The reality of today’s startup world is that there will never be enough marketing dollars in the budget.
We have never heard a marketing executive express the problem of having too much money to spend (except for maybe the artificial bubble days when time and market share were of essence and not profitability). Let’s assume that we are operating in back to normalcy, and that indeed, nearly all CEOs and their CMOs are operating on a “shoestring” budget.
Grace Ueng, President of Savvy Marketing Group LLC, talked about trends in marketing in advance of Thursday’s Engage: Sales and Marketing program at UNC Chapel Hill’s Kenan-Flager Business School. Ueng has 20 years of experience working with both Fortune 500 brand names as well as early stage startups. She has served in executive roles for several successful RTP ventures including Interactive Magic, OpenSite Technologies, TogetherSoft, and SmartPath.
Grace, thanks for taking a few minutes to talk with me about sales and marketing trends, in preparation of CED’s upcoming Engage: Sales and Marketing program. First, let’s set the stage — what do you see as the relationship between sales and marketing?
Marketing is often not understood. I am amazed when people ask me what the difference is between sales and marketing. While this thankfully does not happen often, it is still common for the discipline of marketing to be misunderstood. People often hear me preach about the high “R-squared” or correlation coefficient between marketing investment and sales results. Marketing, done correctly, should support revenue goal attainment. It is also critical for these two functional groups to work well together — there is bound to be debate and discussion, but both groups should realize the importance of the other. I have always had a respectful relationship with my sales executives — this is critical to having a successful startup.
I think most people agree that marketing is necessary for a growing venture, but how can it be measured? Do you see marketing as an art or a science?
Many people think that marketing is a cost and not an investment. I have always advocated marketing as an investment and to measure the ROI of all marketing spends and to treat as scientifically as possible. While the creation of marketing campaigns and new product ideas can certainly be a creative process, every marketing activity must be set up with analysis of the backend ROI in mind. Those programs or products that have a below threshold payout should be cut or revised until they do have acceptable ROI. Those programs that work well should be continued and further improved. People who have worked with me know that I preach metrics for everything — PR, marketing programs, product management, and market research. Marketing dollars are too precious to be treated any other way — there must be accountability back to the company.
What trends do you see in marketing for RTP startups?
At my last company, SmartPath, I was the vice president of marketing and also the entire marketing department. When I was at OpenSite, I had a marketing team of 18. Startups are hiring fewer internal staff and trying to staff with a high level of cost consciousness. Since budgets are smaller these days, some startups cannot justify or don’t need a full time vice president of marketing since there may not be many people for this person to manage — a director or senior marketing manager may be overseeing a smaller marketing team and budget. In the long term, this could hurt the overall speed to market and inevitably valuation of the company. Those with less experience may not have the judgment that can be best developed with experience.
With venture-backed startups, there is a definitive timeline in which to have a return. In the start up mode, not many companies are able to spend money on long-term brand awareness activities due to lack of budget or short-term pressure. However, if we research the successful companies that have sustained strong valuations, they have all invested in building their brand equity. In all cases, companies should invest the appropriate amount of time in branding their company and determining their positioning — who their target market is and what unique selling proposition they offer. Marketing should always demonstrate a return. This return, however, may not necessarily be immediate. Many marketing vehicles such as advertising usually are to build brand awareness which takes frequency over an extended time frame. Unfortunately, this is the first line time to go or doesn’t even make the budget these days at startups.
Any recommendations on how to market on a shoestring effectively?
Ueng: At the “Maximizing ROI while Marketing on A Shoestring Budget” panel, several experienced executives will share their ideas. Some tips I advocate — figure out the best marketing vehicles that impact your business and continue to test and measure ROI and refine — thereby optimizing your marketing dollars. Have a clearly articulated brand and positioning. For business to business companies – utilize your customers in case studies, invest in at least a baseline PR and Analyst relations program, and figure out the most cost effective lead generation vehicles to support your sales organization. Hire the best people possible — this will pay for itself many times over in their judgment and ability to get the job done efficiently and effectively based on prior experience.
Thanks, Grace. It should be an interesting discussion at Engage.
Grace Ueng is the President of Savvy Marketing Group LLC, a consulting firm that uses proven methodologies to help new ventures within Fortune 500 companies as well as startups optimize their chances for success. Clients include companies in the consumer products/services, life sciences, and information technology sectors. Ms. Ueng started her career as a consultant with international strategy leader Bain & Company and then worked in the consumer marketing division of Time Inc. After receiving her MBA from Harvard Business School, Ms. Ueng managed five major national household brands with leaders General Mills and Clorox. She then held leadership positions with five software ventures which collectively generated over $1 billion in investor returns. For more information, see www.savvymarketinggroup.com
Since 1986, Monica Doss has served as President of the Council for Entrepreneurial Development (CED), a non-profit organization founded in 1984 to stimulate the creation and expansion of high-growth entrepreneurial businesses in the Research Triangle region of North Carolina. Doss is responsible for spearheading the direction, operation, and overall management of the organization. During her 18-year tenure, the CED has grown from a 125-member organization with an annual operating budget of $35K, to become the largest entrepreneurial support organization in the United States, with more than 1,000 member companies, and a budget of $1.8 million.
CED Engage information: www.cednc.org/engage