Startups Made Simple Step Four: Grow It
Below is an excerpt from our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here.
“By far the biggest leverage point to increase sales is marketing. Marketing is the master skill of business. No one knows how good your product is until after the sale so the best marketer wins every time. Even being 10% better at marketing can have exponential effects on the bottom line.”
—Allan Dib, author of The 1-Page Marketing Plan
After you’ve officially filed your paperwork and you’re a real company, job number one now is to grow the business. I put this step before the next step, “Manage it” because, as I’ve mentioned, you don’t want to over-plan and optimize things too much when your true focus now should be getting sales and customer feedback so you can improve your product or service. Eventually, the Grow it, Manage it and Systemize it steps work together as you scale your business to your liking.
Generally, there are three ways to grow a business:
• Acquire new customers organically
• Increase sales to existing customers (get them to buy more, buy more frequently or both)
• Encourage existing customers to refer people to your business
A well-designed marketing plan and sales process will help you do all of this and ideally will systemize this it into a replicable Sales Machine that brings you continuous business. Beware though, if there’s one area of business that suffers from confusion and purposeful over-complication (especially by those who sell marketing services) it’s marketing and sales. In fact, most small business owners I encounter don’t know a lot
about marketing and sales and believe the eternal myth “build it and they will come” or think that doing sales is “uncool.” So let’s start off with clear definitions, then we can move on to strategy and then tactics.
What is Marketing?
Basically, marketing is identifying, then finding or attracting your ideal customer and getting them to trust you (so they buy from you). That’s it; that’s your marketing strategy. Almost everything you will hear or read related to marketing and sales is simply a tactic of that. Tactics include advertising, writing content, direct mail, public relations, and many more that we will go over later in this chapter.
Knowing that marketing includes identifying your ideal customer, that is the first step of your marketing strategy. We’ve done a lot of this in Steps 1 and 2 of this book (review them if necessary), but now it’s time to really get specific and actually make a Simple Marketing Plan that will keep you focused as you grow your business.
What is Sales?
Marketing makes your ideal customer (also known as a “lead”) aware of your solution. Sales is the art of demonstrating to your leads that your solution is the best for their needs. Sales is everything your company does to “close the sale”, sell the product or get a signed agreement or contract.
Again, almost everything you’ve heard about sales is probably a tactic. The sales process often includes interpersonal interaction and is often done via one-on-one meetings (sometimes via
Internet), cold calls, networking or via your company’s brochures or website. Sales is not uncool, it’s simply seeing if your product or service is a fit for a potential customer.
Biggest Marketing and Sales Mistakes
As discussed in other chapters, I believe avoiding mistakes is a big part of success in business (and in life). Here are the biggest marketing and sales mistakes I’ve seen over the years.
• No marketing at all. This may be the “build it and they will come” mentality or simple benign neglect, but a sure path to failure is not doing marketing at all or hoping some one-trick pony like a Yellow Pages ad or a stack of business cards will work.
• Not knowing your ideal customer. Treating everyone the same (even jerks and cheapskates), targeting everyone with a heartbeat, or trying to make all of your customers happy by catering to their every demand can strain your resources. It is much better to focus on the best customer (see below).
• No marketing or sales process. No marketing process, no sales process or plan. Hoping that the phone will ring or people will find them online. Uses lots of Post-It notes, randomly sent emails with or without follow-up. No testing what works, no game plan at all.
• No response or follow-up. I’ve spent tens of thousands of dollars with a vendor simply because they answered the phone, responded to my request in a timely manner, or followed up later. Was this the best vendor? Who knows? Many times I never got a response from their competitors. A lot of success in life comes from just showing up to the game.
• Cheap marketing materials. I cringe when I see a company that has a great product or service have some cheaply made logo, website, storefront, or other materials. Humans are not rational and many times will simply go with the best-looking solution, not necessarily the best. Don’t cheap out on marketing materials and design.
• Not focusing on the product or service. As discussed below, building a great product or service makes your life easier because customers will tell their friends and you’ll be much more enthusiastic about marketing and selling something you’re proud of and are passionate about.
