Lean Marketing Strategies for Small Businesses and Startups Ross | December 15th, 2010

Small businesses and startups face many challenges when marketing their products and services.

Small businesses and startups have minimal brand recognition, are often located in geographic or demographic areas that limit their marketing options, and most have small (or non-existent) marketing budgets.

Some marketers advise small businesses and startups to research and create strategic marketing plans. Such plans can help – and strategy IS important. But strategic marketing plans take time, resources and money. Few young companies can afford that cost.

Other marketers recommend that small businesses and startups build a website or optimize their existing website, develop email lists, start blogging, and develop newsletters. These tactics can be important and may work for some, but they also require time, resources and money.

The reality is that for the vast majority of small businesses and startups, marketing consists of handing out a business card.

Why?

Marketing and advertising require an investment of significant amounts of money and time. The ads we see on television or in magazines, for example, were developed by agencies and consultants who evaluated past campaigns, developed concepts and assumptions about advertising themes, conducted some market research/focus group testing, created story boards, developed scripts (for commercials), and much more. It’s no surprise that the cost of running the advertising itself is often smaller than the cost to produce that ad or marketing piece.

The truth is that most advertising and marketing doesn’t work. Studies show that people ignore online ads and other forms of advertising are not much better.

Yet products and services rarely sell themselves – small businesses and startups must find ways to let their potential customers know about those products and services.

In this post, we’re going to explore several strategies small businesses and startups can leverage when marketing their products or services without spending a lot of money or time developing comprehensive marketing plans.

First, some background for those not familiar with lean startup principles. “Lean Startup” reflects a set of key principles used by some entrepreneurs to quickly and inexpensively develop new products and services. Lean startup principles promote creating rapid prototypes of your products and services designed to test your assumptions about the market and then to rely on feedback from customers to enhance those products and services.

There’s strong support for the lean startup movement in the marketplace, including from investors. Even agencies have taken notice and are talking about ways that agencies can apply lean startup principles when they counsel their clients.

What can small businesses and startups learn from lean startup principles?

Let’s take three key elements of lean startup principles – quick and inexpensive prototypes that test market assumptions, feedback from real customers, and learn fast, don’t fail fast – and apply those elements to strategies for small businesses and startup marketing.

Test your marketing ideas in small batches

Many small business owners  and entrepreneurs think that picking the right marketing channel will solve all of their problems. But there’s no one right marketing channel for all businesses. Some products and services sell better using one channel, while others sell better using different marketing strategies and tactics.

By trying different tactics, you’ll get a better sense of where your customers are, how they respond to your marketing messages, and how they like your products and services. Once you start excluding things that don’t work after a period of testing, you can focus more of your energy and budget on the marketing channels that are effective for your company.

Instead of starting with big strategic marketing plans and investing huge portions of your marketing budget on one or two initiatives, break your budget into small pieces that you can use to test various marketing ideas. For example, you could set aside some funds to experiment with offline and online promotions, online small business listing sites, referral programs, deal-of-the-day sites like Groupon, print ads in local papers or mailers, online ads, hyper-local advertising on Facebook, participation on Twitter, or adwords on Google. Decide on a small budget for each effort, set a reasonable time frame (at crowdSPRING, we typically experiment with most marketing initiatives for two weeks – but there are exceptions), and then monitor and assess the results, although be careful to focus on the important information.

Word of caution: many small businesses and startupsassume that great marketing can overcome poor products and services. Ben Malbon, Director of Strategy at Google Creative Lab reflects the view of all experienced marketers: “You can’t polish a turd.” This view is echoed by David Armano, Senior Vice President at Edelman Digital:  “The best product = the best (and cheapest) marketing” and also by Elizabeth McCaffrey, published author and Chief Creative Officer, EAM Creates: “Do one thing, do it well.”

Listen to your customers

Perhaps the most important lean startup lesson for small businesses and startups is the need to increase the frequency of contact with real customers. Marketing is often directed at a faceless, voiceless audience and you rarely, if ever, hear from that audience. It’s the equivalent of standing on top of a tall building with a megaphone and talking loudly about your company. How likely is it that such a strategy would work?

Small businesses and startups don’t have big budgets to blanket the world with their marketing messages. So what can they do?

