7 sins of startup marketing

When trying to help a new company get off the ground, there are a few cardinal mistakes that will thwart later growth. Consider these tips.

deadly-sins-marketing-mistakes

Tens of thousands of startups are born each year. Some grow slowly, while others grow rapidly; some fail fast, and others fail slowly.

While many factors cause startups to succeed or fail, one common determinant for success is a robust marketing capability, whether in-house, outsourced or a mixed model of resources. Having worked with approximately 250 startups and as the marketing mentor to Plug and Play Technology Center, the world’s largest incubator/accelerator, we have identified seven of the key mistakes startups make as they grow when it comes to their marketing program:

1. Failure to define the marketing team’s scope.

Among core corporate functions, such as sales, operations and human resources, marketing has the most variance. In some organizations, CMOs strictly manage an “influencer” function, while in others they have P&L responsibility and manage product development, pricing and other core functions. CMOs have the shortest “life expectancy” among c-level officers because many organizations fail to match the job function to the CMO’s areas of expertise.

2. Failure to scale your team and capabilities as the company grows.

In organizations where marketing is not a P&L function, the tendency is to fund it last. So, a company might grow from having three products in the U.S. market alone, to having 10 products sold worldwide, but the marketing team might grow, in number and budget, by just 50%. The result is predictable: Support for any one market or any one product is reduced.

Another mistake is staffing the CMO function with people that lack adequate marketing and/or management experience. We recently worked with a company in a newer industry that was growing rapidly. The CMO had about 25 years’ experience and clearly had a strong marketing background. However, she was completely unable to manage her own schedule, internal team and the relationship with us as an outside agency. The results: Marketing activities took at least twice as long to complete as they should, coordination on new product launches was lacking and the CEO had a low opinion of the marketing function in general—and even told an editor that during a briefing.

3. Failure to update distribution support strategy.

Many startups begin by selling direct-to-consumer and then evolve to selling through channel partners through a mixed model. Marketing support for channel sales is completely different than a direct model, but many organizations continue with the same strategies, with the result that channel partners feel unsupported and don’t aggressively sell the startup’s products.

4. Failure to update company positioning.

In many markets, there is a continuous evolution of technology, customer expectations and competitors. Marketers need to constantly be aware of, anticipate and adjust the company’s position based on this evolution. We worked with a startup providing services to wireless carriers at a time when mobile device hardware was advancing rapidly. The CEO literally called a monthly meeting to review his company’s positioning, that of its competitors, customers and prospects. Each month, we tweaked the messaging slightly to ensure the company stayed ahead of the curve.

5. Failure to create pricing best practices.

One client of ours has called pricing the “sick man” of marketing, often an afterthought after product development and sales. When we discuss this with clients, we still often receive answers such as “cost plus”, “10% less than competitors” or “10% more than competitors” from more confident clients. There is frequently not much of a scientific discussion focused around testing different pricing models, offers, promotions and other pricing levers.

6. Failure to identify new competitive threats.

Many startups are led by teams who have spent years developing their new product or service and have often focused on replacing an existing technology. They are very focused on what the product/service is and often less on what it does. With this mindset, they can forget that the customer is almost exclusively focused on what the product does for them. The customer will look for any solution that fills their needs better and for a lower price.

Food and beverage retail is a great example of this. Until recently, traditional retailers such as brick and mortar supermarkets looked at their threats as other supermarkets. Then, Walmart and others used their supply chain and distribution muscle to disrupt the market. Next, online retailers such as Amazon entered the competition. And finally, startups such as Instacart got in on the action.  Many traditional retailers have scrambled to catch up because they failed to identify potential threats early and respond.

7. Failure to efficiently convert marketing qualified leads (MQLs) to sales qualified leads (SQLs).

This is one of the oldest discussions around. Marketing teams often complain they hand quality leads to sales—who then fail to close them. Sales teams complain that the leads were unqualified and valueless.

Startups can’t afford this disconnect. Both teams need to set up acceptable criteria for what is an MQL, what is an SQL, what does “qualified” mean, how the handover takes place, and related questions, and then use tools such as a CRM to remove friction from the process.

Creating and growing a startup is already difficult and the high failure rate is well known. Avoiding these and other marketing mistakes is relatively easy. With forethought, the right talent and teamwork, startups can avoid these sins and increase their chances for success.

Tim Johnson is the president for UPRAISE Marketing + Public Relations.

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