Peter Drucker once stated that the two most important functions of a business are Innovation and Marketing. He meant that the primary purpose of a company is to create value and to deliver it. Whereas businesses have become more complex nowadays with strong interdependencies between divisions and functions, the core principle still remains the same.
What has changed is the naming due to specialization and optimization. Value delivery nowadays includes marketing communication, prospect management, marketing intelligence, lead generation, business development, sales, customer success, PR, quality control, product management and even design.
What does marketing mean for early stage startups?
In a young startup, marketers often find themselves wearing a set of different hats. While marketing in big corporations has a strong focus on branding through ginormous media budgets, startups not only have limited capital to deploy but they also have very different needs in their early stages. They primarily need to get to product-market fit. And a marketer’s responsibility is to find out what value should be delivered and what the best way to do so is.
What this means is that marketing should have a holistic view of everything that spans between the product team and the customer. It is one of the most interdisciplinary functions in the business. I am often surprised to see how little marketers understand about the products they want to sell, or even worse – about the customers they want to reach. Marketing should be seen as holistic value delivery and hence, it should be collaborating with design and sales for needfinding, with product management for specifying the product, and with operations to make sure customers can be onboarded without friction.
I have often mentioned Dave McClure's Lean Marketing Framework, colloquially called AARRR in pirate lingo, when talking about growth marketing. But this framework also best describes what areas marketing should have interdependencies with and which activities marketing needs to be responsible for.
A marketer’s job is to acquire new customers. In B2B, this means lead generation, prospect management, and sales support. In B2C, this means building up awareness, interest, desire and action on the consumer side. This includes all channels that a company can use in order to reach the target audience and communicate the value proposition. If the website is the primary channel of communication marketers need to be able to manipulate it for conversion rate optimization without the support from engineers (web developers) all the time. So for young businesses, web development introduction for all marketers or content management software are both great investments.
A marketer’s job is to capture value. It is not enough to only worry about capturing leads and routing them to sales. Marketers need to know what the best way is to facilitate relationships with customers so that they convert and start paying. Collaborating with operations and product teams to ensure smooth onboarding processes is also part of this.
A marketer’s job is to retain valuable customers. It is 5 times more expensive to acquire a new customer than to retain one. If retention rate is low, marketing needs to understand why and find a solution. Often, marketing & sales overpromise or products underdeliver. For both scenarios, marketing needs to lead expectation management and value proposition alignment with the product team. Deep understanding of product architectures and underlying processes is important knowledge for marketers.
A marketer’s job is to satisfy customers so they become advocates themselves. There is no better alternative to convince potential customers than social proof. Prospects are more likely to trust peers than any other means of communication a company can offer. The best way to create advocates is by focusing on customer satisfaction and hence, the relationship between expected value and perceived value. A product should delight customers through innovative approaches, novel functionalities, surprising characteristics or emotional value. Marketing needs to work with product teams to make give products a USP that is able to make customers love them.
A marketer’s job is to make the company profitable. Financial planning is a core skillset of marketers because they need to make sure customer acquisition costs don’t exceed customer lifetime value. Only when a company has built a healthy engine of value it can focus on building an engine of growth. Thus, marketers should be data-driven and focus strongly on performance especially in early stages of a startup.
Building for Growth
I believe there should be a marketing-focused person among the first 5 people in any team. Of course, this requires the marketer to have a technical skill set enabling her to manipulate all marketing channels for best performance. It should be the person having the customer in mind all the time and making sure that the company is solving the customer’s needs.
Especially in early stage startups, validating the value proposition should be the main focus of all functions including marketing. In the end, marketing is responsible for delivering the right value to the right customer through the right channels.
So to all entrepreneurial marketers out there: Be technical, be customer-focused, be process-oriented, be data-driven and be interdisciplinary!