Edward Boches, the Chief Innovation Officer at Mullen advises small businesses and startups to “maximize social media. Build a community, support them, leverage them. Market WITH not TO your community.” This is sound advice and is in stark contrast to the way most companies market. Companies rarely engage in dialogue with their customers and as a result, miss opportunities to learn and improve their products and services.

Learn fast, don’t fail fast

Many people fear failure. For most, this fear is healthy because not every failure is a learning experience. But the key to lean marketing for small businesses and startups is to focus on learning, not failure. The goal is to learn as much as you can about your marketing options and spend as little money and energy as possible to gain that knowledge. While many of your marketing tests may fail (at crowdSPRING, 99% of the marketing programs we try don’t work out), you’ll be able to adjust, refocus, and find marketing channels that work. And importantly, by applying lean marketing principles and focusing on small, iterative initiatives and feedback from your customers, you’ll test your theories and assumptions within weeks or months, while your competitors will wait years to see if their grand bet-the-company marketing initiative succeeds or fails.

If you want to dig deeper into this topic: Tim Malbon from Made by Many put together an excellent presentation deck focusing on many lean startup and marketing concepts.

What other lean marketing strategies and tactics can you recommend for small businesses?

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  • http://twitter.com/rnadworny Rich Nadworny

    Good article Ross. I’m surrounded by small businesses here in Vermont most of whom have a budget for a yellow pages ad and little else.

    But I’ve also seen some very successful launches in the last year with a focus on social media. The successful ones have some things in common:

    1. They don’t try to create a new community. Instead they make strong connections with existing communities. The ones who make sure they connect with the social media people in a real, personal way end up having great success.
    2. They offer their business location as a place to connect. They hold Tweetups or other networking events to connect social people in real life.
    3. They show up. In person. At other events. Real people are the best asset small businesses have for marketing.
    4. They reward people for talking about them (on social media) or create specials/deals for word of mouth and social marketing. It’s a no brainer, but it works every time (and there are still few who do so.)

    Just my 2¢

  • Sean Mallon

    Ross – great article and excellent suggestions for maximizing marketing impact while minimizing expenses. Very relevant to me at the moment!

  • The Media Fairy

    All good information, but I must respectfully disagree with the two-week test runs. Unless a business is selling a highly desirable product or service at an amazingly low price (imagine rib eye steak for 99 cents a pound), that’s just not enough time to establish any kind of ROI. Remember, it typically takes 5-7 impressions for a message to be retained. Also, for short-term trials, you’ll likely end up paying a premium.
    Regarding the statement that 99% of the marketing programs you try “don’t work out”, THAT’S FRIGHTENING! No one should experience that rate of failure, even someone who knows little or nothing about marketing. Something is clearly wrong with your selection process. Are you throwing darts at a dartboard? If you perform at least minimal research on a program to determine if it has the capability to reach the audience you seek, and it still doesn’t work, then you’re probably not giving it enough time. (providing you also use a compelling message)

  • The Media Fairy

    If a Yellow Page ad is all they can afford, that’s probably the last place they should be investing their modest budget. The money is locked up for a year, the ad can’t be changed, and it’s PASSIVE advertising. I would hate to think the only time people would see their ad is when potential customers ‘shop’ the Yellow Pages, where they will also see every competitors’ ad as well.

  • http://workingforwonka.com Kathy

    I agree with the Media Fairy and Rich. First, I’m a little perplexed by the 99% of marketing fails. Maybe we’re taking it too seriously, and you are simply exaggerating to make a point. If that’s the case, yes, lots of marketing fails. But lots succeed as well.

    Lean start-ups (I’ve worked for half a dozen) need to employ strategic guerilla marketing tactics. In small batches? Great. Failing and learning, absolutely. But they have to market or the entire product/brand/company will fail. For instance, use PR to get editorial coverage trade publications instead of advertising in the publication. You begin building your name in the community and with buyers. And most trade pubs are looking for content.

    Rich’s point regarding social media is a good one. If employed using his tactics (specifically engaging in existing communities) it can provide great bang for the buck. And if you’re targeting a younger crowd, all the better.

    Interesting post!

  • ad guy

    Most advertising and marketing doesn’t work? That statement will come as a shocking surprise to P&G, J&J, Frito-Lay, Coke, ect. All ads are not created equal, however, ill-conceived, poorly executed advertising never works.

