In this episode of Startups For The Rest Of Us, Rob and Mike talk about the pitfalls of commonly recommended marketing tactics. This topic was inspired by a tweet from Scott Watermasysk from KickoffLabs. Some of the tactics discussed include split testing, affiliate programs, content marketing, and more.
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Welcome to Startups For The Rest Of Us. The podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you build your first product or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you with the same mistakes we’ve made. What’s going on, Mr. Rob?
Rob: We received a voicemail from someone, I believe he was in Brisbane, Australia, but it was definitely an Australian accent and I could barely make out the audio. The audio quality was so bad that we don’t even know his name or the question he asked. If that is you, please call us back or better yet, just record an MP3 on your local machine and just attach it or send us a Dropbox link to email@example.com. Because it sounded like a good question but couldn’t really make out what he’s saying during that. How about you? What are you up to?
Mike: I’m in the middle of testing a new road map process with one of my customers using Teamwork. The basic idea is that I set up a project in Teamwork, mainly because this customer’s been with me for a while and it’s not a really complicated stuff that they’re asking for what they need, but they need assurances or like timeline and implementation and everything else.
I’ve got a road map that I’ve been using in the background using Trello for a while, but I just haven’t kept up with it. I’ve never really gotten into Trello like most people have. What I did was I created a project in Teamwork and then I invited them to look at it. I took their […], threw them in there. Basically, I’m working through them and it gives me the opportunity to comment on those things directly and allow them to comment back on them as well. It creates this really nice feedback loop between those things.
I haven’t added any other customers into it yet, but I think that that might be something that I’ll look into the future. But I’ve looked at other road mapping tools in the past and I’ve never really quite found one that suited me.
Rob: Is this for communicating your road map to customers?
Mike: If a customer asks for something, how do I communicate it to the rest of the customers, like, “This is what is going to be going on and this is what the priority is.” It’s a little bit different than like a bug tracker, obviously, if there’s a bug or somebody needs support or something like that, it’s different, but I’m the only one who can add stuff in so that it’s visible, but anybody can comment on it, at least so it seems like.
Rob: I’m trying to think there’s a tool that we use at Drip and of course, I can’t remember the name of it and we always used it to announce what we had built. It’s like, “This is what we released in September.” It’s like a change log tool but it was user-friendly. It was not super techie. I’m trying to think if you could use that pretty easily to suggest like, “Here’s what we’re working on in order.” I think there was actually a little feature where you could just add a bulleted list, but it was super stripped down. It was a very simple tool. It was $10 a month or something. It’s probably someone’s side project, although it’s pretty well-designed. Is that all you need is just a list of things? Why not just have, maybe a public Google doc or even just a static page on your website that’s like /roadmap? It’s just five things in bold list like, “Here are the next major five efforts we’re doing.”
Mike: There’s two things. One is we’ve been going back and forth through email and I said, “Look, I understand you got all these different things that you want to see, but I need a list of them. Just going back and forth one at a time is really not working. Send me the whole list.” They sent me the entire list and broke it out into three different sets like, “These are things we need very, very soon, these are things that can wait a little while, and these are things we’d like to eventually see down the road.” I looked at them and they all mapped pretty well like my internal road map anyway, which I have in my bug tracker, but I’m not going to pay for other people outside of business to have an account there just because it’s going to get expensive.
I was trying to figure out how do I work back and forth with them because I had a bunch of questions on some of them and there were comments on other things. It was a question of, “How do I work with them to flesh out what each of these things is?” because if I got an email that’s, let’s say, two pages or something like that, like bullets that they email to me, it’s hard to go back and forth about one line item and five line items in an email. I really needed something that was going to break them out so that I can comment on things individually and separate them a little bit more. Does that makes sense?
Rob: It does, yeah. It’s not just for outbound communication, it’s kind of like you’re almost collaborating with a client. It’s not that they’re paying you for this and not that you’re going to build it exactly as you’re expecting, but they really are. It’s much more customer development process than it is, “Hey, we’ve got suggestions in here is what’s we’re going to build.”