• Not knowing why you’re better. If you can’t explain (in-person and via your marketing and sales process) why your product or service is better than your competitors (usually in one sentence) then how are your prospects going to know? Read below for more help with this.
• Not putting one person in charge of marketing. If you don’t have one person in charge of your company’s growth then nobody will be in charge. Make one person accountable for growth and have them working on measurable goals.
• Not knowing the numbers. As I’ll discuss later in the chapter, knowing how much it costs for you to acquire
a customer as well as their lifetime value is incredibly valuable.
The Startups Made Simple Marketing Plan
Now that you know the basics of marketing and sales and the biggest mistakes, it’s time to make a very simple one-page plan that will guide you and simplify your marketing and sales process. Many of the best companies have a very simple, replicable marketing and sales process that has served them well, sometimes for decades.
Figuring out your ideal market and systemizing how you turn them into customers is one of the biggest secrets to success in business. Your purpose with the Simple Marketing Plan is to initially identify who your ideal customer is by talking to them and getting lots of feedback in the startup phase. Then, you can continue to tweak your product or service to meet their needs or potentially find other markets you may not have been aware of when planning your business.
Start With Your Product or Service
If there’s one thing that will make your marketing and sales efforts dramatically easier and more effective, it is simply building a superior product or service: better, cheaper, or faster/easier. There is such a thing as a product or service that’s so good that it lives by referrals alone. This is rare, but it does happen, and when it does, you will almost guarantee success. As I mentioned in the Founder Superpowers section, product obsession is a valuable mindset to have.
One thing you may want to focus on is which two of the three features you want in the Product Triangle: the best, the cheapest, or the fastest/easiest. Note that almost no product or service can be all three; you should pick one to focus on and do the best you can with the other two. For example, you can make the best product in the world, but it certainly won’t be the cheapest. You can make the cheapest product in the world, but it probably won’t be the best. There are trade-offs like this, and you should know which you are willing to make.
Once your product or service has been demonstrated to be superior in at least one of those areas, that’s where you focus on making what’s called a Unique Sales Proposition (USP). Below, you’ll target your ideal customer, and one thing to remember when you write your marketing and sales messages is that you
need to demonstrate why your product is superior.
Think 80/20 and Think Big
One of the big secrets in business is that 20% of your clients will typically make up 80% of your profits. This is based on what’s known as the Pareto Principle in statistics and has proven consistent for centuries across business and life in general (20% of criminals cause 80% of crime, etc.). Similarly, 20% of your products make
up 80% of your sales as well. In the startup phase you may not know which clients or products are your most profitable yet, but it’s important to starting thinking 80/20 as you grow your business.
So, in your marketing plan, an important step will be identifying your ideal customer and even making a “persona” of this person so you can more easily identify others like them. Begin looking for these 80/20 customers, and remember things like how easy they are to deal with (nobody wants a profitable jerk as
a customer), how demanding they are for support, how quickly they pay, and other factors.
A great way to generate innovative marketing ideas is to really stretch your imagination. What if you had a gun to your head and needed to increase sales 10X in one year? What if you had to meet your BHAG® in 6 months? What things would you need to experiment and implement on right now to get this done. Thinking like this is valuable because it lights the fire of motivation and expands your thinking.
Identify Your Ideal Customer
As mentioned, knowing specifically who your ideal customer is, whether they’re a person or a business, is the obvious first step in any marketing plan. Once you know who your ideal customer is, then marketing simply becomes a matter of targeting these businesses or people “until they buy or die” as some (hilariously) say.
Identifying your ideal customer is sometimes completely obvious or can be somewhat tricky; especially if you’re introducing a new product or service. Many times, this is a process of talking to lots of customers and finding out which type is not only the best match for your product or service, but which type is the most profitable for you and the type you like serving best. Remember, businesses are simply made of people, so in reality,
you’re likely targeting a specific person in a company (for example, the operations manager or the human resources manager), even if you think you’re only selling to businesses.
Identify Personas
Getting to know this person, how they think, what their problems are, what their fears are, and what they care about is the first step in identifying your ideal customer. What keeps them up at night? What do they worry about? Who are they trying to impress or what is the main problem they want to solve? What keywords do they search online to solve their problem? Where do they hang out offline and online?
