If you are not basing your tech startup’s marketing plan off of data, it can damage your ability to successfully launch your brand. This is because you are not validating your assumptions, and they could be wrong.
A false assumption can ruin any marketing strategy. You can’t afford to make any mistakes when you need to measure every move and account for every dollar while managing your startup’s marketing strategy. You can’t assume that you know what your customers need and how to deliver it to them.
Never Assume What The Customer Wants
Every business would be successful if they knew what customers want. However,research shows that you have to look deep beneath common perceptions and conventional wisdom if you want to build a successful brand.
Common Reasons Why Brands Chase False Assumptions
This is a common theme among startups that ultimately fail. The most common reasons why assumptions are allowed to prevail without getting validated are:
- Marketing teams are afraid to stand up to the faulty assumptions of brand leaders or investors
- Startup leaders haven’t developed a brand persona to target
- Startup leaders overestimate the reach of their products or services
- Marketers base efforts around outdated assumptions that used to be true
- Startup leaders don’t want to put money into research and data
What Are You Risking When You Don’t Validate Assumptions?
The most obvious and painful risk you’re taking when you don’t validate assumptions is that your startup will release a product that is viewed as being completely out of touch with what people want. Many products and services that have come to fruition without proper validation regarding how to market them are then perceived by the public as being:
- Difficult to use
- Hard to understand
- Too ahead of their time
- Too expensive
- Not executable in real-life scenarios
- Lesser versions of existing products
Validation Must Be Prioritized
If you don’t validate your assumptions early on, you’ll probably end up wasting money on bad ideas. It’s not very helpful to validate assumptions after you’ve already implemented your marketing strategy. You need to validate your beliefs about your customers’ needs before moving forward with anything else.
How To Validate Your Assumptions
You will need to do some research and gather resources to confirm the assumptions you are using to plan your marketing campaign. Here are the key questions you need to be able to answer using factual insights before you can market your product:
- What is the target market I created my product or service for?
- How large is the size of my market?
- Does my product solve an isolated or recurring problem that people in this market are searching for?
- Are there actual people and companies willing to pay for the product I’ve created?
- Is there anything I need to change about my product or message to become better aligned with the market I’ve identified?
Going Deeper Into Validating Demand For Your Products
To validate the projected demand for your startup’s product or service, you’ll need to use multiple data sources and resources. Your first steps should include:
- Looking at industry reports
- Viewing sales, online traffic, growth, and other indicators regarding competitors
- Using the tools on Google AdWords to see how many searches related to your market are occurring per month
- Using surveys to gauge interest
Investigate The Liability Of Your Assumptions
You need to investigate any assumptions that could make your product or service non-viable, before you start marketing it. Eventually you should investigate broader assumptions too. Startups don’t usually have the resources to investigate all their assumptions, so you should develop a strategy for pursuing bigger market opportunities once you’ve validated or disproved your key assumptions.
The Crime Of Overconfidence
The leaders of startups are always selling. They work all the time to create excitement and conversation about their projects. This can sometimes lead to them being too confident. After all, when you tell everyone you meet that you’re going to be the next big thing, it’s easy to start believing it yourself. Overconfidence is heavily linked with incorrect assumptions and can cause startups to falter for the following reasons:
- Experienced marketers start relying on intuition over facts
- You’re trusting something that worked in the past under a seemingly similar situation that was different in nuanced ways
- Positive or negative feedback from one customer influences future customer-related decisions too heavily
There’s Nothing To Lose From Validating Assumptions
You could lose a lot of money if you don’t know your target audience or if you’re just guessing. For example, big companies have failed when they didn’t validate their idea with their target audience.
Successful leaders know that intuition can be powerful, but in the business world, good data, preparation, and persuasion are what lead to success, not feelings or chance. If you want your tech startup to be successful, you should validate your assumptions, so that you’re offering your customers what they want. If you don’t remove incorrect assumptions at the beginning, you could miss the mark and lose the opportunity to be successful.
Assumptions That Sabotage Your Marketing
People generally make a lot of assumptions every day. They might assume that their coffee maker won’t ever break down, that the traffic light will always change, or that their cellphone will always work perfectly. But then one day, the coffee machine might not work, the power might go out, or their phone might lose signal in a dead zone ? and they realize that their assumptions were wrong.
But they aren’t alone in having faulty expectations; just check out these incorrect historical assumptions:
- An 1876 Western Union internal memo read, “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherent of no value to us.”
- Thomas Watson, chairman of IBM, said in 1943, “I think there is a world market for maybe five computers.”
