Why I Hate Tech Start-Ups

Digital Media Marketing Consultant - Seattle
Dear Tech Start-Ups,

Just kidding. I love you. I really do. You’re creating some of the most innovative products, changing lives, and making the world a better place. I admire you.

Truly.

However, I am not a fan of the way you conduct your marketing efforts. Time after time, start-ups ask me for advice on how to get users, how to market their applications, and how to get blogs to write about them.

Great. No problem! I can help you with that.

Whenever I take on a new client, I pose the question, “What is your budget and what are your goals?” 

So many times I am met with something like “We’re a start-up – we have no marketing budget.”Here is something I would love to go shout from a mountaintop:

“Marketing is NOT free!!!!!!!”

This is a quick and easy formula of how much money you need to allocate to your marketing efforts based on your users goals. (This does not take into account PR efforts)

(Cost per new user) (X) + (Cost of Execution) = Marketing Budget

X = Customer/User Goal

Want 1,000,000 users? Great. Now what are you willing to pay for these users?
$0.05
$0.20?
$0.50?
$1?
$5?

For a million users, you’re looking at a necessary marketing budget that ranges from $50,000 – $5,000,000 (PLUS the cost of execution)

“Well, that’s too much – I’ll just use social media!”

There is a huge misconception that technology start-ups just need to use social media to market their product. Even if you’re promoting your product through a grassroots social media campaign, there is still an associated cost – time. This is either your time or the time of someone you have to pay to help you.

If you can not answer these questions, you should not begin your marketing efforts.

  • What is your cost per acquisition per new user or customer? (How much are you willing to pay per new customer?)
  • What is the lifetime value of your customer? (How much money will your customer make you over time? Will you make more profit from this customer than loss in the long run?)
  • What are your marketing goals? (Are you trying to increase engagement with your brand, drive more sales, or something else?)
  • How will you measure results? (By increased sales? By blog comments? By unique visits to your website?)
  • What’s your conversion rate? I can drive all of the users in the world to your website. However, if you can’t convert them, you’re wasting your money and time.

If you have no marketing budget your application or website will FAIL. Marketing is the business function that connects consumers to products. For some reason, a majority of start-ups seem to have missed this class during business school.

Field of Dreams

Whoever said “If you build it, they will come” was not a marketer.

If you build it, develop a marketing budget and marketing strategy, THEN they will come.

About The Author

Arianna

...like a boss!

Other posts by

Author his web sitehttp://www.ariannaodell.com

10

05 2012


by Arianna
posted in Entrepreneurship, Marketing, Social Media
2 Comments »

←
→

2 Comments Add Yours ↓

The upper is the most recent comment

  1. J Clauss #
    05.10.2012 10:32
    1

    I can tell you right now that even with social media, acquisition costs aren’t zero. Outside of getting an influencer to plug your product, Facebook ads are fairly costly. In the neighborhood of three new “likes” for a dollar. If you’re savvy you can turn a relatively small amount of input into a great output with various force multipliers, but what I think you’re seeing, Arianna, is the naivete endemic to Bubble 2.0. The same airheaded babble we heard in 1999 is resurfacing albeit with different terminology. Back then you just said the word “internet” and the need for a business plan disappeared. Now you say “social” or “gamification” or “cloud” or “mobile”.

    Reply
  2. Kate Walling #
    05.10.2012 17:34
    2

    Couldn’t say it better, Arianna!

    Reply


Your Comment