebel (Siebel Systems) and Marc Benioff (Salesforce). Our job, according to him, started with a negative: make sure he didn’t screw things up. Then the job turned positive: use our experience to position the company appropriately; develop the messaging and content to support that positioning; launch the company into the open market; and equip the sales team with the tools and programs to give them the best chance to succeed.
Crowded Ocean, in its own way, is just another startup. We started with the basics that most founders do: a whiteboard and an open mind. We didn’t have an installed base that we needed to preserve or antiquated technology that we needed to amortize. We just had the goal of building the ultimate marketing agency for startups.
Once we focused on our core strategy and market, we articulated our core operating principles, which we not only wanted to offer to our clients but wanted them to integrate into their own business operations. They are:
This concept can go by multiple names: ‘just-in-time’; ‘kanban’ (Japanese for ‘just-in-time’); ‘virtual’, and the more trendy adjective: ‘fluid’. Regardless of what you call it, it comes down to this: pay for only what you need, when you need it. It applies to Marketing (a major focus of this book), but increasingly, to multiple areas of your own startup operation.
When Tom started at Oracle, he was one of three members of its nascent Corporate Marketing department, writing all the company’s product literature, annual reports and ads. During his six-year tenure there, as the company skyrocketed, he wound up as Sr. Director of Corporate Marketing, with a staff of 70 (running ORACLE Magazine, Oracle Open World, seminars, direct marketing, advertising, etc.) In today’s world, with a growing distinction between ‘core’, ‘virtualized’ and ‘commodity’ functions, so many great contractors out there, and so many collaboration technologies allowing contributions from many perspectives and geographies, that department of 70 would probably be between 15 and 25, most of them managers sourcing and collaborating with outside resources.
Why the move to on-demand (or ‘virtual’) resources? A number of factors, really:
- Economic. This one’s obvious. No hefty salary, no 30% overhead, smaller real estate costs. The lower burn rate alone makes this option very attractive to startups.
- Agility. Much of today’s work is task-oriented or project-oriented. It’s much faster to assemble a collection of professional talent for a short period and specific task than hope that your collection of in-house talent has the same ‘best of breed’ skills and original ideas to perform the task at hand.
- Fresh thinking. In-house talent often grows comfortable and intellectually complacent. Outside talent has to stay on top of its game, learning and integrating the most recent ideas and techniques into their skill set.
In the course of our engagements with startups, we generally outsource the development and delivery of the following programs:
- Corporate identity
- Content writing (white papers, data sheets, case studies, video)
- Public Relations
- Website design and development
- Event Marketing (trade shows, webinars, partner programs)
- Demand generation, automation and measurement
- Sales and Marketing systems
- Video production
- Social Media
What does that translate into, headcount-wise? At most, for your Marketing department (in an enterprise startup), in addition to your CMO (or a virtual VP of Marketing like Crowded Ocean) your startup should have at most one full-time employee: a strong Marketing manager who can hire and manage all of the above contract services. As you move into Phase 2 (Early Sales) you should plan to add a second employee, someone strong in demand gen, web analytics and sales/marketing automation systems. That’s it. The rest should be virtual or on-demand.
The above logic applies not only to Marketing but to almost every other discipline within your startup. There are some obvious areas: no startup needs a full-time CFO or legal counsel, but in the eight years that Crowded Ocean has been operating, we’ve seen even the ultimate in-house, full-time positions—coding and Sales—moving to on-demand.
Inbound and Outbound Marketing
The marketing brains and co-founders of Hubspot evangelized the concept of “inbound marketing” about a decade ago. Inbound marketing says that in the age of the internet, you want to invest in targeted content to attract or pull customers to your website and social channels to build your audience with compelling content and offers. In other words, you want to “get found” online and earn your audience through authority, content and offers.
Previously, a brand would reach out to try find customers through traditional outbound or push-based investments like paid media (advertising), PR and direct mail. Startups today invest marketing dollars in targeted content offered on specific sites, social channels and forums online to be discovered in search and “earned media.” The term ‘inbound marketing’ is now so ubiquitous that it has its own Wikipedia entry and has spawned its own industry of books, presentations and seminars. Inbound marketing is the marketing engine that lowers the cost of customer acquisition, but it is an engine that must be fueled with an investment in outbound marketing to prime the pump, so to speak, a process that can take months.
Success in inbound marketing also implies an emphasis on measurement that was heretofore unavailable in the pre-internet, outbound-marketing era. By using marketing automation system software like Hubspot, Marketo, and Pardot, coupled with a disciplined inbound marketing approach, startups can measure where their customers are coming from, what content is most effective at attracting customers and therefore how to tune and maximize every marketing dollar spent to attract and convert customers.
Since our founding, Crowded Ocean has been associated with ‘Sales-based Marketing’. The concept is simple but controversial: The role of Marketing comes down to three words: Make sales easier. If it doesn’t generate new sales, shorten the sales cycle, or make repeat sales easier, don’t do it.
We’ve written about it, we do workshops about it—for us, it’s just common sense. But for many marketing professionals, it’s controversial because it sounds as if we are making Marketing and marketers subservient to Sales. We’re not: Marketing is a true equal of Sales in any startup in which we work.
But the term is off-putting to many. Especially marketers. There are any number of CMOs or VPs of Marketing who reject this concept. They believe that: a) They know—better than the Sales team—what the market does or doesn’t need; and b) Raising the role of Sales, in their mind, diminishes the importance of Marketing, which is a killer in this world of big egos, and big budgets.
