As the years go by, there are more and more products in every possible niche, so marketing the product is as important as building it. If you go back a couple of decades, many of the services we use today weren’t built out. But now starting a startup has become cheap, startup knowledge is widespread, and being a founder has become a fairly common thing. We all know people who are founders. It’s not an exotic thing like it was a decade or back. But that has resulted in so many startups out there, all clamoring for attention. Customers already have a service similar to what you’re doing, so it’s hard for you to stand out.
In fact, a friend of mine says that distribution matters more than than product. I wouldn’t disagree with him.
Marketing is hard, to the point where many startups fail because they can’t find a marketing channel that works. It’s not something you hire a competent team for and expect them to deliver, unlike engineering.
A startup won’t succeed without a marketing / sales leader in the team from day 1. You can’t just hire such a person once the product is ready, any more than you can hire an engineer the month before the launch and ask him to build the product in that month.
Marketing can be free or paid. If you’re starting a startup, and you don’t know better, start with free marketing. Many naive founders, including me earlier, think that paid marketing is a knob they can turn to get users. Not so.
Paid marketing doesn’t work for products with a low LTV, like a mobile app that costs $9 one-time. Maybe 0.5% of users who click an ad pay for the app, but you have to pay for all clicks. This works out only if your customer acquisition cost is 5 cents, which isn’t realistic. CAC is typically $10 or more. Working backward, you need an LTV of $2000. Maybe that estimate is too high, but advertising certainly won’t work for an app that has an LTV of $20 or so.
There are different types of marketing: to begin with, marketing can be online or offline. It can be performance marketing (where results are attributed to specific marketing campaigns) or brand marketing (where you don’t know if increased sales of Coke are because you successfully manipulated people into thinking it’s good). Performance marketing is online, while brand marketing can be either online or offline.
Sales vs Marketing
What’s the difference between marketing and sales? Marketing generates demand, sales fulfils it.
If you have a < $1000 LTV, which is B2C, marketing is important, but not sales: you can’t afford to have salespeople spend time talking to customers for such a paltry fee. Conversely, if you’re going after enterprise customers with a $100K or higher LTV, which is B2B, sales is important, not marketing. And there’s an area in the middle where both marketing and sales are important.
Marketing scales less than linearly with number of users, while sales scales linearly.