There are as many ways to market a start-up business as there are types of business. From a private airline to a bespoke birthday cake provider to a chicken farm to an engineering company, the list is endless.
A few start-ups with ready-made customer bases need no marketing at all. For all the others, we suggest that there are two overall options, depending mainly on the size of their ambition and the size of their budget.
Of course, all our start-up clients would like to have sufficient funding to come to us to advise them on establishing a distinctive, compelling and enduring brand from day one, knowing that this will boost their ability to differentiate their position in the market and to target their most important and valuable prospects.
In this article we are going to focus on low cost marketing which can be applied to small businesses serving consumers in their local communities. Typical examples would include a nail bar, a café, a physiotherapist or a gym. And let’s remember that starting small with seed capital does not preclude the opportunity to then scale up having established proof of concept and either made or raised sufficient funding for the next stage.
Assuming you are exceptionally good at what you do, you still need to find and attract your first customers with as little outlay as possible – and then build on that platform. Having achieved this many times, here are six key pointers:
By distinctive, we mean that you need to be different to everyone else in your competitive set in order to be memorable.
In the 1990s and 2000s, we saw a lot of brands being radically different in their nomenclature to all that had gone before. An airline called ‘Go’. A credit card called ‘Goldfish’. Water coolers called ‘Powwow’. A phone provider called ‘Orange’ followed by one called ‘3’.
The naming process is just a small part of branding and there are plenty of examples of companies with much more mundane names who have thrived. But start-ups have the benefit of a clean sheet, both in terms of their name, and the way that they do business.
Ask yourself what you can do to become a disruptor in your sector. There is much more about different ways to disrupt by becoming a challenger brand and winning in this article, but ask yourself what you can do differently to make your service more attractive to those customers currently being served by your competitors. How can you be bigger? Faster? Tastier? Easier? Or better, still the biggest? The fastest? The tastiest? The easiest?
An excellent example of this is Domino’s pizza. In 1960, brothers Tom and James Monaghan opened their first store in Michigan, USA. A year later, Tom swapped his car (apparently a VW Beetle) for his brother's shares.
The business idea was less about the pizzas (although they are yummy) and much more about delivering hot food as quickly as reasonably achievable to people in their community – or your money back! They were all about ‘faster’ and were as much a logistics business as they were a restaurant business.
Using an early franchise model to supercharge growth, Tom Monaghan went on to sell 93 per cent of Domino’s to Bain Capital for a cool one billion dollars. And yes, the pizzas are brilliant, but it’s the marketing model that made all the difference…
The concept of the Elevator Pitch arises from an imaginary Hollywood scenario in which a prospective film producer finds themselves alone in an ‘elevator’ (or a ‘lift’ as we say in the UK) with a big studio boss- and with just one minute to sell the idea of his or her film to them. This idea doesn't require any money, only some time, a pen and paper, which makes it a perfect low-cost marketing idea.
For our examples, the nail bar, the café, the physiotherapist, and the gym, imagine yourself on a park bench or at the school gate where you get chatting to someone and, as often happens, they ask what you do. At this point, you will have the best possible answer, ready to go. The point is not to close a deal; the point is to open a dialogue – and even if the individual is unlikely to utilise your services, they are sure to know someone who might do.
Every Elevator Pitch is different of course, but here are three key pointers – short and to the point, and should the pitch be:
There are both a) plenty of easy to use tools to enable you to build a simple site and b) plenty of freelance website designers who’d be pleased to do it for you. As the minimum requirement, you need to tell the world who you are, what you do, how it benefits your customers and all the practicalities such as where you are, when you are open or available and how to contact you.
Assuming that the scale and funding for your business is not sufficient to pay an expert, we recommend that you research the use of Search Engine Optimisation to help make your site easy to find. Despite Google being an unimaginably enormous entity, it provides tools for small businesses to make them easy to find in their localities. Therefore, when people in your community experience a burst pipe and search for ‘plumber town name’ you can be right there on page one when they need you. Go to Google My Business and claim your free business listing.