  • http://twitter.com/rosskimbarovsky Ross Kimbarovsky

    We sometimes test for longer periods (and sometimes for shorter periods). We tend to set a baseline at 2 weeks and work from there because you’re right – there are times when you simply need to test for a longer period of time to get meaningful results.

    As for marketing failing 99% of the time – I’m curious about your experience with marketing and the types of things you’ve done that have been successful. We do quite a bit of research, analysis, and planning and yet find that many marketing channels convert poorly (for us).

  • http://twitter.com/rosskimbarovsky Ross Kimbarovsky

    Rich – thanks so much for adding your thoughts here. Great advice for things that small businesses and startups can do that cost very little money.

  • http://twitter.com/rosskimbarovsky Ross Kimbarovsky

    When you throw hundreds of millions of dollars into many marketing channels, some of your advertising may work. But even for those companies, many marketing channels don’t work, as evidenced by very poor click rates for online banner ads and other forms of advertising.

  • http://twitter.com/rosskimbarovsky Ross Kimbarovsky

    All good thoughts, here, Kathy. Thanks for commenting.

    99% might be a slight exaggeration – I haven’t actually counted. But I can tell you that most of our marketing efforts don’t succeed despite careful planning and reasonably good tactics (which is OK; we are prepared for that).

  • http://twitter.com/rosskimbarovsky Ross Kimbarovsky

    Sean – very happy the article is helpful.

  • http://www.smartroiconsulting.com SmartROI Consulting

    “The truth is that most advertising and marketing doesn’t work”? I respectfully disagree and I think that using the yellow pages as an example and an article from the Harris Poll, which has as it’s conclusion that it DOES work if you do it right, are not compelling pieces of proof. Unfortunately, the point also needs to be made that “small, iterative initiatives” normally cannot generate enough actual data and are more likely to lead to anecdotal evidentiary conclusions, which are most likely seriously flawed and can lead to disastrous marketing programs (like the yellow pages!).

  • http://growingforward.net Scott Asai

    Love the shirt. Success is more about how you handle failure.

  • http://twitter.com/AjevaCom Ajeva

    I’ll have to agree with you on creating the best product which in turn translates to marketing. A lot of startups are too excited with all the glitz that they rush headlong against a brick wall – without a helmet. No matter what social media channels a startup uses, if your product is sub par – you might as well as kiss your marketing efforts goodbye.

  • The Media Fairy

    Generally, a little due diligence to insure a good match between the desired audience and the delivery method will eliminate the possibility of a high ‘fail’ rate. Maybe you’re willing to try new things and act as a guinea pig, reporting back to followers whether something did or did not work. =)
    My clients can’t afford that kind of fail rate, and neither can my reputation. The majority of my clients are local, and have enjoyed great success on cable TV and radio, as long as the same methodology is applied to station/network selection. Direct mail has also been successful. Again it all boils down to knowing whom you want/need to reach, creating a compelling message that will elicit a response from them, and delivering that message through a medium that will connect with them. Sadly, social media success stories are still the exception to the rule, which is what makes them newsworthy. Not every business needs to go global or viral to be successful.

  • http://twitter.com/SpotJ Scott Johnson

    Good article; however, as Mythbusters has proved, you can indeed polish a turd.

  • david

    The article is reasonably informative. It would read a lot better if you would cool it a little on the keyword phrases, though. Makes it sound like adsense land… Sorry – not trying to be a dick for Dick’s sake. But that’s the truth my man.

  • david

    On the other hand, I’m super grateful for the connect to Eric Ries, who I hadn’t heard of before.

  • Spfldnet

    I’ve noticed that more people respond to a normal eight and ha half by eleven sheet of paper with black ink, folded in half, sealed with a simple round sticker, and addressed with Avery printed labels, than respond to any super flashy glossy card-stock postcard. Give it a try, You will be surprised.

  • http://twitter.com/rosskimbarovsky Ross Kimbarovsky

    A slightly different context, I think…

  • http://twitter.com/rosskimbarovsky Ross Kimbarovsky

    Interesting…thank you for sharing. Have you measured this response in A/B tests?

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  • Rolanddaoustbis

    Ross – great article and excellent suggestions for maximizing marketing
    impact while minimizing expenses. Very relevant to me at the moment!
    ______
    Roland
    Seo Agency

  • http://www.facebook.com/peter.mutiso1 Peter Mutiso

    It was interesting to read your argument on the above article

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