Knowing the difference can save you a lot of time and money.
Once your product is officially launched, the hard work begins. Acquiring a customer base, and doing so in a relatively quick timeframe, is hard to do for almost any startup–especially if you're bootstrapped and not working with a ton of capital. After a few months of being “live,” many entrepreneurs start to freak out. (Well, most of us are regularly freaking out, but that's another post.) Whether growth is happening too quickly (a good problem to have with its own challenges), or you're not gaining traction, this stage of a startup is extremely stressful.
The number one thought many entrepreneurs jump to is, “Our marketing strategy isn't working.” I've seen startups that have been live less than six months cycle through three different heads of marketing–all of whom were qualified to lead the company's marketing efforts. Why? They were quick to blame the marketer (or the marketing), not the product. The most skilled marketer in the world can't make a bad idea gain traction, though they might be able to use contacts to gain some short-lived press, or get some important speaking engagements. But a product that has not been validated is never going to succeed. Likewise, even a mediocre marketer can get great results for the next billion dollar company.
How do you know the difference? Is your marketing failing, or is it your product? Here are some initial questions to ask yourself:
Have you validated your idea through user testing?
If not…Stop. Right. Now. You are going to waste a ton of time and money if you don't. We recently published a post on our user testing process–take a look at it here.
Have you validated a market need? Does the idea meet a need? Or simply a want?
A validated market need can be identified, in part, with validating your idea. You might want to include some outside research, including checking for competitors, such as businesses that are in the same space (and market with the same target market) as you.
Have you looked at addressable market size?
This can either be super easy or super hard. (Enlightening stuff, right?) If you're building a product to address a new market, this research can be very difficult, particularly since no one has likely done it before. You're going to want to slice and dice different sources to come up with some numbers on your own. From there, it's a decision you need to make based on what you think the investment will need to be to get the business off the ground, as well as how many customers you'll need to make money. If your addressable market isn't that big, hitting that number will be nearly impossible.
Have you done objective customer research?
After you've taken a look at all the resources available to you, it's time to talk to some real, live humans. Real, live humans who aren't your mom or your spouse. Doing some research with people you don't know can be intimidating, but you'll find that people are more willing (or even eager!) to help than you might think.
Go to a coffee shop in a neighborhood where your target market is likely to hang out, and offer to buy coffee or give a gift card in exchange for 5-10 minutes of the potential user's time.
Here are some customer research tips and tools on learning from your customers (or potential customers.)
Have you looked at the competition? Is there competition?
There are a few schools of thought on competition. A typical “unicorn” is a completely new idea, but the risk is super high in building something that's never been tried before. You either win big or fail big. Gaining traction is SUPER hard since you have to get people to think in a new way. Once you succeed…that is if you succeed, you're likely going to be very successful.
Most companies, however, live alongside ideas that are already successful–they are simply improvements or new ways of looking at a longstanding problem with multiple alternative, sometimes outdated, solutions. If your idea is bold and completely new, you must make sure your user testing and validation is mighty thorough. Typically, most companies want to build on ideas that are already tried and true, which means simply building improvements to those ideas.
If you have looked at all of these factors, your marketing might be the cause of your lack of traction and success.
That's not to say your marketer isn't successful–there could be a number of factors influencing your marketing success (or lack thereof).
How long has your product been live?
Things don't happen overnight. If you're expecting sales, customer acquisition, or app downloads to take off right away, you likely have very unrealistic expectations. With an MVP, your target market is smaller than your total addressable market since the product offers fewer features. That's ok–you need that small group of people to find you (or more likely, you need to find them) and start to advocate your product. Don't expect thousands of customers coming to you overnight. A few customers a day is a great start, and it's how most successful companies start.
Who is your target market? Are you communicating with them on a channel that makes sense?
If you've done your market research, you likely know the demo of your target audience. The next thing to look at is where this group of people “hang out,” both online and off. Many, many startups discount experiential marketing right off the bat and rely on digital only. This is a huge mistake. Where else can you meet potential customers one-on-one and get immediate feedback on your product? Face to face.
If it doesn't make sense to do any sort of in-person customer activation with your product, then pay very close attention to where you're spending digital dollars. Facebook ads may be cheap, but if you're going after a 20 year old woman, you're likely throwing that money down the toilet. However, taking out YouTube ads on a popular blogger who is reviewing the Kylie Jenner lip kit is probably a better use of your spend.
Do you have to spend money to acquire customers right away?
Nope. Most businesses are bootstrapped at first. While bootstrapping means very different things based on your personal financial situation, most people are trying to spend as little money as possible acquiring customers from the get-go. This means engaging people on social media, building trust as a subject matter expert, and connecting with as many people online–and off–as possible. Needless to say, this takes a lot of time and energy. What makes this worthwhile, however, is personally building up your user base. This means you're close to them and can reach out to them for feedback, which is critical at every stage of your company, not just the beginning.
Should you spend money to acquire customers right away?
Maybe. First of all, the idea that any marketing is “free” is a fallacy. If you're spending time commenting on YouTube posts, writing blogs and sharing with similar bloggers, or responding to everyone alive on Twitter, you're investing sweat equity. This is smart…for most companies. But it also makes sense to set aside a small amount of money on paid advertising. You can take out Twitter sponsored posts or Facebook ads relatively inexpensively. Spending a little money can often help you speed up the fail/succeed factor. It's better to know sooner rather than later if, despite all of your customer development, your company is not going to succeed.
Do you have tools in place to measure where your customers are coming from?
This might have to be really scrappy at first, especially if you don't have the ability to integrate a lot of tools to track sources onto your website. You can send people who sign-up follow-up emails asking how they found out about you. A phone call is even more effective, but only if you send a personal email in advance and ask for a good time to chat. If you're sincere, most people will give you a few minutes.
Once you talk to your customers, be sure to track the responses in a spreadsheet. Monitor when an influx of sign-ups come in as well, and track what happened that day. You might have been mentioned by a blogger, a news outlet, or even an influential Facebook page.
Taking all of this into account will likely help you determine whether your product, or your marketing, is failing. While the adage “If you're going to fail, fail fast” exists–no one wants to fail. No matter what stage you're in, we can likely help you figure out your next steps. Reach out to us! We would be happy to help with user testing, customer development, or marketing your startup.