Marketing Memos

Want to see me cringe? Be a start-up founder and tell me you don’t have any competition.

Every company and every product has competitors. They may not have offices, there may not be a product, and your prospects may not know they are using your competition. But everyone has competition and it can come from very unexpected sources.

Even Google has tangent barriers.

Google’s Android mobile operating system is the most popular on the planet, especially in China where they appear on 90% of smartphones. The competition is not the hodge podge of OSs in the other 10%. Nor is it the gaggle of Chinese knock-off companies that wish Google would release the source code to new Android versions more quickly so they could create near-real-time Android clones. The new competitive threat is the Chinese government.

Mao’s mavens are not entering the smartphone market. These control freaks simply don’t like anyone else having that much control. At least that is the opinion of the Ministry of Industry and Information Technology (a department name that indicates exactly how important IT is to China’s future plans). In particular the Capitalist Commies fret that “The core [Android] technology and technology roadmap is strictly controlled by Google.” China’s geek ministry also indicated that their country could develop their own mobile OS.

They probably will, because it is tough to battle the American Capitalist Empire when your people gleefully buy directly from the source.

The new competition Google will likely face in China is not a mobile OS but crippling regulations and restriction by the Chinese government. In order to encourage a home-grown mobile OS, through which they can control advertising and other propaganda, as well as perfectly monitor citizens of both classes [elites and slaves], China needs to both develop product and restrict competition. Hence, even without a product competitor, Google will receive market penetration competition from the government.

(The best way to win market share is to get the government to hobble your competitors, which explains why interstate sales of health insurance has been illegal in the U.S. since the 1940s)

Everybody has competition, and sometimes it is simple inertia. When Quicken was first unleashed, sales were slow. People did not see a huge need to duplicate their check book register into a computer. The inertia of “how we do it now is Good Enough” kept people from adopting Quicken. However, once Intuit started facilitating the printing of checks (remember those, and the postage stamps required to mail them), sales grew mightily. Quicken’s competition was the status quo, and they had to invent new capabilities to make the old way appear to be the dumb way of paying bills.

For anyone in marketing, or any founder at a start-up, you need to thoroughly investigate how your prospects do business. Your competition might be the regulations they face, organizational resistance, severe price sensitivity, or a million other things that compete for your market share without being a product. If you don’t do this, you may face invisible yet impenetrable barriers.

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Happily, outsourcing marketing strategy works for everyone.

Last year I got a call from a global conglomerate that rakes in over $20 billion each year. They were launching a new product from within one of their divisions. Savvy as they were, they needed help in new product go-to-market messaging.  In the division of that giant corporation, the native knowledge was unavailable.

Sadly, this doesn’t happen all the time.

Nobody is universally competent. In large companies, even specialists with necessary knowledge are not portable between organization boundaries. Smart marketing executives inventory their talent and outsource as needed to assure everything that needs to be done is done, and is done well. Companies that don’t fail.

Early in my consulting career I was hired to help with the pivot of all pivots, changing an entire post-IPO enterprise from a hardware company into a software vendor. The company was successful at what they did, but their market was dissolving from around them. They had no clear notion of their new market segmentation or core market messages, much less how to stitch it all together. But they didn’t have the internal strategic focus to realign themselves around an entirely new business.

Sadly, few companies can admit their lack of specific expertise.

When SuSE Linux brought me in, their North American marketing strategy wasn’t. They didn’t understand the problems they had internally, but were willing to learn. Between a revamped marketing strategy and a solid PR team, SuSE went from being an also-ran to the undisrupted #2 enterprise Linux distribution. Management understood that they didn’t understand marketing, and were flexible in acquiring expertise for their weak points.

Sadly, few founders are that flexible.

Every company, from the smallest boot-strap start-up to the largest conglomerate has holes in their marketing discipline. Every company needs to fill those holes, but cannot hire full time people for every possible marketing task. Outsourcing to marketing experts is as wise as outsourcing coders – hire the experts you need, when you need them, for only as long as you need them in order to acquire the skill sets you need. It is inexpensive, flexible, and completes your marketing savvy.

Sadly, someone reading this will ignore the advice.

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Marketing is a bit like target practice. You aim for the middle to score the most points.

Start-ups are notoriously bad at targeting their buyers. Instead of using a hunting rifle, they choose a shotgun, scattering their marketing spend over vast areas of ill-defined buyers. Thus their spend per new customer is higher than it should be, and their stable of customers contain awkward fits who will be less happy with the product that well targeted buyers.

Start-ups entrepreneurs shoot their investment wad and go home without winning.

Go-to-market plans need to identify everyone that influences a purchase decision in a viable market segment. If you have not segmented – properly or at all – and you have only vague ideas about the functional and emotional motivations of buyers, their bosses and subordinates, then you are shooting blindfolded and will miss your target.

