A large business can hire 10 people to do their marketing, spend millions and still have very little to show for it in increased revenues. No one really knows outside of the company how much is spent on marketing because it is hidden in the profit and loss statement under “operating expenses”. If a prominent shareholder were to ask how much is spent on marketing, they’d be pointed to the general sales and administration expense.
By not running a business themselves, marketing people do not know the impact of their activities on the company’s sales. In some severe cases, marketing skills are so low that the company may just as well fill wheelbarrows with millions of bank notes, wheel them up to a cliff and tip them over.
If you think this is an exaggeration, take a look around and see what’s passing for “marketing”. If this sounds harsh just look at all the R&D that occurs in marketing. Marketers have learned to “Google”. All they need to do is rip and duplicate (R&D) information, concepts and campaigns from the Internet. No need to worry about campaign strategy, company strategic objectives or brand positioning.
If you’re a “marketing person” reading this and going blue in the face, well go read something else. Go do some R&D. We don’t want you around because we’re going to talk real marketing now to start-ups and small business owners who know the difference between junk and quality.
Marketing is one of the major risk areas for a start-up. How will what you spend help you cut through the noise? Unless you know your economics of customer acquisition, you will be merely wasting money. You must know how much you have to spend (cost to acquire customer) and the revenue that the customer will generate.
Remember that the first sale can be the most expensive because of the initial marketing costs. The second sale could be “free” if the customer doesn’t require further advertising to buy again. But that’s naive. Apart from word-of-mouth advertising, sales of most products have a marketing cost attached.
Start-ups requires strong differentiation to distinguish themselves from competitors. And don’t believe that even if your product is “new” that you don’t have competition. There is always the threat of substitutes. The risk of high marketing cost needs to be addressed because start-ups don’t have mountains of cash. Your marketing strategy has to exploit low-cost forms of targeted communications.
The best decision you can make is to find someone who has real-world experience in real marketing for start-ups. You won’t find someone this good easily but make sure you do because no matter how brilliant your strategy, the execution with an able person will turn your marketing spend into investment.