How a small marketing budget works for startups better than a big budget?

CEO of Gaia VSM ♣ Host of Reach or Miss podcast ♣ Customer Focus for entrepreneurs ♣

CEO of Gaia VSM ♣ Host of Reach or Miss podcast ♣ Customer Focus for entrepreneurs ♣

By Hayut Yogev,

Lean marketing allows startups to grow revenues with fewer marketing resources and far greater results.

It’s high time to debunk one of the greatest myths in the marketing of startups. In a recent conversation with the marketing manager of a startup that develops and sells enterprise software, I was informed of one of the most common, yet false, axioms regarding marketing.

“You need to spend big on marketing if you want to bring in the big bucks.”

Wrong!

The truth about marketing budgets

Unfortunately, as many companies can attest from experience, you can spend a fortune on marketing without achieving the breakthrough that will generate revenue. Highly focused marketing, also known as lean marketing, is what generates the most revenues in the quickest and most effective manner.

Eric Ries developed the concept of the ‘lean company’ in his book, The Lean Startup, which was published in 2011 and became a bestseller in the US. The book is based on the insights Ries gained as an employee of startups that failed because they did not understand the wants and needs of their target customers and because they focused too much time and energy on the launch of the product they believed in. The mistake, as Reis astutely analyzed, “It was working forward from the technology, instead of working backward from the business results you’re trying to achieve.”

Marketing, as I define it, means seeing things from the customer’s perspective. Since the money we want is in the customer’s pocket, if we want to get the customer to buy and/or use the product, we need to understand:

  1. Which customers are the best fit to adopt our new product?
  2. How to define the product from their perspective?
  3. How to properly define the market and the categoryto which the product belongs?
  4. Recognize the greatest value that will motivate the customer to buy or use it?

These are the four core definitions which marketing activities should be built around.

The 4 Core Dilemmas

Marketing based on the answers to these four dilemmas is the leanest, as it is focused on the customers with the greatest potential for our product and on the relevant messages that will motivate them.

In the Internet era, social networks allow marketers to leverage Internet connections to reach anybody at any time. Because of this revolution in technology, customers have gotten used to searching for, and adopting, new habits and products. This is precisely why lean marketing is the most effective and best fit for all new startups.

The use of lean and focused marketing will not only allow you to save a great deal of money, but it will also give the greatest chance of introducing a new product and creating the quickest breakthrough to the international markets.

What are the four principles and stages at the heart of lean marketing?

  1. Proper and quick mapping of the market and defining the answers to the four basic dilemmas as listed above.
  2. Defining the company’s goals and objectives for the short term; define goals and objectives for the launch period and/or for the next six months.
  3. Building a marketing plan of action based on the basic definitions to achieve the company’s objectives. The plan is, in fact, a mixture of target audiences and of the most effective activity.
  4. Regular monitoring and measurement; checking success of each activity against the targets set for it.

Timocco, an Israeli startup that develops and markets interactive games for children with special needs, is an excellent example of the success that can be achieved through lean marketing.

Eran Arden, the CEO of Timocco

Eran Arden, the CEO of Timocco, demonstrates in the company's office in the Akron Business Accelerator, Ohio

After two years of spending money on marketing and sales efforts that did not deliver the expected results, the company underwent a brief process to remap the market and redefine its basic assumptions. It then used the results to prepare a marketing and sales plan. First of all, Timocco defined the initial target countries by mapping the market, and considering the resources and tools at its disposal. The next step was to choose which distributors were right for the products. Then, Timocco created a plan of action for each target audience, based on the basic definition of the three target audiences: therapy institutions, therapists, and parents.

Over 90% of the plan of action was based on Internet activity. Most of these options are free:  

  • On relevant forums, bloggers and social media groups
  • Managing a professional community
  • Quarterly newsletter oriented specifically to each target audience
  • Managing a diverse and active blog and writing relevant content for each of the target audiences.
  • Internet-based public relations and maximizing the effort through social media
  • Sending mailers and conducting webinars for the professional communities
  • The other 10% is dedicated to professional conferences in two selected countries as well as Israel, Timocco’s home market.

This plan of action, a large portion of which is based on free advertising and activities, allows the company to achieve its objectives in less time than expected and, more importantly, positions Timocco as a market leader in its field.

The precise definition of the target audiences, and tailoring a marketing plan for each separately, makes it possible for startups to reach their customers quickly, receive feedback about the product in real time, and generate use and significant revenues in a short time – all while slashing time to market. This is the winning formula for lean marketing that leads to a breakthrough.

I'm happy to talk with you about the marketing challenges your startup is facing.

Contact me at hayut@gaia-vsm.com

 

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