The point is that "build it and they will come" isn’t true. You need to build it, and then show them exactly how it can be used, and then show them several explicit examples of why it’s powerful, and then they might come. - Dick Costolo in 2007
Product building and product marketing used to be mutually exclusive. Eventually something funny happened. Some people who were in charge of marketing realized they could use methods from the engineering departments to do better marketing. Enter the Growth Hacker.
Just like marketing, the goal of Growth Hacking is to acquire and retain customers. But the Growth Hacker is empowered with marketing methods AS WELL AS engineering methods to get it done. (Disclaimer: I'm not including design in this discussion. This is because great design is critical to both engineering and marketing, so I take it as a given).
The reason why Growth Hackers can be so effective is because 1) they are capable of using and understanding data in a way traditional marketers usually are not and 2) have the training to build better products themselves. It's not magic, it just makes good sense.
Engineering and marketing are both broad fields. So to say Growth Hacking will replace marketing is as silly as saying Growth Hacking will replace engineering. HOWEVER, the implications of Growth Hacking are much much more significant for marketers. Let me edit the title of this post a bit.
This is what you need to know about Growth Hacking and the future of marketing
The product and marketing worlds have collided. Well actually, they collided a long time ago, but the recent rise of the Growth Hacker is forcing marketing to evolve faster. This is a good thing. Marketers should be product makers. Marketing should be delightful and built into the products they are intended to serve. This is the implication of Growth Hacking.
If you want to learn more about this you can watch my interview on Growth Hacker TV here.
It's really important to understand that Growth Hacking is not a singular job or study, rather it's a collection of disciplines used to pursue business growth. Here is a list of awesome Growth Hackers that have influenced me in some way.
In conventional economic theory, the price you charge and quantity you sell are a function of both the aggregate supply of and demand for your product in the market. The rule is not supposed to be violated, and in our old economy this was the case much of the time.
For modern digital products and SAAS comapnies, however, this relationship breaks down in at least two places.
1) Perfectly Inelastic supply.
Even the smallest startup has access to infinitely scalable infrastructure. This means that the unique opportunity -- and challenge -- of selling a digital product is that you can theoretically produce infinite quantities. The term to describe this is "perfectly inelastic supply" (where the Elasticity = 0 and the supply curves looks like a line going straight up and down). I'm not sure a product with truly inelastic production capacity has ever existed before the internet.
2) Unknown or 0 demand.
The most successful companies find huge unsatisfied vaccums of demand and fill it. Now more than ever we can create products beyond the understanding of what is possible or what it is people may want. Thus, completely unknown future demand.
The point is, it used to be that supply and demand determined how you did business. But it seems now that the price you choose to charge and quantity you choose to satisfy will actually set the supply and demand in your market -- if that market in fact exists. The relationship, in other words, is completely opposite. The power is in the hands of the marketer, not the market. Here's the takeaway: you have way more control over your price and quantities than ever before. Now they are just numbers on your marketing materials rather than huge differences in operational capacity.
Quantities set prices and prices set market size. You can observe this relationship in action pretty easily. Facebook and Twitter are social networks for everyone. How much would you be willing to pay to use them? You are lying if said anything over $0. Salesforce and Basecamp, however, are not for everyone. They solve specific problems for particular kinds of businesses and directly charge good money for their products.
Luckily there is plenty of opportunity on both sides of the continuum. Your positioning on that scale is determined by marketing, not the market. Want more? Let me know
price elasticity of supply on Wikipedia
Community Managers will become the most visible customer-facing people in your technology company, if they are not already. It was just a few years ago where executives doubted their value altogether. Now I hear about Fortune 500 companies launching Community Managers for each product and each market. It's strong move, but a wise one. Community Mangers are the team captains of the internet because they ought to be a customer as much as they are an employee.
Community Mangers bridge the company/customer gap in the same way team captains connect coaches and players. Team captains are the players that coaches consult to understand the player perspective. They are the person who can rally the other players to get behind one thing or against another. They are usually the most famous and iconic player on their team. Most important: team captains do not coach, they educate when appropriate. Likewise, Community Managers need to have a total understanding of what the customer wants and how they are likely to behave. They represent the community because the community trusts them. And they never sell, they provide relevant content and products according to the unique needs of the conversations they are in.Follow me @yes for moreimage credit
I first gave my definition of marketing on this blog two years ago
. I still believe Marketing should be a Sales operation, and that effective marketing is sales at scale. But there are a lot of kinds of marketing and all are important. In general, Marketing serves these functions:
- Define the Brand
- Find the Audience
- Deliver the Message
- Build the Relationship
I intentionally did not number them because I do not want to suggest an order. With new companies and new products the process would probably go in this order, but actually it can go in any order because every function should be iterative and ongoing. That is why the last point gets an asterisk. Stagnation is decline in disguise; success favors change. The image above is from Tom Ford and is one of my favorite fashion adverts ever. Good marketing will not please everyone.
