* Mix inbound and outbound tactics to lower customer acquisition cost *
This article is the third in a three-part series. The first focused on issues that should matter most for Founder CEOs: Vision, Talent, and Cash. The second covered Basic Steps for Getting Sales On-Track.
Now we turn to marketing. Let’s make a few simplifying assumptions. You have a basic web presence, along with differentiated messaging that resonates with your target audience. You know why your customers buy and how they like to buy. (If you want a primer on storytelling, read Great Sales Decks Create Emotion Connection.)
Let’s identify common misses that emerging companies make in terms of marketing:
*Results aren’t tracked regularly making improvement impossible.
*Your fiercest competitors invest marketing dollars, but you are unsure where.
*A written-out marketing plan doesn’t exist.
*One thing consumed your entire marketing budget.
*You don’t do any marketing.
The good news is these are easily addressed. We start by taking a step back to address why invest in marketing in the first place.
Why Marketing Investment Matters
Answering this question begins with your revenue goals for the year. Does your business plan call for doubling revenue? How many new customers do you need, and what is the average selling price (ASP)? Do you have a general idea, or at least a working hypothesis, how much it costs to acquire a new customer?
Armed with this information, review all resources at your disposal.
This requires taking a dispassionate view of burn rate so you can make informed resource allocation decisions across the business. For example, are you over-investing, or under-investing in areas? Emerging companies often over-investment in R&D when they should spend on sales or marketing. Other sins include spending 100% on direct sales, but zero on marketing. There are others, but you get the idea.
Breakthroughs occur when emerging companies understand the strategic value marketing plays in helping lower the total cost of customer acquisition. Let’s dig into how marketing makes this possible.
Tip: As ASP decreases the more marketing should increase as a percentage of overall resources allocated to driving sales.
Yin And Yang
Inbound and outbound represent the two major complementary components of marketing. By creatively mixing these tactics, and guided by cost / benefit, you can multiply views generated. This can dramatically increase sharing, and ultimately the number of prospects who see your content, opt to engage, and convert to real sales leads.
Inbound Marketing Unpacked
Today’s buyer is in control. Because of buyer self-education, marketing needs to be heard through the noise and come up with new ways for leads to find you. This is the process of helping potential customers find your company, then turning that early awareness into leads and sales.
There are four components of inbounding marketing: website, content and SEO, blog, and social media.
The website is the place for converting browsers into actual leads. For example, calls-to-action encourage prospective buyers to sign up for your newsletter or fill out a form for a demo.
Next is content and SEO. Content is the foundation of inbound marketing efforts, from email to social. You need to continually refresh content that is impactful to your audience and drives sharing. Search engines equate high-quality content with a high-quality website.
Your company’s blog is the place to create trust with potential buyers. Readers can stumble upon your blog from all over the web so make sure it is search-engine optimized. This doesn’t mean lots of overhead. Smaller companies derive impact from two blog posts per month.
The increasing popularity of social networks make them impossible to ignore. Enable buyers to research and learn about your product through influencers and peers. Social media channels like Twitter and LinkedIn can take you directly to prospects and create trust.
Tip: With the right strategy properly implemented, SEO can increase website traffic 2-4x, giving this tactic a great ROI.
Outbound Marketing Revealed
Outbound amplifies inbound efforts, and targets specific opportunities. Outbound channels are used to introduce message and content to prospects, typically through “rented” attention. Communication is highly targeted, with an obvious call-to-action.
There are four components to outbound marketing: event, email marketing, lead nurturing, and PR.
Events can help define your brand, clarify solution offered, and provide you with opportunities to engage with prospects and customers. Compared to other tactics, events are more likely to quickly turn a prospect into a strong lead.
Email marketing is a key component of every marketing campaign. Whether you are hosting an event, sending out a new piece of content, or simply staying connected with customers, email should be one of your main forms of communication. Marketing automation should drive this.
Because not all sales leads are ready to buy, you need a solid lead nurturing strategy to continue to build awareness. Done well, this increases lead-to-opportunity conversion rate, drives more revenue, and shortens sales cycle. Like email marketing, this is the role for marketing automation.
PR is the last piece of the outbound puzzle. This is the idea of obtaining “free” coverage like generating an article featuring a client. Third-party validation like this is the most credible of all outbound tactics.
Tip: Identify impactful points of prospect connection, and develop content appropriate for each stage in the buyer education process.
Don’t Buy the “Rubber Chicken Dinner”
If your emerging company has acquired its first cohort of paying customers, then you should be spending a minimum amount on marketing. While opinions will vary, this is my rule of thumb in the business-to-business software space: If you have more than 10 customers or more than $500,000 in revenue, then you should be “serious” about investing in marketing.
How hard you “pull” on the different levers, and in what combination and sequence over time is a function of revenue goals paired with factors like seasonality and resources. But all successful marketing strategies and plans are holistic in approach, and accountable to measurable outcomes.
Avoid thinking that spending something is better than spending nothing. Not true. Spending less than the minimum to achieve a lasting, impactful outcome is the equivalent of buying a rubber chicken dinner. You paid for it, but it sucks. You want to send it back, but you can’t.
In this case, you are better off banking the money until the organization is ready (and jazzed) to invest. Otherwise good money is spent without the ability to generate lasting ROI.
While on the topic of spending money poorly, another common mistake emerging companies make is investing marketing dollars in a “stop-start” cadence. In other words, lots gets spent in a short period, followed by a prolonged “valley of death” period. This is problematic on many levels: measurement is meaningless and improvement is impossible. Lasting ROI is null.
Marketing Is A Force Multiplier
Successful emerging companies understand the role marketing plays in helping achieve ambitious sales goals. What to spend and how much to spend starts with understanding the role marketing can play in the pursuit of customer acquisition targets. Creatively applied and continuously adjusted, inbound and outbound tactics will accelerate sales velocity and improve capital efficiency.
Chris Preston is a business advisor and sales leader who helps turn emerging companies into market leaders. A former Microsoft executive, two-time startup veteran, and board member, he is founder of True Partners Advisory. If you’d like a little help, contact us.