Once you have a website, you should try and produce some blogs. Not everyone can write well, but trying to create top 10 lists, set of tips, best practices for your sector and things like that should be relatively easy. This is a quick way of providing useful information and ranking on Google with a small marketing budget.
You can also make videos of yourself, demonstrating your expertise. No one is going to judge a small business on the basis of their camera work, so just film the content on your phone and get it out there.
Our nail bar owner can showcase the application of a new technique or a particularly on trend finish. Our café owner can show themselves putting the finishing touches to a new dish. Our physiotherapist can provide tips on how to avoid common conditions which arise from everyday actives, such as driving or desk work. Our gym owner can film a popular class in action (with the consent of those in attendance). Everyone can find something to showcase their expertise on film with enthusiasm.
Whatever it is you are planning to do, your family, friends and wider contacts will be happy to help if you make it easy for them to do so. This is particularly relevant if your business is serving consumers, and even more so if it is serving a particular community where many of your family and friends reside – such as the examples already given. Even if it's something as low cost as getting your friends and family to put up some flyers.
Start with your contacts on your social media channels such as Instagram, Facebook, Twitter and Snapchat. All of these have business options which are easy to set up and begin to build a presence among your existing network.
Post often. Find things to say about what you do to demonstrate that you are the experts in your field. However, don’t oversell yourself; in fact, aim for a ratio of about six to one in favour of posts relating to your business compared with those directly advertising services. Also share and repost other people’s content that is relevant to your business. It’s easy to do using your phone when you are in the queue at the supermarket or whenever else you find yourself waiting around with a little time on your hands.
At a time when most of us receive hundreds of messages per day via digital platforms, consider writing a letter and posting it to as many of your personal contacts as possible. Your friends and family will be very receptive and will want to help you; you just need to give them the information they need to tell their friends what you do, where you are located, what time you are open and how to contact you (ideally via your website with an easy to find name).
Explain to them that you have started a business and ask them to tell their friends about it. This is called ‘advocacy marketing’ and, combined with getting your first customers to tell their networks about you (see point 3), it is the most effective way to help your business to build momentum. They are your best customers and also your best salespeople, providing you give them a great experience; but until you have lots of customers recommending you, rely on your family and friends to help get you started.
As detailed above, your best customers are your best salespeople, particularly in a small business; nothing will super-charge your business growth as effectively as referrals and recommendations, also known as ‘advocacy marketing’.
Allied to recommendations and referrals is the equally important matter of Customer Lifetime Value (CLV or CLVT). Without getting into the technicalities of this, the basic idea is that your customer is not only worth the total amount that they spend with you, but also the total amount generated by other customer as a result of their recommendations, not to mention that next level of customers and their recommendations!
As a simple example, if a barber’s average customer spends £120 per year on eight haircuts and remains a loyal customer for three years, then he has spent £360. But if he has recommended their services to two friends who also attend for three years, then his CLV becomes £1,080. Too few businesses recognise the value of their customers, and the opportunity to invest in them to boost their businesses.
Where Advocacy Marketing differs from its similar cousin, ‘word of mouth’, is that Advocacy Marketing includes tools and techniques to propel referrals and recommendations, rather than simply hoping that they will occur. The most typical examples of this are often to be found on Notice Boards and pop-up banners in gyms, where members are invited to ‘Introduce a friend’ in return for a £10 gift voucher or a bottle of wine. This helps to keep your marketing costs low in the short term and provides a return on investment in the space of a couple of months.
And whilst that ten pounds or so is money well spent, assuming that the new membership is worth considerably more, Advocacy Marketing does not necessarily involve any costs or give-aways. For example, many people these days love to share great experiences online as a way of curating and broadcasting their perfect Instalife, so providing a satisfied customer with an image of their newly coloured hair or fitted conservatory that they can share and asking them tag your business costs nothing and makes everyone happy.
And as with Domino’s Pizzas, small businesses become big businesses using low cost marketing. In its first 13 years, Tesla became more valuable then Ford, despite only producing a fraction of the number of vehicles and Ford having been established for more than 113 years!
