Building technology companies, Forum

The Transformation Of Marketing & The Implications For Start Ups

Yashwanth Hemaraj (BGV Principal) shares his perspective on the transformation of marketing and the implications for the skill set required for marketing success in early stage startups today. “Marketing is Everything” – In 1991 Regis McKenna wrote about the transformation of the marketing discipline, driven by the enormous power and ubiquitous adoption of technology. While his statement still stands true twenty-five years later, marketing methods have continued to change significantly over the past eight years. Prior to the 2008 crash, a typical marketing manager used, among many others, the following tactics:

  1. Ensure startup presence at major events with a consistent brand and positioning
  2. Secure “Industry Awards” for the startup to gain visibility
  3. Navigate journalist landscape to get the startup in front of key influencers within the media
  4. Work with the industry analyst groups like Gartner/Forrester to get included in their top lists
  5. Employ consulting groups to run surveys on behalf of the startup and perform factorization, clustering and segmentation of the user base.
These tactics were extremely effective at that time. The marketing executive’s rolodex was extremely beneficial to get in front of these constituencies and make a good case for coverage. However, some of these tactics have not proven as effective in the new era post 2008 for a few key reasons:
  • While the big Industry Events such as DreamForce, Techcrunch Disrupt, RSA conference etc. draw large crowds, they are expensive and the startup’s message gets diluted amongst 100 other startups vying for the share of mind. Similarly, the impact of Industry awards has been diluted tremendously. Every event has a startup awards section these days, and the inconsistent selection criteria means that these awards do not have a meaningful impact beyond being potentially useful networking events.
  • Journalists and analysts used to be a good medium for startups to gain early visibility. However, media reporting has drastically changed – these days journalists follow companies with perceived high momentum within the media. This momentum is derived from a combination of the startup’s presence in online channels, share of voice within key influencers etc – a reactive process than a proactive one.
As a result, the techniques that worked in the past have very limited effectiveness today. Furthermore, these methods are often extremely expensive and as a result, often get cut from the startup budget. So what does the new world of marketing look like? It is the era of “Always-On”Marketing…
  1. Impact of Social networks: with the tremendous adoption and acceptance of social networks, the traditional media channels have been circumvented. Traditional gatekeepers of information have become less relevant. Companies can have direct conversations across social and professional networks with an enterprise’s entire workforce – right from mid level managers all the way to the CEO.
  2. Availability of user data on a voluntary basis: gone are the days when you had to perform surveys to collect user information. In these days, you have ready availability of user-generated data. Best part is, it is voluntarily provided by users. You know when individuals change employer, when they change roles, what their interests, skills, and job responsibilities are..
  3. Change in purchasing habits: Purchasing habits have changed drastically. When making day-to-day purchases, it is not uncommon to aggregate reviews, prices from multiple sources before buying. The same habits carry over to the enterprise space. As a result, companies must adopt an “always-on” marketing methodology. There is a wealth of information on effective content marketing methods. Prof. Mohanbir Sawhney from the Kellogg School of Management describes the concept of “network centric” innovation here. Karthik Sundaram speaks about frictionless marketing – moving from Gate-and-Bait tactics to meaningful and rich conversations with prospects – in a LinkedIn post here.
  4. Availability of analysis platforms: marketing is part art, part science – i.e. data science. In the past, analysis was complicated and only a few experts with access to data tools and methods could perform marketing analysis such as segmentation, clustering, cross tabs etc. These days, big data, machine learning and artificial intelligence platforms have made it easy to aggregate data, normalize and run statistical analysis easily. Take a look at to understand how analysis tools have become as simple as drag and drop.
  5. Availability of marketing tools: the adoption of tools such as Eloqua, Marketo, Hubspot, Mailchimp and others. These tools have the ability to integrate all types of data sources and also enable a marketing executive to maintain constant contact with customers through rules based automation techniques. New generation of tools such as Mariana, Automated Insights etc provide the ability to customize data for individual customer. This omni-channel communication approach is key to influencing customers effectively. Using analysis fosters a metrics driven mindset rather than one driven by gut feel and past experiences.
When executed well, these new methods can drastically lower the cost of customer acquisition. For example, In a CB insights article, the CEO explains how CB Insights has been able to reduce the cost of customer acquisition using their 3-A model (Awareness, Affinity and Action). Their LTV/CAC is a staggering 22.9x, a new benchmark for startups to aspire to. One of our portfolio companies, Ayehu, provider of IT process automation tools has been able to reduce the cost of customer acquisitions through very smart use of search engine optimization and smart content marketing. What does this mean for early stage startups hiring their marketing leaders?
  • Do not ignore marketing – it is key to scale up your business. It has a lag before it starts working. So, you have to start early.
  • Hire an executive who has made the transition to the post-2008 marketing era successfully. Do not fall into the trap of “hiring” a consultant or “junior” person to run these campaigns in conjunction with the executive. You may not be able to afford both. These tools/methods are easy enough for one person to perform both.
  • Encourage these marketing leaders to give away content for free – contribute to comments, panels and forums. These contributions will pay back in terms of brand advocacy and brand awareness.
  • Hire international teams – content generation can be done from everywhere. Hire international teams with good access to technology skills to generate content, brand materials, infographics, videos etc. This will get your dollars to go a long way.
  • Hire marketing leaders who can generate a lot of customer use cases. Customers don’t buy products and services from companies. They buy specific outcomes. Marketing these outcomes is necessary for success and advocacy. It is most likely that your product generation is cheaper than legacy applications. In exchange, get your customers to share some high-level aggregate usage information and statistics with you so that you are able to generate relevant content to educate the marketplace on outcomes.
BGV believes that marketing strategy is necessary not only to put the startup and its products on the path to success but also to guide the sales team. In the new era of “always-on” marketing the skill sets required for success are very different than the past. As Einstein stated – ‘Problems cannot be solved with the same mind set that created them.’