Ready to dive into marketing for your start-up? Think about this first.
STEP 1: Know your customers.
Companies need a reason for creating a product or service. But all too often, the “reason” isn’t to solve specific customer problems. Often, the reason for creating a product or service has to do with market size or potential, to be in a lucrative industry, or something other than solving a problem.
Before all else, your company needs to ensure the reason it exists is to solve a problem.
After identifying a problem to solve, companies may still have issues articulating how their product or service solves a specific problem for its target customers. Companies lose sight of the “who” and the “why” behind a product, which results in product-centric messaging versus customer-centric messaging. Ads read more like product highlights rather than positioning the product as the solution to the customer’sproblem. And customers tune out.
To win customers, you need to show your target market that your product or service is the best solution to their problems.
To identify unique problems that your business solves for customers, start with knowing your customers inside and out.
There are three basic levels of demographic research that can be summarized as follows:
- What you know. This is the most basic level of knowing your customer. This is the obvious, or things that are assumed. For example, if you’re selling women’s shampoo, you know you’re selling to women with various hair concerns.
- What you know you do not know. These are things like where your customers shops for products, if your customer is more likely to shop online or in stores—things you are aware would be beneficial to know, but that aren’t obvious without research. To get the most out of this level, you should do as much ‘free’ research as possible—conduct surveys, run polls on social media, ask for feedback from existing customers. You can set yourself up for success for level three of demographic research the more you learn in this phase.
- What you probably wouldn’t even think to learn. This level of demographic research is best outsourced to a research firm. Once you’ve run out of “free” ways to get to know your customers, another option is to hire a firm that specializes in collecting specific demographic information. Typically, outsourcing for this information will cost a couple grand, at minimum. For companies that can’t afford to outsource quite yet, being as detailed as possible in phase two is enough to help you tailor your messaging. But as soon as you can pay for more specific customer data, do it—the more you know about your customers, the better you can tailor your messaging.
Let’s dive into an example.
A reusable water bottle company needs to know more about their customers other than that they drink water on the go.
In order to separate themselves from competitors, the company needs to know the type of people they’re marketing to—what a potential customer’s interests are, their values, the other solutions they currently use.
Next, the company needs to identify a problem that your reusable water bottle solves that competitors either (a.) don’t solve, (b.) solve poorly, or (c.) upcharge to solve.
Finally, the company needs to adjust their offering by tailoring their marketing to make its product feel like the obvious solution to its target market.
The process of learning who your customers are is called personification. Personification is identifying as much about your customer as possible—everything from where they live to what they typically do on a weekend in July.
Aside from knowing your target market’s age, gender, and location information, it’s crucial to identify tendencies like spending habits—where do your customers like to spend money? What’s their income? Are they salaried employees? Self-employed? How do your customers exist in the world? . The more you can learn about your target market’s behavior, the better you’ll be able to tailor your messaging, and position your product or service as the ultimate solution to their problems.
Pro tip: To really set yourself up for success during the personification process, give your customer a story. Create a character, and make them as “real” as possible.
Here’s an example of successful personification (aka customer personas). And how messaging was tailored using the data gathered in the personification process to increase brand awareness, revenue, and more:
Another crucial part of knowing your customers is understanding the actual market size your company can serve. There are three important terms to grasp when understanding market size: TAM, SAM, and SOM:
- TAM or Total Available Market is the total market demand for a product or service. This is the maximum amount of revenue your company can generate serving its market.
- SAM or Serviceable Available Market is the segment of the TAM targeted by your products and services which is within your geographical reach. Most businesses won’t be able to service the total available market due to location. This segmented group is the maximum amount of customers you can serve after identifying restrictions to serving TAM (like selling internationally, for example).
- SOM or Serviceable Obtainable Market is the portion of SAM that you can capture. Just because there’s a large SAM doesn’t mean there aren’t competitors. Your SOM is the maximum amount of revenue you can generate accounting for competition.
