However, while marketing can be the fuel you need, it can also be what causes you to crash and burn. Analyzing over a decade of experience, we have put together critical mistakes startups make so you don’t have to learn the hard way.
7 Startup Marketing Mistakes You Must Avoid
Table of Contents
1. Failing to Define a Clear Value Proposition
To make a marketing strategy successful, a well-defined value proposition is crucial. Without a clear value proposition, you are unable to help your prospects choose you over your competitor. Your startup’s value proposition explains how the offering solves a problem, meets a need, or improves a situation for the customer, and why it’s better than competing alternatives. The value proposition answers the question: “Why should a customer choose you over someone else?”
A startup that fell prey to its weak value proposition was Juicero, a Silicon Valley startup that raised $120 million in venture capital to revolutionize juice-making with a $400 machine. Yes, you heard that right. Juicero not only sold its machine for $400 but the consumers also had to get a subscription for fruit and vegetables to extract juice. Now the problem? Juicero’s customers quickly realized they could simply squeeze the juice packs by hand. This made the $400 machine redundant. But what led Juicero to this was its value proposition.
Juicero wasn’t reinventing the wheel but its customers didn’t think of Juicero as convenient, high-quality, or a novelty. This lack of clarity made Juicero, in all honesty, a rip-off, and eventually, the startup saw itself fall in 2017.
So, what can we learn from Juicero’s experience?
Before you jump into the nitty-gritty and marketing tactics, make sure your value proposition is crystal clear. Conduct surveys, speak with potential customers, and iterate on your messaging. According to Bain & Company, companies that crack their value proposition grow 5.8 times faster than their competitors.
2. Ignoring Data-Driven Decision Making
With so much going on, it is often hard to give each decision the time it needs at a startup. Often these decisions are made based on gut instincts and while intuition is important, ignoring data can lead startups to costly mistakes.
This happened to HomeJoy, a home-cleaning startup, which quickly grew into 31 markets in only 6 months. Now, for any startup, that growth is amazing. However, HomeJoy overlooked critical customer feedback and churn data during this expansion which led to high customer acquisition costs and unsustainable growth. HomeJoy offered overly discounted cleanings for $19.99 through websites like Groupon. It was a great deal for first-time customers but they never used HomeJoy’s services again despite the availability of internal data.
Ignoring this data cost HomeJoy all of its businesses and investors lost all their trust.
According to McKinsey, companies using data-driven marketing are 23 times more likely to acquire customers. In startup marketing, metrics are critical, and tracking data around customer acquisition costs (CAC), lifetime value (LTV), and conversion rates will help you scale efficiently.
Actionable Tip? We always recommend startups to have a lean tech stack but robust CRM systems like Hubspot or Salesforce ensure you can track your marketing efforts. At DVC, we have helped companies build analytical ecosystems merging data from Hubspot, Salesforce, Analytics, Search, Paid, and in-app to build a clear story. As a startup, you do not need every analytical tool, however, a few paid mixed with free tools is always a great starting point.
3. Overestimating the Power of Virality
Living in the age of virality, it is no surprise that a lot of startups wish they would go viral overnight and be successful. While having some of your content go viral can boost your traffic or brand awareness, relying on it as a strategy is a recipe for disaster.
One company that relied on virality was Ello, a social network free from ads and data mining. It marketed itself as “anti-Facebook”. When it was launched, the platform went viral. At its peak, there were 30,000 sign-ups per hour. Now, though Ello and its team had to build tremendous hype, they didn’t have enough features to keep their users engaged and while marketed as a “Facebook-killer”, Facebook quickly became what users wanted.
Based on research by The New York Times, only 1% of online content goes viral. Instead of seeking virality, startups must focus on sustainable growth and implement growth marketing strategies that are scalable.
Pro Tip: If your content or startup goes viral be prepared to capitalize on it with lead capture capabilities, discounts, and/or a referral program. But always remember, virality is just icing on the cake.
4. Neglecting Brand Building
As a startup, growth is important. We get it. You’ve raised your seed or Series A, and you want to be efficient, scale, and grow consistently. Because numbers do matter. But so does the brand. Oftentimes, startups have an amazing product, and customers love using it, but that’s all the people who know about you. Making you the best-kept secret in the industry. In the long run, brand equity sets you apart. We’ve seen this between Google and Yahoo or Facebook and MySpace. But a brand isn’t just about attracting customers, it is also about building a loyal following. According to Nielsen, 59% of consumers prefer to buy new products from brands familiar to them.
Quirky was founded in 2009 as a community-based invention platform that raised $185 million in funding and launched over 400 products. Though it was exciting for many one of the most prominent reasons why Quirky went bankrupt just 7 years later in 2015 was its branding. Quirky built a variety of products, and since they were built based on community-rating, Quirky had a confused brand identity since no one knew what they built. This heavily contributed to a lack of customer loyalty.