This is called a “persona,” and is extremely effective in clarifying your marketing efforts. Once you know this, then you can build your list of potential prospects and then identify the optimal way to reach these people and inform them of your solution. You will then craft your marketing message to solve this person’s problems.
For example, you could be selling consulting services, and after you’ve worked with a few clients, you begin to discover that a certain type of company is your absolute best client. They’re a pleasure to work with, they pay premium rates on time, etc. This could be a certain industry, a certain size company, a certain location, a certain set of problems, or even a certain personality type from the CEO or even the office manager. As you get better at this, you’ll be able to laser target these people and your message.
Let’s say that the ideal customer in this case is a small manufacturing company in the southwest USA with 20–100 employees and a CEO who is between 40 and 50 years old, forward-thinking but concerned by outsourcing and labor issues like workers compensation expenses. Now our job is much easier. Instead of the 5 million or so businesses in the USA with employees, we now can focus on perhaps just a few thousand or less and craft a marketing message perfectly tailored for their problems and your solutions. This is powerful targeting—instead of millions of targets you have only a few—and now you can spend much more time and money per lead versus an untargeted campaign.
Some businesses never need more than one persona, but many times you may have multiple personas you’d like to target. My recommendation in this startup phase is just to get the biggest and most profitable persona right first, then carefully add others later if necessary. The startup phase is a learning phase, and it’s critical that you find your ideal customer, but keep in mind this process may take a while. You may need to spend many months interviewing leads and customers to find out which one is ideal and to develop the persona. That’s why it’s so important that once you launch your business that you talk to as many customers
and potential customers as possible. This can be as simple as emailing your customer and asking them why they chose you and what convinced them to buy (or asking them in person or phone if possible). A good question I’ve learned to ask over the years is “What almost prevented you from buying?” to identify possible issues with your marketing or sales process. If you can get important demographic information on them, even better (age, income, location, sex, etc.).
Build Your List
Once you have a decent idea of your ideal customer and their persona, you can begin building your list. It’s amazing how powerful this concept can be; you can build one list and continue to attract or reach out to this list systematically.
There are an enormous amount of information resources online for finding businesses and individuals, and I will list several in the Chapter Resources. Depending on your market, you may be able to buy a list, build your own list, or hire a service or assistant to compile the list for you. The main point is that you want to have a good idea who your ideal customer is, begin building your list and start testing out marketing messages.
Test Your Message and Medium
Instead of using a shotgun approach like buying an expensive TV or radio advertisement and then hoping and praying it works, you can run very small tests by targeting your ideal customer with inexpensive tactics. This includes cold calls, cold email, online search engine ads, direct mail (even letters you write yourself), brochures and in-person visits, depending on your market. Once you figure out what works, you can then go all-in and spend many more resources on that proven medium. This has been called “firing bullets before cannonballs” by the business guru Jim Collins.
If you’ve done the testing work from Step 2, then you may already have a very good idea of your market and perhaps even a message that works. The important thing in this step is to appeal to the persona you are targeting.
There are various ways to do this, including writing ads, websites, blog posts, brochures, white papers, or “special reports” that identify problems they may have and how your product or service solves them. The Chapter Resources lists many more. A good rule of thumb is to spend 5–10% of your marketing budget on experiments each month so you can figure out which medium works best for you.
Writing ads and “copy” is an art itself, so you may consider hiring a pro to write ads for you if you’re not good at this yourself. This can involve things like coming up with taglines, headlines, experimenting with images, colors, buttons, etc. and can get pretty involved. Taglines are powerful ways to differentiate yourself from the competition or quickly show why your solution is better in one sentence. See the Chapter Resources
for recommendations.
The important thing to know is that when using the above methods you can either “go to them” (outbound marketing) and contact leads directly via an outreach program, or you can create content that makes the lead “come to you” (inbound marketing). Imagine if you could simply make a website that has such valuable content that your leads actively search for you online and contact you. This is what many marketers focus on these days. You attract your ideal lead by providing information and solutions, and answering their questions so well that they immediately find you, trust you, and will purchase your products or services.
Build Your Sales Process
Once you know how to find your ideal customer and make them aware of your product or service, then it’s time to figure out the optimal way to turn this lead into a customer. This will be your sales process, and if you can learn how to replicate it consistently, then there’s no limit to how you can grow your company.