Generally speaking, TAM is a good way to measure long-term growth, while SOM is a way to measure short-term profitability. For instance, a company’s TAM might be upwards of $10 billion, but their SAM is $100 million, and SOM $10 million.
Your product or service could be groundbreaking. Even revolutionary. But without fully knowing your customers, your business won’t succeed.
STEP 2: Know how your customers solve their problem right now (without you), and how you can solve it more efficiently.
A deeper aspect of knowing your customer is knowing how their problem (the “need”) and your solution (product or service) interact.
The research done in Step 1 should reveal the problem, as well as some basic information about how your customers currently get their problem solved.
Now, you need to dive into the relationship between their problem and your product or service. Where you sit in the mix of the marketplace. And how you’re going to have a competitive advantage.
The primary question you need to answer is: “Are my customers getting their problem solved elsewhere?”
Customers are either getting their problem solved in (a.) a variety of ways, (b.) one way, or (c.) there is no solution yet. The answer to that question tells you a lot about where you fit in the market, and how much of a competitive advantage you have.
The likely scenario is that your customers currently have a solution to their problem. The more solutions they have, the more competitors you have. To ultimately earn your place in the market, you need to learn everything there is to know about each and every competitor.
Here are a few questions to use as a guide:
- Who are your competitors? Are there a handful, dozens, hundreds?
- What are their prices?
- How does your product or service differ from competitors, if at all?
- If there’s little-to-no difference, are your prices lower?
- How do your competitors interact with your customers?
- Where do your competitors primarily operate?
The idea is to learn everything about where your customers are getting their problem solved right now, and understand why they’re choosing to go with the competition. Fundamentally understanding the “why” behind these behaviors will help you understand where you fit in the marketplace, and how you can stand out against competitors.
In the rare case your customers truly don’t have a solution to their problem, and you’re truly the only answer, you don’t need to worry as much about a competitive advantage—at least early on. Of course, as similar products or services popup, keep an eye on what they’re doing differently, and how they’re winning business in order to gain ground.
STEP 3: Understand your customer lifecycle.
Effective marketing communications are much more than targeted messaging. To win business and give yourself a competitive advantage, you need to know the journey of your customer lifecycle from start to finish.
In short, a customer lifecycle begins at the awareness stage, when potential customers learn about—and start to become familiar with—your brand. The lifecycle continues through prospects purchasing your product or service, with the goal of winning repeat business over the long term.
There are five primary stages of the customer lifecycle: Reach, acquisition, conversion, retention, and loyalty.
- Reach is the earliest stage of the lifecycle, when potential customers have identified a problem and are actively seeking solutions—your product or service being one of those potential solutions.
- Acquisition is when a consumer goes beyond seeking general information about your company and actively engages on your website or contacts sales or customer service to learn more. It’s important to remember that “acquisition” in regard to customer lifecycle does not mean you’ve won business—only that the consumer is taking a deeper look at how you can solve their problems, and likely comparing your offering with your competitors’.
- Conversion is landing the consumer as a customer! Your offering is the clear standout against competitors and your sales or customer service reps did their job of making the customer feel heard. The conversion stage is the first step in keeping the customer.
- Retention is perhaps the most important stage of the customer lifecycle—it’s about keeping the customer happy. This is where your customer service department should shine. Ask for feedback, offer perks, ensure customers can chat with a customer service representative if need be—make the relationship with your customer less transactional and emphasize your desire to truly help.
- Loyalty is the final stage in the customer lifecycle, where the customer is not only satisfied with your service, but willing to expand opportunities with your business—even recommend your service to others. Reaching this stage should be the ultimate goal for your business. The competitive advantage of having real people vouch for your business and choose to continue working with you even when a competitor offers the exact same service at a lower price point is immeasurable.
A common mistake companies make is hyper-focusing on the first three stages of the customer lifecycle and putting less of an emphasis on retention and loyalty. However, studies have shown that a mere 5% increase in retention can lead to a 95% spike in profits—and that earning new business can cost five times more than retaining current customers.
