Ask the Expert: What if you built it - and they didn't come?
You've worked months (maybe years) building a start-up around your big idea. You've put your reputation on the line with friends, relatives and angel investors. You may have even depleted your own bank account. You've nailed your value proposition and your financial model and now you are ready to go to market.
Think again my entrepreneurial friend; you also need to consider your customer acquisition plan. Sadly, customer acquisition planning is an afterthought for many otherwise brilliant entrepreneurs. If it is on the top of their minds, many think that Twitter and other free social media channels will draw enough leads and customers to keep them afloat. This assumption is a fantasy.
Is your business plan dependant on just a handful of big client deals or is it built around attracting thousands of new customers at a lower average selling price (ASP). Perhaps you are somewhere in the middle. The general rule of thumb is that if you are in a volume dependant, lower ASP business, put more of your resources and capital toward marketing.
If you have a lower volume, higher ASP dependant business, then put more of your resources toward sales. Few start-ups are entirely one camp or another, but when you are just starting out you should know where to focus your limited resources and time to get business off the ground.
Both sales and marketing functions are fundamentally about breaking inertia in your market. You are a start-up, you have a product or service that is unknown. You need to introduce your service to your target market - then change someone's perception on your product to potentially change their habits and gain their adoption. Breaking inertia requires time, money and planning.
5 Quick Start-up Tips for Sales and Marketing Planning:
1. Budget accordingly. Do not assume your prospects will "automagically" come to you. Hint: For recurring revenue business models, cost of acquisition (COA) assumptions for your first year after launch should be about equal to your first year average customer revenue. COA assumptions should be modeled to decrease with time, as you gain market momentum.
2. Learn to sell, then hire your first salesperson. You may be a technical wizard, but don't count on a salesperson being able to transfer your passion and vision on day one. Hint: Sell on your own. Learn where there's prospect push back. Learning-by-doing will help you hire (and train) your first salesperson so that she hits the ground running.
3. Draft a marketing plan. Does your marketing plan have enough budget behind it (with your COA assumptions) to meet the goals of your business plan? Hint: Vet the plan with marketers and other entrepreneurs. Invite them to find holes in it. Perhaps create an advisory board if you don't have one already.
4. Everyone has a great story to tell. Self-publishing tools are free, ubiquitous and easy-to-use. CREATE CONTENT! BE the thought leader your market needs. Be careful not to be too self-promotional. Create content your prospects and customers want to read. Email newsletters are an inexpensive, sometimes free, way to keep your best prospects and customers engaged.
Offer a newsletter opt-in to your prospects and customers at every touch point. Hint: Once you start blogging, you can repurpose your content across many channels including email newsletters, Linkedin, Twitter, Facebook, etc.
5. Get testimonials and case studies. Third-party credibility goes a long way in helping to break market inertia. Also known as "social proof," case study and testimonials from early customers can help influence your prospect's buying decision in your direction. Hint: Start small, perhaps you gave your product to your college roommate and she loved it and provided a reference. As your business matures, so will the third-party credibility you can lend to your product.
I look forward to answering your questions and/or responding to your comments at www.unionleader.com/expert or http://abihub.org/ask-the-expert/
Richard Turcott is the CEO of Mill33, a high volume email marketing service provider based in Manchester. He is responsible for the company's vision, management and product strategy. He has been active in technology marketing for more than 20 years, holding senior marketing roles as CMO at several start-ups including Constant Contact, RatePoint and Curata Inc. Richard launched his first email marketing campaign in 1995 while at Dow Jones and also lead direct marketing efforts at the early Internet superstar Lycos Inc. He earned his B.A. from Assumption College and MBA from Northeastern University Graduate School of Business Administration.