- The president of the Michigan Savings Bank was advising Henry Ford’s lawyer not to invest in the newly founded Ford Motor Co. in 1903 when he said, “The horse is here to stay, but the automobile is only a novelty – a fad.”
This is not an exhaustive list, but some key examples of ways that marketers can sabotage their own efforts by making assumptions that are not backed up by research.
Social Media Is Always a Profitable Venture
It’s undeniable that social media is influential. It’s a form of word-of-mouth marketing that can reach thousands or even millions of people. Don Draper, a character from the TV show “Mad Men,” once said, “If you don’t like what is being said, then change the conversation.” But nowadays, it’s harder to change the conversation because of social media.
Some marketers are making wrong assumptions about social media without knowing it. This can be harmful because if they act on these wrong assumptions, it could negatively affect their business.
The biggest challenge for marketers when it comes to social media is figuring out which key performance indicators (KPIs) to focus on, since the field is still relatively new. It can be difficult to determine a return on investment, since there’s a lot of data available but it’s not always clear how it impacts the bottom line. For example, a high engagement rate might not necessarily translate to increased profits. Here are a few tips for turning these assumptions around:
- Start measuring your ROI. Sure, engagement is great, but at the end of the day, you need to look at ROI, because followers and likes don’t always translate into dollars and cents. Work with your finance department to understand the cost of customer acquisition and the total lifetime value of each customer. Once you understand these two metrics, you can work toward calculating ROI for each social media channel.
- Generate leads. B2B social media should include some element of lead generation. But how? Include calls to action and lead-generating landing pages and forms that draw those who engage on social media into your sales funnel through offering gated assets, such as high-value reports, white papers, and e-books. Once you start capturing leads, you can easily track and calculate the value of your social media efforts.
- Stop talking about your products. At the heart of every product is a pain point. Discover these points by staying in touch with those on the front lines – the sales team. Use this information to drive social media updates, content, and lead generation.
- Select social channels carefully. Use marketing analytics software to understand how customers communicate on each social media channel.
Be wary of thinking that just because something is liked or shared a lot, it will lead to increased profits. Test out whether this engagement actually results in more profit.
You Can Guess About General Trends
Data showing general trends can be useful, but you shouldn’t only use it to figure out what to offer customers and how to market it. For example, in the 1980s, a new type of soda came out and started competing with Coca-Cola. Coca-Cola did a study where people couldn’t see what they were drinking, to see how big of a threat the new soda was. The study found that people liked the taste of Pepsi better than Coca-Cola. Coca-Cola decided it needed to do something quickly.
Coca-Cola made the assumption that its product needed to be altered, which turned out to be costly. The company changed Coke’s recipe to make it sweeter, like Pepsi. However, this new recipe was not received well by Coke’s customers.
Though customers liked the sweeter beverage in blind studies, Coca-Cola altered its recipe without consulting customers first. This angered many of the company’s loyal customers, who felt that the recipe was a beloved American tradition. After the launch of the new recipe, customers started hoarding and selling older versions of Coke on the black market for inflated prices. The company soon realized its mistake and quickly reverted to the old recipe, renaming it “Coca-Cola Classic” to ensure that everybody knew they were buying the original, emblematic version.
Use general trends as a starting point for your own research to see if they apply to your customers. Adjust your marketing approach accordingly.
All Customers Are Equal
The 80/20 rule is a concept that was first introduced by Italian economist Vifredo Pareto. The rule states that in business, 80 percent of your business comes from 20 percent of your customers. It also says that when it comes to productivity, 80 percent of the results come from 20 percent of the actions. The point of the rule is that a small percentage of your customers or actions will usually account for the majority of your business or results. However, some people assume that all customers are equal. A recent study found that when it comes to social media, this is not always the case.
According to MarketingSherpa, most customers follow brands on social media for the discounts, coupons, and sweepstakes. However, these customers might not be the most valuable to your brand.
Discover which demographic group generates the most revenue and adjust your marketing strategy to target that group more frequently in order to boost sales.
Loyalty Translates to High Profitability
Many marketers believe that customers who have been with the company the longest and purchase the most frequently are the most profitable. However, this is only an assumption. Even though these customers purchase often, it doesn’t necessarily mean that their purchases are the most profitable.
While it is commonly believed that customer loyalty leads to profitability, this Harvard Business Review article argues that the two are actually unrelated. Therefore, managing customer loyalty and managing profitability are two entirely different responsibilities.
There may be an opportunity to increase profit by examining loyalty in a different way. Identify which customers are most profitable and create profiles for those individuals. Find out if the most profitable customers are also the most loyal. Determine where there is overlap and look for new chances to capitalize.
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