✋ The No. 1 marketing mistake and how you can avoid it
✋ The No. 1 marketing mistake and how you can avoid it
9 out of 10 start-ups fail. Many projects are discontinued after a few months. Why is that and how can you make your work successful in the long term?
➡️ You can also listen to this posting in my podcast 🎧
Hello 👋 My name is Florian Schleicher and this is the FutureStrategies newsletter from FutureS. I'm glad you're reading along 💚 If you want to learn strategic marketing, my Simple & Sustainable Marketing Academy is just right for you.
Marketing has never been so easy.
And never before has it been so easy to bring a project to life.
Founding a startup has never been easier.
But despite this, many companies fail every year. It made me very sad to hear from some founders in my network that 2023 was their last year in business.
That's why I want to write about it today.
1️⃣ Why do so many start-ups and projects fail?
2️⃣ What does it take for sustainable success?
3️⃣ How can start-ups and projects be made a success?
Ready?
1️⃣ Why do so many start-ups and projects fail?
What does failure mean? In my view, failure means that not enough turnover and profit can be generated to ensure the continuation of the company or project.
More than 2/3 of all start-ups never manage to achieve a return on investment.
The success rate of first-time founders is just 18%.
20% of all start-ups don’t survive their second year.
So although it is possible to start a business from home these days and with a very small start-up investment, many do not make it.
The main reason, apart from the financial end:
35% of all start-ups do not fulfill a market need.
A "good" idea is created and the product or service appears logical and clear from an internal perspective. But the market, i.e. the target group, does not exist, does not have this need, and therefore has no reason to make use of a new solution.
This happens when no strategic process has been followed, too much time has been invested in programming, the product itself, but too little time has been invested in analyzing the target group.
So there was no good marketing strategy.
Good marketing with a great strategy means understanding what "the market" wants and then creating products and services that satisfy those needs.
2️⃣ What does it take for sustainable success?
The success of any new idea - whether a start-up or a project idea and campaign - always depends on having a clear strategy.
This consists of:
Diagnosis
guidelines
Actions
In the first step - the diagnosis - we analyze the initial situation we are facing. A key aspect of this is to understand who our target group is. The most common way I see this done is to determine what the demographic characteristics of a group are, i.e. what age group, where they live, their income, etc.
However, this approach leaves out a key success factor for a good marketing strategy:
“Predictable marketing requires an understanding of the circumstances in which customers buy or use things. Specifically, customers - people and companies - have “jobs” that arise regularly and need to get done. When customers become aware of a job that they need to get done in their lives, they look around for a product or service that they can “hire” to get the job done.”
Clayton M. Christensen & Michael E. Raynor, The Innovator’s Solution
Above all, we need to understand the situation of our potential target group to know who they are.
Many people with completely different demographic backgrounds may have the same problem for which they are looking for a solution.
“The key problem for that audience - what is missing from their lives. Of everything we know about them what’s the most salient problem that this business can solve?”
Emily Heyward, Obsessed
If we understand what the problem is, we can tailor our solutions to it and really understand our target groups.
If we do not do this, then we are working for so-called "phantom targets" - target groups that do not exist in reality and therefore do not help us to achieve economic success - and survive.
So the first step in any successful marketing strategy is to find out WHY and WHO needs us. And then to base all further decisions - guidelines and actions - on this.
“If you're not adding value or creating solutions, it's going to be tough. So, having a better way to address an existing problem, or being the first to tackle a new one, is critical.”
Nikhil Sharma, Co-Founder of LitmusEye
Simply said:
Don’t sell. Solve problems.
Instead of trying to sell your product or service, try to solve your customers’ real problems. This may include helping individuals/organisations to achieve their goals and helping them overcome challenges.
Srikanth Acharya, Founder of OffiNeeds and TheHomeOffice
To do this, we need to know and understand the perspective of our potential customers. Not think from a product perspective, but act from a customer perspective.
Simply illustrated by this example from Heinz:
3️⃣ How can start-ups and projects be made a success?
Every project, every company, every product, and every start-up needs a clear strategy. The good news is, as Rob Estreitinho recently wrote:
It doesn’t matter if you write the strategy as long as there is one.