Here are the essential steps in formulating a sound go-to-market plan:

Be realistic: Whittle down your total market first into your addressable market, then your realistic market. Narrowing your market helps you to narrow your R&D and marketing spend.

Divide to conquer: Segmenting is essential, so make sure you not only segment your realistic market based on appropriate vectors, but that the segments you prioritize are viable (you have a good whole product fit, the segment lacks competition and everyone therein communicates freely with one another).

Know their DNA: Odds are more than one person will be involved in the buy decision. Learn all their separate motivations (functional and emotional), what mandate and veto powers they have, and compose your value propositions and market messages to match.

Only then do you have your sights set and adjusted … only then should you pull the trigger on your go-to-market campaigns.

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About the time this blog post goes live I’ll be breaking the hearts of a handful of entrepreneurs.

Sadistic as that sounds, my job is to insert reality into uncomfortable places. In my speech today I’ll be telling some tech innovators why no angel investor would ever give them a dime. Tears will be shed, anguished screams will be head, and I may get a new laptop if someone throws theirs at me.

Entrepreneurs here in Silicon Valley are more common than belfry bats. They exist on the hope of changing the world and getting hit by the money truck. These two aspects mean that they are commonly irrational and unreasonable about their products and prospects. Some of them succeed because they are unreasonable – nothing important has even been accomplished by a reasonable person.

Where they often fail is funding. Despite being digital demigods, they rarely put themselves in the investor’s Bornrichs. They fail to pretend that they have a pocket full of cash and have launched successful companies themselves. They do not act as if they had already heard hundreds of sloppy pitches and become instinctively aware of buncombe. Yet they believe their alleged miracle is worth someone else risking hundreds of thousands of dollars.

And they wonder why they don’t get funded.

Reality sucks, but it sucks less than starvation. To get funding requires making a solid business proposal, which means dealing with reality – real go-to-market plans, real segmentation, real target marketing, real whole product definitions, real financial projections. Entrepreneurs also need to sound like business people, presenting in a solid, linear, clear style and not like Madison Avenue pitchmen. Investors know the ropes and are willing to hang entrepreneurs with them.

The lesson is that if your idea has any merit and if you can get a handful of people actively and happily using your product, you can get funded. But you have to approach investors ready to cut a business deal as a business(wo)man. Failing to do your homework, to calculate realistically and present honestly will doom you.

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Businesses should not resemble circular firing squads.

While presenting to the Silicon Valley Forum’s Marketing SIG last night, one audience member noted her company’s marketing, product development and sales staffs were unaligned. Well, “unaligned” might be poor wording. They appear to be as completely disjointed as drawn and quartered traitors. This is not uncommon in tech companies where the three groups have come onboard at different phases of corporate growth, believe they own the customer and move ahead despite what other teams are doing.

Circular firing squads are more efficient and less violent.

In early phases, techies are product managers and interface with customers directly. They believe they listen to prospects though this is often self-delusion. Techies (and particularly techie founders) only listen to customer input that agrees with the original product vision. This form of founderitus is so prevalent in Silicon Valley that my audience was not surprised when I described it to them.

Cynicism thrives in the valley.

A little later in corporate aging, salespeople are hired and begin dictating product development agendas. Unhappily, professional product hawkers have a one sales quarter viewpoint and can launch development teams into spasmodic fits of coding to meet the Customer Objection of the Week. Product managers get sick of this after a while and stop listening to sales, leaving sales staffs to create their own stories about what the product does … even when it doesn’t.

Sadly the Internet has not yet obviated the need for salespeople.

Finally, marketing employees arrive. The first in the door are typically advanced copywriters and actors at trade shows who have only vague notions about measuring market needs. They proceed to irritate product managers with irrelevant and misguided suggestions. By the time experienced marketers with quantitative research skills arrive, their input is disregarded by product management and their go-to-market messages are revamped by sales.

Three groups with no agreement on mission, messaging or marketing.

Curing this malady is not for weaklings. It takes some bullheadedness on the part of marketing and enforcement by top management. Marketing has to quantify market needs and competitive realities. Since they are twisting techie arms in product development teams, marketing cannot use generalities. Demand and competitive threats have to be expressed down to one decimal place … at least. Any pushback from product development will then result in backlash from the CEO.

Marketing must also manage the message, and wherever possible bias buyers perception before salespeople are ever engaged, turning salesmen into order takers. Getting the message and brand right, then relentlessly pushing it to the market and all through internal teams forces salespeople to respond to customer inquiries based on the selected messages, value propositions and product positioning. Salespeople who don’t follow the script won’t sell much and will soon be finding new jobs.

However, these sales/marketing/proddev disconnects don’t need to exist. Start-up CEOs need to establish clear demarcations of responsibility and be ready to enforce them. They need to change these responsibilities as the organization grows. They have to be firm at the right times, mediate before and during organizational changes, and be ready to let non-compliant people walk. It is a tough job, but essential …

And a lot more pleasant than dodging interdepartmental fire.

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