10 mistakes in startup marketing strategy

A quick search on Google will tell you that around 90% of startups fail. They simply never become a profitable or scalable business. Why is...

A quick search on Google will tell you that around 90% of startups fail. They simply never become a profitable or scalable business. Why is this failure rate so high? What critical mistakes are these failing businesses making in their strategic marketing?

I’ve been in strategic and practical marketing for more than 10 years and have observed some common mistakes that most early stage startups make. But, observations are not as conclusive as data. Therefore, in my global research on startups, I was looking for success factors and valuable lessons to be learned. But, unexpectedly, I’ve also found some common mistakes made by one after another in startup marketing. Following are the most common and most costly.

startup marketing strategy

Startup marketing strategy: Creating the product first, thinking about marketing later

This is one of the most common and expensive mistakes a startup can make. Who would create a product that nobody wants to buy? It seems so logical, but there are many, many startups that have invested their time, money, and effort in developing products without having a clue as to whether customers will buy it. Many startups, especially in the tech industry, think that the hardest part is to create an innovative product, to “make things better.” The notion that the main success factor of a business is to create a product is a business mindset that was popular and very effective in the 1960s. It is certainly not a valid business premise in the 21st century and even less so for startups.

It’s great to have a strong focus on product innovation, but you have to create products that will be loved and used by customers, not you!

Startup marketing strategy: Offering “nice to have,” but not essential value

Many startup founders focus on creating products that solve a particular problem that is important for them, but not necessarily for their potential customers. If the problem you are trying to solve is not really painful for customers or the value you try to create is not essential—but just “nice to have”—the chance of success for your startup is very low. First of all, it will be much harder to sell non-essential products. If your customer’s financial situation worsens, your “nice to have” product won’t be on your customer’s priority list. Secondly, the price and your profit margin strongly depend on perceived value. The more valuable your product seems to be for the customer, the higher the price he is ready to pay. So, you definitely want to focus on creating essential value and solving painful problems.

Startup marketing strategy: Lack of market verification; saying is not the same as paying!

This is closely related to the “nice to have” mistake. The fact is that 42.6% of startups that are trying to address really serious problems and create tremendous value don’t test it in the market or they do it in the wrong way. It would be hard to find a startup founder who hasn’t heard about market verification, the process of validating their business idea in the real market. But most of them either don’t take the time to do it thoroughly or do it incorrectly.

For example, you can’t just ask your customers to answer a survey to get market verification. Instead, ask them to buy or at least pre-order your product. If customers say your product is great and that it solves a meaningful problem for them and gives great value, that’s great! But, if they still don’t buy it, guess what? Saying is not the same as paying! You’ll never have real market verification until customers give you their money for your product.

Startup marketing strategy: Anything to please investors instead of customers

Pleasing investors instead of customers must be some kind of disease. I don’t know what else to call it. Startups too often focus on the show while pitching a business idea to investors instead of proving their business concept and growth potential.

Sadly, some investors foster such behaviors by raving about exciting pitches—those without a solid foundation and marketing background—just because the startup founder was so charismatic and put on a great performance during the pitch. Other startups notice this trend and the next time focus more on the pitch and the performance rather than verifying their business model and proving the business’s potential durability and scalability.

Trying to please potential investors has a reasonable justification: investors can bring money, their network, and quick solutions to some of the challenges of a startup. Yes, it’s true, but only if you have a valuable and verified solution. Customers, not investors, should be at the center of your startup’s radar. If the customer is happy and satisfied, many things follow automatically, including the investors standing at your door to provide you needed funds.

Startup marketing strategy: Thinking that “we have no competitors”

I don‘t know why startups believe in such a fairy tale. In my global research on startups, I didn’t find a single case where there were no competitors. Anyone who knows at least the basics of marketing knows that there is always direct and/or indirect competition. If your startup is developing some kind of innovation, it’s possible that you won’t have direct competitors for some time until you are copied. But if you are solving a real problem (which should nearly always be the case), there’s already a way that people handle this problem. This is your indirect competitor! The customer’s decision to ignore the problem is your indirect competitor as well! Why? Because there is an alternative for the customer: not to buy your product!