And this starts with a razor-sharp diagnosis of the problem we are facing as a company and the problem that our target group has.
The second requires us to take an external perspective, and there are a few good techniques, methods, and approaches for this, which I will show you here using a great example.
Do you want to set up your strategy for success?
That is exactly what I do with FutureS.
Simply contact me right here or have a look at whom we are working for.
🥤 McDonald's Milkshakes - The jobs-to-be-done-concept
Many years ago, the McDonald's marketing team was given a new goal.
To increase sales of milkshakes.
Not a challenge for a talented marketing team with an unlimited budget.
Right?
So they started a focus group by demographics of data from millions of customers and conducted interviews with them to make the milkshakes better - assuming that customers could surely tell them how to create a better product.
The results?
No clear answers. No change in sales.
Then McDonald's brought in an outside consultant - Clayton Christensen - who took a different approach:
To find out what customers were looking for when they ordered a milkshake, he and his team spent entire days in a restaurant, carefully recording who bought milkshakes.
They noted the time of each milkshake purchase, what other products were bought, whether the customer was alone or in a group, whether he or she consumed the milkshake on the premises or drove away with it, and so on.
The most surprising finding from this work was that almost half of all milkshakes were bought early in the morning. More often than not, the milkshake was the only item purchased and it was rarely consumed in the restaurant.
The researchers re-interviewed customers who had bought a morning milkshake to find out what they intended to do with the purchase and asked them what other products they bought instead of a milkshake on other days when they had the same task to do. Most had ordered the milkshake to achieve a similar goal.
They had a long, boring commute ahead of them and needed something to make it more interesting! They weren't hungry yet but knew they would be hungry at 10:00 if they didn't eat something now. They were also faced with constraints. They were in a hurry, often wore their work clothes, and had at most one hand free.
Finally, a clear problem!
People are looking for a simple snack that can be consumed in the car with one hand and will keep them full for a long time.
No bagel, no banana, no sausage roll, no doughnut can do that.
But the milkshake can.
And this also makes the solution to increasing sales obvious, as Christensen describes in his book:
“To tackle the boring commute job, for example, the chain's managers could swirl in tiny chunks of real fruit. This would nail the boring commute job even better, because the drivers would at random suck crisp, flavorful chunks into their mouths, adding a dimension of unpredictability and anticipation to a monotonous morning routine.
The chain could make the shake even thicker, so it would last longer. And they could set up a self-service machine in each restaurant that customers could operate with a prepaid card, to get in and out fast.”
A good diagnosis looks at the situation, the motivation, and the outcome - the result that the purchase of our product or service should achieve.
Demographic data does not give us this result.
We have to observe our customers. Directly.
Like National Geographic, go in search of them.
To do this, we first need to find out where they are and talk to them, again and again, and test new hypotheses directly.
Because they often don't know what they need, they simply act emotionally driven.
😮💨 Qualitative research is time consuming
Yes, this type of strategic marketing approach is time-consuming and therefore cost-intensive.
It is therefore no easy task, especially in difficult economic times, when the next quarterly result is waiting in the wings and short-term success is sought:
“Economic pressure and corporate mandates to show the value of every dollar spent have made marketing much more focused on short-term results. The creative efforts that align with long-term brand equity and overall brand values often feel like they’ve taken a back seat. Consumer attention has become a scarce commodity, but the tactics designed to get long-term traction and create loyalty—things like brand equity/brand consistency, customer experience or even net promoter scores—don’t feel like a priority.”
Adweek
But every good marketing strategy starts with a clear understanding of the target group, an insight - the AHA! - that is based on a problem.
This is the only way start-ups, new projects, and companies can be successful in the long term.
Fortunately, in addition to time-consuming research, there are a few other, simpler techniques that also work with a little experience and knowledge.
I teach these methods on an ongoing basis in my Simple & Sustainable Marketing Academy, for which there are still a few tickets available. So if you are looking for a sign to sign up and benefit from the incredibly low ticket prices, this is it.
Thanks for reading along,
PS: You can also read this posting in German.