How to grow your startup like a chia pet
While the ch-ch-ch-chia requires just a few simple inputs, those being water and seeds, your startup will need a lot more: humans, technology, real estate, capital, IP…and finding the right formula can be tricky, especially in the first year.
There’s a fine line between lean, efficient, and bloated, and this is especially true before a company reaches profitability. As you get your books in order and work through financial projections, it’s important to look at what’s necessary and what isn’t. We can group these necessities in two familiar buckets:
- Fixed costs (the shell of your chia pet)
- Variable costs (the water and seeds)
When it comes to growing your business, two roles are vital to success (insert quote about how having the best product in the world doesn’t matter if no one knows it exists): business development and marketing. Both fall into the variable costs category, and I’ll break them out further by calling business development the seeds, and marketing the water.
Today, what we know as “business development” and “marketing” can vary widely in definition from person to person and company to company. Young startups often blur the line between the two, and when executed correctly, this can be a good avenue to running a leaner business.
For the purposes of this example, let’s define them as such:
- Business Development seeks to scale the company through conversions or sales. Tactics range from cold calling and pitching proposals to performing research and analysis to identify new opportunities.
- Marketing seeks to generate brand awareness and conversions through multi-media channels. Tactics encompass digital and traditional platforms, events, and other crazy things that startups tend to do.
Young startups often create a hybrid approach to scaling up and making sales. This may involve one person straddling both business development and marketing, or a team implementing strategies that find the most efficient route to conversion by using key activities through both practices.
Marketing is one of those areas that can quickly grow out of control; call it over watering. It’s easy to hemorrhage money through various marketing “tactics” when you aren’t measuring their ROI. This is like adding more seeds to a chia pet…then adding more water…then more seeds…and you see how easy it is to outgrow your container (or budget).
Finding the right balance isn’t easy. It takes trial and error. Error costs money, and that’s okay when you’re first starting out — as long as you examine every error in order to use it as a learning experience.
So, how do you find that perfect balance of seeds and water?
As a young brand, it’s important to root marketing tactics in business development objectives. By year one, you need to be bringing in $x, or have x customers, and so on. Work backwards from there.
Before starting any marketing campaign — whether social media, email marketing, direct mail, advertising, and so on — make sure you understand your consumer and their motivations. Spending $1,000 on Facebook advertisements with broad targeting may net you 35 customers. Spending $1,000 on Facebook advertising with targeting based on your own customer validation efforts and market research will almost always net you more customers — and higher quality customers at that.
Market research — whether done through surveys, interviews, paid data, or demographic and psychographic indexing tools — is so, so important to getting your marketing right from day one.
Let’s check out an example.
Perhaps you sell socks. Made of alpaca wool. And a dollar of every sock goes to support an alpaca sanctuary. You might run a Google Display campaign targeting people who buy socks, and/or support charities. It is true that both of these groups might be potential customers, but for the purposes of this example, 1) you don’t have any hard data to prove this, and 2) you won’t learn as much about your potential customers with such broad targeting.
Say you create a few surveys, run a few email databases through profiling tools, analyze any existing records you have, and find out that upper-middle class women in their 50s-60s really like to buy apparel made with alpaca wool. They also tend to give a decent amount of money to charities each year.
You also find out that millennials like supporting companies that give back.
Now you have two specific groups to target your marketing to, in addition to a control group (composed of your broader targeting; keep funneling a bit of money that way so that you have a baseline). Messaging should be tailored to each group based on their affinities and idiosyncrasies. A/B test. See what people respond to, and what they say. See which group is more responsive. Iterate.
With this information on target segments, you now also know where to direct PR efforts: to magazines that women in their 50s read, and magazines or websites that millennials read. You can see how a bit of simple research will open doors and provide opportunities to convert faster, and learn faster.
The next step is to figure out which channels are converting. Email marketing may result in more opens, or impressions, while your Facebook dark posts are actually driving sales. Watch these numbers, and use them to build out the most efficient “menu” — the channels and tactics that bring you the most success in the least amount of time. Spending $5,000 a month on digital advertising is a lot to lay out for an emerging company, so it’s best to be extremely strategic in spending that money. The same goes for human capital — is time better spent writing a week’s worth of Facebook posts, or writing marketing emails? There’s no universal right answer.
I don’t believe that there is an out-of-the-box formula for marketing a company or selling a product. Different avenues bring success to different companies in different ways. That said, you can start off on the right foot by keeping the following in mind:
- Know your customer. Use surveys and tools to find out what they like, what they do, what they spend and where, and so on.
- Communicate your problem, and frame your product as their solution. It sounds basic, but a lot of startups focus on the problem in their pitch decks, but not always in their marketing.
- Test. And test. And test. The best way to learn how to market your product is by determining what works and what doesn’t, until you get to a point where you’re locked in on your customers. Test copy. Images. Targeting. Budgeting. Timing.
- Measure everything. This goes hand in hand with testing. Keep tabs on your campaigns — whether paid or organic — in real time. Noticing a spike or dip on a certain day at a certain time can give you an insight into the way your audience behaves.
- Be human. This might be the most important point. Today’s consumers expect a two-way relationship from brands. They don’t want to be sold to; they want to be listened to. So listen. Use your marketing channels to hold a conversation, and think of what your customer wants to hear, think, and feel.
This is all to say that startups need to be both efficient and smart with their seeds and water. Once you find the right balance, the thing almost grows itself, as long as you keep feeding it the right way. Through testing, measurement, and iteration, you’ll land on a set of tactics that give your team the right balance of business development and marketing chops to grow the business in a measurable way.