Let’s be clear: there are certain companies (Coke, Nike and Quiksilver come immediately to mind) that are truly Marketing-centric. The differences between my sugar water and yours, between my shoes and yours, between my surf shorts and yours, rarely come down to functionality and technology: they come down to Marketing. And in those cases ‘Sales-Based Marketing’ doesn’t make sense. But for most companies today, ‘Sales-Based Marketing’ should be the norm.
This is especially true in the area of startups, which exist because of real-life problems that a company or consumer is having or because of a unique application that users will flock to. Which means Marketing can’t work in a self-imposed vacuum: it has to go down the hall to the product team and translate what they’ve created to a skeptical market. And it needs to go out in the field with the Sales guys and see and hear how target users react to the product. Then it needs to incorporate all of this into their positioning and messaging.
The next step in sales-based marketing is testing the message. Let’s say that, in the course of establishing the initial positioning of the company and product, we establish three different options to explain how the product works: a bicycle, a car and a boat. After much discussion, with Sales and Product weighing in heavily, we decide on ‘car’ and devise presentations and sales materials in support of this position.
Now it’s time to test our new positioning (before we do any of the heavy investments of time and money in critical marketing deliverables like PR, a website and demand generation programs). We meet with a number of potential customers and get their feedback. And we listen hard.
It’s the same thing with early positioning of your product. You have to have confidence in your decision (‘Car’), but you have to be flexible and humble: the market knows better than you what it needs and wants. So the first time a customer says: “You’re not a car—you’re more like a bicycle,” consider the feedback but stay the course. If Sales, based on this one meeting, wants to rip up the PowerPoint presentation and start over, tell them they’re over-reacting. The second time, if the Sales team gets the same reaction, listen harder: but it’s still too early to change course. But if the Sales team reports that they hear it for a third time, scrap the Car and get to work on the Bicycle strategy.
Now that you’ve been out selling the product for a bit, it’s time to define your sales cycle. Not some generic cycle—your sales cycle.
The key is to still hold Sales accountable for revenue generation but to also involve your entire startup team by showing them where there holes (or stalls) in the cycle, so that the appropriate department (Marketing, Product, Support) can take the appropriate action. If the issue is lack of market awareness you might heavy up on PR, analyst relations, thought leadership, search engine marketing, and social media. If it’s a problem of early trials not turning into volume sales, we work out incentive programs for the pioneers within a company. If the product is a complex sale, we might pilot a try-before-you-buy program, where some customer success people work as coaches for key clients.
Your company-specific sales cycle graphic will change as you grow—and it’s Sales’ job to keep it up to date and the company informed. And your marketing strategy and spend will adjust accordingly. You can put PR on a maintenance budget and heavy up on lead generation. Build out case studies and ROI tools—anything that validates your early claims and assures customers they’re not taking a major risk. And then (you’ll be sick of reading this phrase throughout the book) ‘measure everything.’ Learn what’s working, where new business is coming from, and how to make your sales cycle as short and efficient as possible.
Business, as seen through the left-brain/right-brain lens, (left brain = logic and analysis, right brain = creativity and imagination), is a determinedly left-brain discipline. Sales: make your numbers and you’re golden; miss them and you’re gone. Product: make the product according to ‘spec’ and on time and you get a bonus. Miss it often enough and you’re working the drive-through lane at Carl’s Jr.
For most of its history Marketing has inhabited the sparsely-populated right-brain sector of business, describing itself as ‘more art than science.’ When asked to justify our spends in such areas as PR, advertising and direct marketing, we point to recent coverage and hoped that no one would ask if any of that coverage led to a sale. Same thing with advertising.
Historically, Marketing has always been the least appreciated part of most businesses. (Those who can, do; Those who can’t, teach; Those who can’t do either, go into Marketing.) While no one in management is bold or stupid enough to suggest that the company do no marketing at all—after all, how else was the market going to notice you initially and learn more about you over time—there is always the lurking suspicion that Marketing is run by lemmings, that they only do what other companies are doing and are only doing it because the other companies are doing it.
All of that changed in the past two decades because of two developments: the internet and Sales/Marketing Automation systems. Now, Marketing is “Metrics R Us.” With the right tools in place, data-driven digital marketing experts can report stats from site traffic (weekly, daily, hourly) to time on site to downloads, signups, shares, follows, etc—all of which is valuable market feedback about what content is resonating with your target buyers, what channels are producing traffic, etc.
Since virtually every click is now captured and traceable, the data is there to move marketing from the right-brain parking lot into the left-brain side of the business, along with sales, accounting and product development.
Now, with the rapid adoption of Inbound Marketing, which focuses on your company being found, the technology that made sense of all those clicks and connections are marketing automation systems, an outgrowth of customer-relationship-management or eBusiness software. Originally, companies like Siebel Systems and Salesforce led the way on the Sales front, with Marketo, Pardot and Hubspot (and more) complementing them on the Marketing side. Marketers could now tell not only when you first visited their site, but where you had come from, how long you stayed, what else you clicked on while visiting, etc.
To be successful these days, you need to employ both halves of your marketing brain. While the internet and marketing automation systems have created a new level of visibility and accountability, you still need the original thinking and creativity to create those programs you want to measure. So our counsel to our clients is to adopt a pattern similar to military marching: left-right-left. Start with the analytics for your market to determine who’s looking for what you have to offer, then use this data to guide your creative thinking (for campaigns, PR positioning, sales promos, etc.). Then use your left-brain tools to track the efficiencies of these programs.
Then do it all over again.