Startup success stories are more prevalent than ever with the top GAFAM technology brands (Google/Apple/Facebook/Apple/Microsoft) dominating the news, followed by hundreds of startup $1+ billion market cap Unicorns (a record 700 Unicorns in 2021), along with record IPO activity now fueled by special-purpose acquisition companies (SPACS). Yet the failure rate of startups continues to hover at 90% including a 20% failure rate in year 1. Also consistent with the 90% failure rate is the 10% success rate of startups that succeed after 10 years according to Investopedia.
Fortune magazine published a study on startup failures that identified the Top 20 Reasons as stated by the founders. “No Market Need” ranked as the Top Reason for failure at 42%, followed by “Lack of Funding” at 29%, and “Poor Marketing” as the 8th reason for failure at 17%. Take a closer look at the chart below and interestingly, 8 of the 10 reasons for failure are marketing related, with “Ran Out of Cash” and “Not the Right Team” the only non-marketing reasons for failure in the Top 10.
With this background, our “thesis” will go forth to prove that Ineffective Marketing is likely the major contributor to startup failure, and the corollary, Effective Marketing is a major contributor to startup success. First let’s “carve out” the marketing reasons for failure from the above list (8 of the top 10 reasons) and then identify the marketing disciplines that can overcome these problems:
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- No Market Need
- Get Outcompeted
- Pricing/Cost Issues
- Poor Product
- Need/Lack Business Model
- Poor Marketing
- Ignore Customers
- Product Mis-Timed
9 Marketing Disciplines for Startup Success
Each of the above reasons for failure can be addressed by effective marketing including the 9 disciplines below, along with multiple marketing sub-disciplines.
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- Market Research
- Marketing Strategy
- Product Engineering and Testing
- Branding
- Digital Marketing
- Content Marketing
- Awareness Building
- Ongoing Communications to multiple audiences
- Customer Acquisition
Let’s take a closer look at each marketing discipline, and note that chronology or the order of these 9 disciplines is important.
Market Research
No new business model, new product or service should consider “starting-up” without undertaking Market Research including Secondary Research or published information (Google searches included here); both quantitative and qualitative Primary Research including surveys, interviews and/or focus groups. Syndicated Research is often available for many categories on a subscription basis from analyst and research firms. Finally competitive analysis and when possible, competitive intelligence is an important sub-discipline of market research. Spouse and “mother-in-law” research need not apply.
Market Research can help identify market and customer needs, support marketing strategy, business model and product development and engineering, testing and optimization. For more information on market research, view our blog on (market research) Types and Tips.
Marketing Strategy
Business model development is dependent on marketing strategy. Again, Market Research can support both strategy and business modeling. Identifying customer personas and needs is a priority undertaking for Business-To-Consumer (B2C) scenarios. Demographics and Pyschographics are part of persona development.
Business-To-Business (B2B) scenarios more often require Market Segmentation by Standard Industrial Classification (SIC) code, identifying sales or procurement processes, and identifying decision makers or decision influencers by title. This B2B “customer profiling” is typically complex with multiple decision makers, and often procurement committees. In B2B, Vertical and Micro-Vertical marketing are sub-disciplines that can help startups focus on digestible market segments where market leadership is possible.
Customer personas or profiles, market segmentation, and vertical marketing support an absolutely critical sub-discipline: Customer Identification. Intuitively, B2C and B2B will require different processes to identify customer types, and ultimately market potential.
Last but not least, positioning strategy is critical. Understanding competitive positioning, and identifying a unique, differentiated and defendable market position is paramount to success. Perceptual Maps are useful tools to plot and visualize competitor’s positioning on such variables as features and price. Check back here soon for a How-To link.
Product Engineering and Testing
My background includes brand management, new product development and launch, and new market entry. Product (or service) engineering and testing are similar processes. These disciplines depend on and overlap with most the 9 disciplines here. How? Prototypes are created and given to “sample” customers to test usage and provide feedback. Product/Services features, brand names, packaging, and pricing are tested.
While “Poor Product” and “Ignore Customers” are reasons for startup failure, neither can happen if you are immersed with customers. Voice of the Customer (VOC) research is a common term and process. “Outcompeted” is avoided with reverse-engineering of competitor’s product and testing with real customers. Finally, product costing and pricing are important aspects of product engineering and testing.
Branding
Branding includes naming, visual identity (logos, graphic themes), and messaging. Brand naming is the foundation, and IMHO (In My Humble Opinion) the achilles heal of startups. Founders silly or arcane names might kill a startup faster than a non-differentiated product. Like other effective marketing disciplines, naming and branding should be explored and tested with real customers. Sorry, but founders and staff brand naming opinions should not be the only options here. For more advice, check out my book, Breakthrough Branding: Brand Naming Tips and Trade Secrets.
With brand naming determined, other brand elements can be explored, tested and optimized. Logos and taglines are typically developed next, followed by messaging.