How to analyze your customer lifecycle:
It’s pivotal to know what stage of the customer lifecycle you’re in to effectively move customers from reach to loyalty. You will run into issues at each stage, but understanding the right questions to ask your customers will keep them happy on their customer lifecycle journey.
For instance, the “Reach” stage of the customer lifecycle is really about whether or not your company is findable. You want to know where your customers are first learning about you—is it social media, television, word-of-mouth.
The “Acquisition” stage is about understanding the barriers or inconveniences that might prevent customers from learning more about you as opposed to your competitors. In this stage, you’re looking for things like website malfunctions or distractions (is your website hard to navigate), what your click through rate is, how good your initial customer service is, and more.
Since the “Conversion” phase is about getting customers to actually commit to purchasing your product, the first thing you want to do is ensure your pricing/packaging is clear and affordable to your target audience. Any barriers to customers making that purchase—like checkout issues on your website or the inability to reach customer service—should be nipped in the bud. Beyond customers being able to actually make purchases, you want to ensure you have privacy policies, trial programs, refund policies, and other guarantees in place so that customers feel their money is safe and well spent.
The “Retention” phase is the most straightforward: Keep the customer happy. Getting a customer to commit to you over a competitor is a huge win—but more importantly getting customers to return. Just as you did in the acquisition phase, you’ll want to talk with customers about their experience and about any problems they're facing with your product or service. The more feedback you can get, the better you can improve the customer experience for all of your customers. Other ‘musts’ during the retention phase include making it effortless to purchase your product again, having a dedicated customer service team, and having a customer success team who can help customers get the most out of their experience.
The final and perhaps most difficult phase of the customer lifecycle is the “Loyalty” phase. The loyalty phase is about getting returning customers to engage with your company beyond buying and using your product. Here, you want customers wanting to follow you on social media and promote how happy they are with your business (without actually asking them to do so.) Some ways to strengthen customer loyalty is to offer perks or discounts to good customers, pay attention to important customer life events (birthdays, anniversaries, etc.), and offer benefits like rewards for referrals to your clients who bring in new customers.
STEP 4: Influence aspects of your customer lifecycle.
Once you prioritize learning about your customer and understanding the stages of the customer lifecycle, it’s up to you to influence their journey in a positive way.
Before diving in, though, it’s crucial to have the right mindset.
Influencing the customer lifecycle is about how you can become part of the customer’s life in a way that makes sense for them. To move customers from the “reach” stage to the “loyalty” stage, it needs to be clear and obvious you want to help them, not just earn more business. This should always be the case.
If you come to a point where you’re doing more selling than problem-solving, you should re-evaluate whether or not earning that customer’s loyalty is worth the time and resources. And if it’s not a good fit on your end, that’s great feedback to take and improve your product or service.
Assuming you are the best solution on the market, influencing the customer lifecycle in a positive way should be a tactical part of your marketing plan at each stage. Think about potential triggers or events that might increase your likelihood of growing your customer base and deepening loyalty.
For instance, an easy example is a seasonal product like bathing suits. To influence the customer lifecycle, there should be tactical marketing campaigns put in place throughout spring leading up to summer. The company might benefit from offering subscriptions or memberships for discounted pricing, or have flexible refund policies. To continue influencing the customer lifecycle, the company can partner with influencers to do free product giveaways, offer accessory products like beach towels, and partner with brands whose products are complementary to swimwear (like sunscreen).
An overlooked yet crucial aspect of influencing the customer lifecycle is having good customer relationship management (CRM). To stay on top of each customer and gauge their overall experience at each stage, you need to incorporate a CRM management system. CRM tools created by companies like HubSpot and Salesforce allow you to keep an extremely detailed profile of each customer, collaborate with teams internally to share data, and streamline processes to improve the customer experience. With the amount of CRM systems and the advancements in software technology, there’s no reason to not utilize a CRM.