Branding Strategy: Even in the early days, brand-building activities are important and must be invested in. You can do this by using founder-led marketing strategies, defining your brand voice, or creating a style guide. Branding helps customers know exactly what you do, makes you memorable, and helps with word-of-mouth marketing.
5. Spreading Marketing Efforts Too Thin
During the early days, it can be very tempting to use every marketing channel under the sun–from social media, email marketing, content marketing, paid ads, etc. This usually happens because as a founder you are likely seeing other founders talk about what’s working for them on LinkedIn or Pavillion. As a result, if one channel is working for another startup, you want to try it too.
Sadly, this does nothing but overcomplicate things and spreads your marketing efforts too thin.
This is something Buffer did too. At one point, Buffer proudly talked about their marketing efforts across various channels. However, they soon realized that trying to maintain a presence on every platform was unsustainable. By focusing on fewer channels and optimizing their strategy, Buffer was able to grow more effectively.
A Hubspot study found that companies focusing on a few marketing channels see 13 times more ROI than those spreading efforts across 5 or more.
What to Do Instead? Rather than trying to be successful with every marketing channel, identify where your audience spends the most time. For instance, if you’re targeting B2B customers, LinkedIn might be more effective than Instagram. The sooner you get back to the drawing board to identify your audience, what their pain points are, and where they seek solutions, the more cost-effective and efficient your marketing will be.
6. Overlooking the Importance of Retention
For many startups, acquiring new customers is an obsession that eventually leads them to overlook the importance of retaining the existing ones. The truth is, though closing new logos is important, retaining current customers is cost-effective and can drive long-term growth. Let’s think about Hubspot for a second. Hubspot is a CRM with a variety of tiers and depending on your job function, you can tailor it to your needs. If a company buys Hubspot for marketing and grows its sales team as well, this allows Hubspot to expand the account. Or if you are using a starter plan, Hubspot can drive growth by helping customers buy a higher tier. Comparatively, current customers can help you drive revenue with a lower acquisition cost.
One startup that overlooked retention was Everpix. Though a useful product for its time, and despite raising $1.8m, Everpix ran out of funds quickly because they spent most of it in building its product and nothing went towards customer retention or even acquisition. The startup could not sustain itself and eventually shut down.
According to Bain & Company, a 5% increase in customer retention can lead to a 25% to 95% increase in profits.
Retention Tactics: To reduce churn rates and increase retention, build personalized email campaigns and workflows to support your audience through a variety of channels. For example, if a user sign-ups on your website, definitely send them personalized emails but you can mix that with LinkedIn messages or notes as the CEO. However, retention goes beyond email marketing and gifting, your customer success and support function does the heavy lifting.
7. Failing to Align Marketing and Sales
Silos are common in startups. Usually, operating as a department of one or few, you’re so busy that you are not cross-collaborating with others. This is most common between sales and marketing. This leads to misalignment which can deteriorate growth. Without a cohesive strategy or alignment, marketing leads would not convert. This wastes both time and resources.
At startups, especially early on, every marketing lead is important. If sales and marketing are not communicating regularly, you are likely wasting each lead and missing out on revenue. This can be due to communication gaps, aiming for different goals, leadership misalignment, etc.
But all startups go through this — even Hubspot. Initially, Hubspot faced challenges aligning its sales and marketing teams. Without a collaborative approach, they noticed that their inbound leads weren’t being properly nurtured. This led to missing opportunities.
According to Forrester, companies that align sales and marketing teams achieve 24% faster revenue growth and 27% faster profit growth over three years.
How to Fix It: Sales and marketing teams, almost always need to be in the same room when it comes to strategy, metrics, and goals. Implementing service level agreements (SLAs) that define how to handle, track and nurture leads is a great way to have both teams on the same page. Simultaneously, building dashboards in Salesforce is helpful to see dropoffs and conversion rates.
Conclusion
Startup marketing mistakes are inevitable, and frankly, that is how we learn the majority of the time. However, the potential for rapid growth is enormous but so is the risk of failure. These 7 common startup marketing mistakes are ones we have seen firsthand. You can set your startup on a path to sustainable success by focusing on each of these areas and collaborating with internal and external resources to improve your systems.
As a growth marketing company, DVC helps startups build a scalable marketing foundation — focusing on a variety of areas. We work closely with founders and marketing leaders to develop the core strategy and align growth with goals. Connect with us today for a strategy call.
In the meantime, remember, every startup’s journey is unique. While it’s crucial to learn from others’ mistakes, it’s equally important to remain agile, iterate on your strategy, and listen to your customers. In the fast-paced world of startups, those who can adapt and evolve are the ones who ultimately thrive.