Think about it; if you can make a documented, clear sales process that works every time, then you can likely train someone else to do it, which frees you up to do other things—or nothing at all! This is why many companies typically assign regions, states, or even zip codes to salespeople: they have a proven sales pro-
cess and simply train people to use it — it’s like printing money.
The important thing will be to first build your sales process through experimentation. Then, you’ll document and streamline it down to the bare basics. You’ll know exactly what scripts, copy, ads, and other specifics work to complete a sale. Modern marketers call this a “sales funnel,” and it includes a clear, documented process from beginning (known as the “top” of the sales funnel) to end that can include things like setting an appointment, doing a demo of your product or service, giving a presentation, signing a contract, or making an online purchase. The important thing is to experiment until you know what works.
Elements of a Great Sales Process
- Consistent lead generation. Your marketing efforts provide a consistent source of leads to enter your sales funnel or are otherwise captured for follow-up.
- Quick response times. This varies by industry, but the faster you respond to a lead, the more likely the sale; the best is in-person, live chat or phone. Some industries have shown that same day follow-up to leads dramatically increases sales even versus the next day. Strike while the iron is hot.
- Awesome marketing materials: demo, proposal, website, etc. However you will “sell” your client and what materials you use will vary dramatically by industry. Whatever it is, make sure that it’s professional, impressive, comprehensive (answers all their questions), and has lots of social proof (verified testimonials from other customers). Do not skimp on marketing materials.
- Great salespeople. Few things in business are as nice as dealing with a friendly, non-pushy, knowledgeable, competent, and well-spoken salesperson who actually consults with you. Great salespeople are worth their weight in gold and can explode the growth of your company, so make sure you take care of them. See the next section for more.
- Consistent follow-up. The best sales process will have a way to capture the lead and follow up consistently until they buy or express no interest. Sticky notes and emails are not a “system” in this regard. A good customer relationship management (CRM) system or even a spreadsheet is better.
- Great product. This should already be assumed, but in case I wasn’t clear in previous chapters, a great product should be a primary focus and will generate plenty of marketing on its own through word of mouth.
- Great after-sales support. If you provide great support, your customers will keep buying from you, will be more likely to buy more (or upgrade their service), and more likely to refer their friends. Don’t look at support as a cost-center, look at it as an opportunity to wow your customer and grow your business.
- Ask for feedback and a referral. You should ask all customers for feedback on their buying experience, which provides a lot of good data for improvements. Happy customers will be happy to give a referral. Build referrals into your sales process by asking customers to refer a friend or even financially reward them for doing so.
Build Your Sales Skills
Take a quick look through any bookstore (or Amazon.com) and you will see thousands of books on sales tactics, skills and more. I have a few recommendations in the Chapter Resources, but as usual, sales is not nearly as hard as many would have you think. It’s important to build your sales skills or at least know great sales skills when you see them so you can hire great salespeople. Overall, sales, like marketing, is about building trust. You build trust by following the Elements of a Great Sales Process above, but also by simply doing what you promise your product or service does. A major element of becoming a great salesperson is building a great product or service that you are proud of, a product or service that you get excited about selling to other people because you know it will solve their problem or improve their life. There are few things more demoralizing than trying to sell a bad product.
Elements of Great Salespeople
- They don’t sell, they solve problems. Great salespeople many times don’t consider themselves salespeople at all; they’re people who educate, consult and advise people who need solutions—they solve problems. This is a great mindset to have if you are hesitant to cold-call people.
- They’re modest. Yes, believe it or not, the best people are not like those you see on TV and movies. 91% of top salespeople rate high in modesty and humility. Think about a great salesperson you’ve encountered; they’re probably not egotistical or pushy, and you probably didn’t consider them salesy at all or even know they were a salesperson.
- They listen. Nothing is more frustrating than someone who filibusters the conversation or won’t let you get a word in edgewise. Great salespeople listen to the real problems and concerns of their prospective customers.
- They ask questions. Known as the Socratic method of selling, great salespeople ask great questions of people, are genuinely curious and can effectively guide the prospect to see if the product they’re selling is the right solution for them.