One consideration in regard to messaging is mission or purpose. Depending on the product category, Cause marketing might be part of your mission or purpose. Another consideration in regard to messaging is your “Elevator Pitch” or short overview that can be used in multiple applications. Like naming and logos, do consider including professional advice.
Digital Marketing
The “digital marketing mix” includes your website, SEO, social media, paid search, and our next discipline, content.
For both B2B and B2C scenarios, the brand website is likely the foundation of a startups marketing. The messaging and graphic theme must be stellar. User Experience (UX) simple and easy. Mobile/Responsive and secure (SSL/HTTPS) are now basic requirements. Complete on-page search engine optimization (SEO), off-page link-building, and Local Citations/Local SEO are critical.
Social media is important with different emphasis for B2B and B2C. B2B social media focuses on LinkedIn, YouTube, Twitter, and possibly Facebook. B2C social media focuses on Facebook, Instagram, YouTube, Twitter, and possibly TikTok, and Pinterest.
Paid Search includes pay-per-click (PPC), online/display advertising, and Remarketing/Retargeting. The use and spend on paid search will be dependent on the category and E-commerce potential.
Content Marketing
Content has emerged as the “fuel” behind effective marketing. The Content Marketing Institute conducts an annual study of content marketing with versions for both B2B and B2C scenarios.
In the 2021 study, B2B content marketers used 13 types of content, while B2C content marketers used 10 types. Following are top 5 types for each.
The same study identified (organic and paid) content distribution channels with social media leading both B2B and B2C, and websites and email following closely. What differed was the 4th ranked content distribution channel with Virtual Events for B2B, and Media/Influencer relations for B2C.
Surely the type of content will differ with the category. Consider technology vs. fashion. Technology requires education and research information, while fashion requires photography and perhaps entertainment? Publish of perish.
Awareness Building
The AIDA model is still accurate today, meaning Attention, Interest, Desire, Action. A customer cannot buy your product/service if it is unknown. Building brand awareness is still essential to effective marketing.
How? Advertising used to be “king” of awareness building, but is likely not cost efficient for all but the largest brands. Advertising options include print, TV, radio, and a variety of online display and social media alternatives, the latter which can be cost efficient.
Publicity is free by definition, but not easy to achieve without resources and investment in publishing fees, analysts, and related. And publicity potential is likely dependent on the product or service, and category. Publicity options should be fully evaluated, and will likely require the assistance of a experienced professional. In the meantime, learn more with the Guide to Modern Publicity.
Brands of all types can achieve publicity by aligning with a cause, mission or purpose that supports a non-profit or related brand that can bring publicity. For more information, check out our Cause Marketing Guide.
Other options for awareness building include thought leadership marketing and community development. Both can be accomplished with content, programming, publicity, and more. View the Thought Leadership Marketing Guide here.
Ongoing Communications
Effective marketing requires ongoing communications to multiple audiences including customers and prospects, employees, investors, editors and analysts, channel partners, and more. Email is still a leading tactic for ongoing communications with options for newsletters, nurture and trigger campaigns, along with new email list development tools.
Your brand website should be a communications “engine” with ongoing content as the “fuel”. Landing pages, blogs, and gated content that requires a form-fill or registration all drive website traffic, with calls-to-action (CTAs) identifying qualified leads or even e-commerce sales.
Intuitively, content supports ongoing communications including blogs, videos, social media, virtual and live events, and more. Finally, ongoing communications supports our next and final marketing discipline, customer acquisition.
Customer Acquisition
The ultimate objective of most marketing and certainly most startups is customer acquisition and sales. Customer acquisition for B2B and B2C scenarios differ, as do E-commerce and brick/mortar. Customer acquisition costs (CACs) should be measured, along with sales conversion rates — important for startup budgeting and forecasting.
Corollary to customer acquisition is customer retention. With retention or loyalty programs in place, customer lifetime value (CLTV) can be projected at the time of acquisition.
Many of the aforementioned disciplines support customer acquisition, along with some new tactics listed below.
Startup Marketing or Die?
Thesis proven. The majority of startup failures are due to marketing-related reasons. Therefore, marketing and especially the 9 disciplines must be effective and well-executed. But how? Lot’s of advice. Seriously consider marketing experts with experience in your category. Do not consider marketing experts without experience in your category.
Depending on startup maturity and scale, consider outsourcing marketing vs. staffing. Startups have a tendency toward staffing when the range of marketing discipline requirements suggest outsourcing.
Recommendation: research and identify multiple marketing agencies with proven category experience and request recommendations. If this process goes well, engage in marketing planning and budgeting.
Maximize startup success by making marketing a priority.
Resource Roundup:
Market Research: Types and Tips (MMP)
Breakthrough Branding: Brand Naming Tips (IDeas BIG)
2021 B2B Content Marketing Study (Content Marketing Institute)
2021 B2C Content Marketing Study (Content Marketing Institute)