Ecosystems like Apple, Android, Amazon, Google, Microsoft, and Facebook are reaching unprecedented levels of ubiquity, so consumers have important decisions to make.
Add more personal access points into the ecosystem and it works better; you are happy. But with every additional node it becomes exponentially harder to leave that ecosystem.
I like to be free -- ecosystem agnostic; but I also like to be happy -- ecosystem optimized. Will it be possible to have both?
To be an effective marketer you have to know what works, what doesn't, and allocate your resources accordingly. But how can you determine the efficacy of your marketing? It takes some math and analytics, but I promise it won't hurt. Let's consider a simple base case: you are marketing for an eCommerce company and your goal is to acquire sales through paid advertising. Keep non-paid and organic marketing out of the model for now.
Bear with swords for teeth driving a dump truck - effective or overkill?
First, choose a time interval that is long enough to be meaningful but short enough to be evaluated regularly. Let's say 24 hours. Then establish your benchmark. For each day, you are responsible for bringing in some number of sales.
This is your daily sales goal [G]. Divide [G] by your on-site conversion rate. This is the number of new visits you need to your website per day. Multiply this number of visits by your daily CPC, averaged over all the paid networks you are advertising on. This is your daily spend [S]; what you have to spend each day to achieve your [G].
Now add up all the sales from the day you want to inspect. This is your gross revenue, a direct result from your [S] for that day. Multiply gross revenue by gross margin (as a percentage), this is your net revenue [R]. Now compare your spend vs revenue. If [R] > [S] congrats, you have a positive ROI. Take a moment to pat yourself on the back. If [R] < [S] then you have a negative ROI, this might be okay for now but you probably want to make it positive as soon as possible.
This exercise is what I call Efficacy Testing. The goal of Efficacy Testing is to give you a quick way to determine if what you are doing is working. Most businesses have more comprehensive models, but the logic is the same. Don't forget that you manage what you measure, so do Efficacy Testing on your most important channels on a regular basis. image credit
Marketing should be designed to perform: it is the marketer's duty to bring new customers and optimize existing ones. This is how I approach every company I work with. I'm thrilled to be in the industry I'm in but I see a lot of marketing professionals totally missing the point. A great article by the Harvard Business Review
illuminates the problem well:In a devastating 2011 study of 600 CEOs and decision makers by the London-based Fournaise Marketing Group, 73% of them said that CMOs lack business credibility and the ability to generate sufficient business growth, 72% are tired of being asked for money without explaining how it will generate increased business, and 77% have had it with all the talk about brand equity that can't be linked to actual firm equity or any other recognized financial metric.
Although it's a sad trend I'm happy to see that I'm not the only one that has noticed. While brand equity is great, it should be the natural by-product of effective marketing -- not an end in itself.
Build. Sell. Measure. Optimize. Repeat. image credit
Selling your software online is hard, even the most beautifully designed website will be ineffective if your sales page is totally screwed up. This is what most startup SAAS pricing pages look like to me.
Unintuitive = ineffective. Ineffective = no sales. Here are some strategies to make your website a more effective sales tool. Use real metrics people understand
Proprietary metrics are not impressive, they are confusing. Most of your customers don't care what it takes to get the job done, all they care is that you get the job done and you do it well. Structure your pricing according to core business metrics your customers already track and understand to maximize the chance of a sale. I really love how Custora
bases their pricing on the number of customs you
Focus your pricing into one real metric
Even if you do price your software according to dozen of variables, keep the customer facing options as dead simple as possible. Give your customer one price based off a simple metric they understand. If you do have to tier your service, tier it off of different levels of exactly one variable. Your goal is to make it as easy as possible to say yes to a great offer. With each extra variable in the pricing equation you will add another question the end customer has to consider. A "no" anywhere in the funnel will result in a sale of 0. Optimize for one YES and get the credit card. Props to WePay
and my former boss, their Director of Marketing
, for such a focused pricing solution. It's easy to understand and really stands out against their competition.