My in-depth interviews with startup founders showed that most of them did only a very sketchy feasibility study into the market competition. Only 33.9% of startups have evaluated their micro and macro business environment, while others hadn’t even thought about it and were focusing mainly on market fit verification in the best case. It’s better to ask yourself “how can we find out with whom we are competing” instead of thinking that “we have no competitors.”

Startup marketing strategy: We have brilliant idea and it will go viral by itself

Really? Are you sure? Why should anyone recommend your service or product? What’s in it for them to do so? I don’t say people won’t recommend you to their friends if your product or service is great. But it’s very dangerous to rely on that. That is called “hope marketing,” which basically means we do nothing in essence but hope for the best. Is it wise to make bets on such a strategy?

There are at least three types of growth engines clarified by Eric Ries years ago: viral, sticky, and paid. The sooner you take action to implement at least one of those engines, the faster your business start growing with the help of other people.

Startup marketing strategy: A good growth hacker is all we need!

About two-thirds of startups I interviewed said they would like to get help on business growth by so-called growth hacking. Growth hacking is a strategy whereby every decision made by the business is focused solely on growth. Of those, only half had already found their problem-market fit. Incredibly, this revealed that nearly one of five startups is willing to waste their energy and resources on growth hacking without having validated their value proposition.

Another surprising statistic is that only about 20% of startups have developed their up-sell and cross-sell strategies. It means that the other 80% of startups have no idea what they will do with potential customers even if growth hacking succeeds. They are not yet prepared to sell more and will basically leave money on the table.

The majority of startups strive for growth, but only a few of them have a well-prepared foundation to handle what growth hacking could bring to them. Don’t waste energy on growth hacking until you’ve laid the foundation for growth.

Startup marketing strategy: Marketing needs a huge budget, therefore we’ll take care of it after fundraising

If you are targeting a large-scale market, you’ll probably need a big budget for communicating your unique value proposition. But it’s simply not true that you can’t start efficient marketing without significant funds. Not all marketing measures and tools need big money. If you want to see this can be achieved, take some time to read some books and articles about guerrilla marketing.

As my research showed, 47.9% of startups were already on the market, but only 17.4% had a consistent marketing plan and only 39.4% had developed their brand and positioning. Crafting positioning statements and creating marketing plans requires effort, not money!

Before putting money in a startup, any rational investor will check to see if there is traction. Investors need proof that the business model is viable and durable. How are you going to show it without doing any marketing? You are on the right track if you don’t want to spend a huge amount of money on marketing in the early stage. But, you can still plan and run marketing experiments to find a problem-solution-market fit, validate your communication and distribution channels, and get some ideas about possible growth engines. Once you have that, you can prepare a comprehensive marketing plan with potential profit estimations and then seek out investors to ask for the budget you will need to implement your brilliant marketing plan.

Startup marketing strategy: We’ll enter the market with “big boom” launch

Wrong! That’s not efficient anymore! Big launches might be a strategy for the well established, traditional business, but for startups, it usually just causes failure in the form of wasted money and insufficient sales. Startups typically introduce innovative products and services, thus they have to do things that don’t scale at first: verify the market fit, acquire their first clients (early adopters), create user evangelists, test communication channels, and search for an efficient growth engine. Sometimes, a big launch might be a good marketing strategy for a startup, but only if you have done the aforementioned tasks and much more. It’s much better to get some traction in advance before considering a big launch.

Startup marketing strategy: Burning money instead of investing

Sounds crazy? Who would do such an idiotic thing? You would be shocked at how many startups burn their investor’s money by spending it on things that don’t add value to the startup. Yes, it might feel comfortable and safe paying yourself a salary from the investor’s money. And, it might be cool to work in a nice office and attend the greatest startup conferences and other events. But, what’s in it for your startup? How does it help your business? One thing is definite: it increases your cash burn rate. The higher the cash burn rate, the less time you have to create a profitable and scalable business.

Startup founders with an entrepreneurial mindset achieve more because they see the difference between fundraised and earned money. They don’t spend on shiny things but instead, they invest in what builds value for the startup.

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