One way the company has established itself has been by providing $1,000 discounts to both the existing customer who makes the referral and the new customer. Moreover, if they referred ten new customers, they qualified for the right to purchase a limited Founder Series of the brand’s Model X SUV that wasn’t sold to the public.
Advocacy Marketing works in two ways. Firstly, it encourages existing customers to talk about your business and/or brand, which both helps to engage them as part of it and to amplify its presence within the community in which you operate. Secondly, and much more powerfully, the fact that your customers are talking positively to their family, friends and network about your services immediately confers additional and invaluable credibility and impartiality. In short, as with the importance of a Net Promotor Score, no one in their right mind would recommend a product or service to a family member or friend unless they were confident in it. This form of conferred trust cannot be doubted or faked, and is why these personal recommendations are so valuable.
There is a general theory in marketing that any product or service that is positioned to suit all types of people will suit no one at all. As with the different types of businesses mentioned in the first paragraph of this piece, this idea is truer of some sectors than others. Most people eat bread and drink tea, so the most common brands are rightly marketed to the masses; just as most people have our hair cut and most homeowners need plumbers occasionally, regardless of our demographic profile.
But what about the owners of the nail bar, the café, the physiotherapist and the gym used in our examples of the kinds of businesses for whom this article is intended? Some types of people are much more partial to, or in need of, some of these services at different times in their lifespans, whilst others may never touch any of them.
In the first point in this article, we touched on the opportunity to integrate marketing into the product or service proposition and brand which keeps your marketing low cost. In doing this, owners should consider both the unmet need or desire that your business will satisfy, and the types of people who have that need or desire.
Even into today’s gender-fluid society, the nail bar owner can reasonably conclude that the majority of their clientele will be female or identify as female. But what types of women does your nail bar wish to attract? One certainty is that the vast majority of customers will value the convenience of the location of the nail bar, so are likely to live locally. So, when it comes to marketing on a budget, that is a useful starting point.
Beyond that, what is your niche? Or your Unique Selling Point (USP)? One factor to consider in this respect is the strengths, weaknesses and positioning of the other local nail bars and related salons. Are they promoting cutting edge nail technologies? Do they specialise in older clients? Are they offering a quick service suitable for busy people, or a more leisurely experience with some hospitality built in? Are they priced at the bottom end to attract more clients, and perhaps younger people with less disposable income; or are they promoting a more luxurious and exclusive service to those able to afford the best? Is there something about their location or their premises that gives them a competitive edge that you need to counter?
Having considered these types of questions, this will have helped the owner of the new nail bar decide on their positioning, and to help define their name and brand too. The same sorts of questions are true for the café, the physiotherapist and the gym in our example.
Armed with this as a starting point, you now need to market yourself in the places where the types of prospects that you are targeting tend to congregate, both in the real world and online. This is often referred to as their ‘watering holes’ based on the idea that lions and similar go to hunt for their prey where their prey has to go to drink! Another version of this is the idea of ‘fishing where the fish are’.
In the real world, it makes sense for the physiotherapist to get their flyers and posters up in sports clubs, gyms and doctors’ waiting rooms across the area that they serve, as well as trying to build relationships with these establishments – and perhaps incentivise referrals. They can also seek to form relationships with Occupational Therapists and other professionals who may encounter individuals in need of treatments. The referrals can go both ways, providing both small businesses with a source of low cost marketing.
And the same is true online. Most areas now have at least one community Facebook group, for example. Whilst these groups tend to advise members not to advertise directly or to limit advertisements, they are also trusted places where local people often request recommendations to which local businesses can legitimately respond.
In conclusion, depending on which set of facts you want to believe, something like 20 per cent of small businesses fail within the first year and 60 per cent within five years. The internet is awash with reasons why this may be so, but three seem to be the most commonly occurring. They are incompetent management, underfunding and insufficient marketing.
It is perhaps worth reflecting that a competent owner/manager of a micro business will understand the importance of marketing, and whilst they may not start with as much funding as they would like to, investing time and effort into marketing, rather than investing money, can be the answer to all three of these issues, and the foundation upon which successful businesses are built.