Give them everything they need to be successful
If you build a product, it should be great. And if it's great why wouldn't you want your customers to use every awesome feature? This may be my most controversial point: include all features at every level of service. I'm crazy you might say, a sure fire way to go broke right? Nope. Just price your packages according to the highest possible use case at each level, then add on top the margin you wish to earn. Yes, that means you will make more money of customers who use your product less, or conversely, less money from customers who use your product more. But this is intrinsic to other technology models we already know like internet service, cell phone data packages, and satellite TV. The corollary here is if a feature is not cost effective or worth offering at every level of service, you need to kill it. There is one specific exemption from this rule -- super premium features. Do not factor them into any standard offering but definitely do offer them to any customer who is serious about an upgrade. Just be sure the features are in fact super premium, it's not worth making huge promises for an incrementally better product. Virb
is a great example of an elegant pricing solution. They give you all their great features at one easy to understand price.
You are a startup: you need more traction, more customers, more runway. Your company is a nightclub and your product is the party. Don't worry about different kinds of tickets, just make sure it's a great party for everyone. Even better if you can get them talking about it tomorrow.
I'm very excited for the future of small and medium businesses across all verticals and sectors. The sophisticated tools and services that drive Fortune XXX companies are reaching down to smaller enterprises (thanks in part to tech startups) and as a result SMBs are becoming an increasingly powerful force in our economy. SMBs have more leverage now more than ever.
As SMBs everywhere develop, businesses who sell their products and services to other business will have to think harder about their sales and marketing strategies because SMBs don't operate like Big Cos. In a way, marketing to SMBs is one of the hardest fields you can play on. Unless you have the capital to fund a gigantic sales team or comprehensive ad campaign, your product and product marketing will have to speak for itself. You have to be strategic with your approach.
This presents interesting marketing opportunities. In big companies, new tech and product adoption is forced. The end users are typically totally disconnected to the sales process where cost, features, and utility are necessary parts of the multi level conversations. But in SMBs, the end user is likely no further than 1 degree away from the owner/operator and key decision maker…the user might even be the key decision maker himself. So the cost, features, and utility of your product are always on trial by the key decision maker or his agent every time it is used. In SMBs your product has to be good otherwise it will be eliminated, quickly.
Your value prop and key marketing messages need to reflect this relationship. If your end user is an employee, your messaging should show how your tech will make his job
better. If your end user is an owner/operator or his agent, your messaging should show how your tech will make his life
I suppose relating your product to the to the most profound context should always be the marketer's imperative, but you can only take an employee's responsibility so far. When marketing to SMBs remember who the operator is and talk to him directly. Make their life better.Postscript
1. If you like economics, geopolitics and have a big chunk of time you should read A Brief History of the Corporation by Venkatesh Rao. It is brilliant. This is what first got me thinking about the role of SMBs in our future economy, and how we can seize to the opportunity it brings.
2. I've been working on this particular post for a couple days and just earlier today Seth Godin published his thoughts on B2B selling. It's not very similar to my what I have above, but just wanted to let you folks know that I am aware of it, and am not writing on this topic only because he is. F*ck it! We'll do it live!
I'm frustrated with music. All around me I see great technological innovations yet none of it has made a meaningful impact on the music industry. There is certainly a demand for it: music is the most popular form of human entertainment. By my count about half of the top 100 Twitter users are musicians or musical artists
. Further, good music is incredibly addictive and is proven have a psychoactive effect on our brains
. To me, this equals missed opportunity.
The big incongruity lies between what music people want versus what music they can get. People want more music. There is more music being created now more than ever and musical tastes are diversifying. Despite this, people are getting the same music they have always had access to because, even though more music is being created, the power of distribution is still held by the industry oligarchs. And therein is the problem with the biggest music broadcasting platforms -- internet and terrestrial radio. Both mediums distribute effectively the same music but package it up in slightly different ways. I personally love Rdio and pay $5 a month for it, but the experience there is exceedingly similar to Spotify, and the music I get there is exactly the same as the music I can download on iTunes (or Amazon), or download illegally (or borrow from a friend), or listen to on Pandora (or Last.fm), or even listen to on my local radio station if I'm lucky. Music, it seems, is being commoditized.
What we need are novel and valuable ways to bring new music to the mass market. Most important is empowering the creators of music to do more with their fans and unlock new monetization channels. The answer I think is building awesome experiences on top of music, where the musical product itself is a unique function of the platform. Critical to this is mobile because it will become the atomic unit of computing, if it is not already. This is something I am working on. Stay tuned.