- They’re competitive. It’s rare to see a great salesperson who doesn’t like to compete, to meet and exceed goals and to win whatever game they’re playing. If you’re not competitive, make sure you hire someone who is.
- They don’t give up. Sometimes sales can be demoralizing to a sensitive person, and there are products that less than 1% of the people you contact will want (and the other 99% might not be so nice about telling you they’re not interested). It takes a certain level of skill and an inability to be upset by rejection to overcome the tendency to give up.
- They keep their word. Ever bought something and were completely underwhelmed by the product compared to what the salesperson promised? Of course you have, this is common, and good luck getting a hold of that salesperson again; they’re on to the next sucker. Great salespeople provide great “after purchase” support and keep the promises they made during the sales process.
- They know the basics. By now, the basics of Dale Carnegie and other sales training is pretty common knowledge: Remember and use the person’s name, proper handshake, eye contact, good personal appearance, return calls/emails quickly, smile, friendly voice, persuasion skills and overall treat people how you’d like to be treated. There’s a lot online about this stuff.
Learn the Numbers
After you’ve started building out your marketing and sales process, you’ll soon learn what it costs to get a lead and make a sale. Marketing can become pretty simple after you know these numbers. This is known as your customer acquisition cost (CAC) and is a very valuable number to know.
Think about it, if you can consistently know how much it costs to acquire a new customer, then you can know what it will take to grow your business. You’ll also know if you need to raise prices or otherwise pursue a different tactic (perhaps the product simply isn’t profitable given the CAC). For example, if you spent $1000 to get ten customers or purchases, you would know that your CAC is $100. A related concept is your conversion rate: if you can convert 1 out of 10 leads into a customer, then your conversion rate is 10%.
Another valuable number to know is the lifetime value (LTV) of a customer. How much does the typical customer spend throughout their time as your customer? This can be measured over months or years and may not be known yet in the startup phase. The LTV is very valuable because if you know the CAC and the LTV, then you know, almost exactly, how much you can afford to spend on your marketing and sales efforts.
For example, let’s say I sell a product for on average $100; this is known as your “average ticket.” If I do the numbers and figure out that my CAC is $100 per new customer, I may think that this is unprofitable (I made $0 on their first purchase), and I need to go back to the drawing board or try something else.
However, if I know that over their lifetime (LTV) they’ll spend $400 with me on average, then I know, depending on time frame (let’s assume one year), that I can actually afford to spend much more than $100 acquiring this customer and still be profitable. Once you know the numbers, you may find out that even some-
thing that doesn’t seem profitable is actually very profitable to you.
Pivot If Necessary
The final thing I’ll mention is that sometimes you will find that through all of your efforts the marketing is not effective and the sales are not coming in as you’d like. Remember that we talked about perseverance in the Founder Superpowers; it’s not considered quitting if the market fires you. Sometimes a product or service simply will not sell.
In these cases, depending on many factors, make sure you exhaust all options before you go back to the drawing board. Here are some things to consider if the product is not selling:
- Talk to customers. Make sure you’re talking to your customers. Send them an email or give them a call (or speak to them in person if possible). They’ll tell you what the problem is and will be happy to do so.
- Raise or lower prices. You should have a sense of your CAC and LTV as mentioned earlier. Sometimes lowering prices can increase volume considerably. Or sometimes raising prices can increase sales as well (and make more per customer). People and prices are not rational, so it’s important to experiment with pricing. Most people start out charging too little.
- Brainstorm alternatives. Make a list of everything else you can do with this product or service as it is or with minimal tweaking to make customers happy. For example, can you add consulting to your product? Can you sell it to a competitor? Can you give it away for free and sell a service with it? Can you split, combine, resell, or otherwise modify it? Make a list of these alternatives and keep talking to customers.
- Use the system. Go back to Steps 1 and 2 to reimagine and test things if necessary. Remember that a pivot is completely normal and some of the biggest success stories have done it, sometimes many times.
Onward!
Visit http://www.startupsmadesimple.com for Chapter 8 Resources and to download the Startups Made Simple Marketing Plan.
This was an excerpt from our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here or see our previous excerpts here.