Mike: Yeah, I’d say customer development is probably a better way to phrase it than I did. It is a lot of back-and-forth to figure out like, “Is this going to work for you or what exactly did you mean by that? How are you going to use this?” for example. Because some of the questions are like, “I hear what you’re saying and it makes sense but where you going to use this for? I want to know, is there a better way to do this or is there something else that we could do either short-term or manually that would get them there faster?”
Rob: Right. Cool, it sounds interesting. I think of it as less of a road map process and more of, I guess, it is impacting your road map, but it’s more like a customer collaboration or a customer development process that you’re doing using Teamwork. That makes sense?
Mike: Yeah, it is.
Mike: But I went on Google and searched for road map software a while back and I came across all these other things, like there’s ProductBoard, aha.io, ProductPlan, ProdPad, and things like that. It’s just none of them really seem to fit what I was looking for in terms of this back-and-forth communication with either individual customers or with small groups of them. I really think I just want to identify a couple of more customers to maybe work on this with, but it’s really a matter of, does it make sense in that particular context for that customer?
Rob: That makes sense. Have you seen MailChimp’s new branding?
Mike: I got an email about it, but I haven’t looked at it yet.
Rob: It’s a trip. I think I saw a news article. I think I was on SparkToro Trending. SparkToro is Rand Fishkin’s new startup and there’s a trending page and they talked–there was an article written about MailChimp’s new branding. Obviously, I think of MailChimp as the ESP. There are other email service providers but they are the biggest one. They are the ones that send a billion emails a day. Like the title tag on their homepage, which is what will appear on Google now, is marketing platform for small business.
I don’t know if it’s a pivot as much of just a rebrand. But like their homepage used to say, “We help you sell more stuff at MailChimp,” or something like that, it’s very much commerce-focused, but their headline is now, “Your business was born for this. Become the brand you want to be with smarter marketing built for big things.” It’s very, very interesting. It’s a gutsy move. The colors are different. I actually like the design of the site. It’s definitely jarring.
Remember when the Drip rebrand happened and there was the magenta and the other colors, I feel this is similar but different, but the headline and the value prop on it feels not nearly as focused as what I’ve always thought of as MailChimp. The fact that the sub-headline is “Become the brand you want to be with smarter marketing built for big things,” that doesn’t resonate with me as a customer and never would have at any point in my entrepreneurial career. I’m concerned. These guys are smart, let’s not fault MailChimp, but I feel like maybe they’ve made a misstep here.
Mike: I don’t know. I think it’s easy to think that if a company changes their brand name, that, “Oh, this company isn’t for me any more. This tool isn’t for me,” but at the same time, the tool itself hasn’t change. It’s really just a marketing message. I forget who said this, but the line is something along the lines of, “What got you here won’t get your there.” Like you said, they’re sending a billion emails a day but that doesn’t necessarily acquire them more customers faster, they need a marketing message that resonates with a larger group of people than they currently have or they’re currently after because they probably saturated the market. The ESP market is really highly saturated. There’s tons of players there so they need to differentiate themselves an go after people who are either just not using something or are using something else and want to find something that is going to fit them better.
Rob: Yeah. That makes sense and that’s thing. When you’re not inside an privy to the conversations that they’re having and who they’re competing against when they’re going for big deals, you don’t know. That’s where I’m like, “Who am I to say?” but this is my opinion on the outside. Again, with the Drip stuff when there was that rebrand, it was right before I was leaving the company. It was happening and rolling out. There were so many naysayers and haters on social media and all the stuff, but they were privy to the information that is actually going on inside the company.
I guess what I’m saying is, it could be so easy for me to sit here and just rail on this MailChimp rebrand because it’s “different,” but I trust that MailChimp is pretty damn smart and pretty good at what they do, and that they took the information. It’s either going to work or they’ll change. If that headline doesn’t resonate with people, they’ll change it. I think that’s the thing. When you make these big gutsy moves and you’re trying to land and expand or pivot into a larger space or whatever it is that they’re doing, apply to more people, as you said, you have to do risky stuff at some point.
What’s interesting is in the early days of a startup, you take a lot of risks but no one’s there to notice and no one cares. But when you have 1000, 10,000, 50,000 customers and you take these risks, a lot of people get up in arms over it, but really it’s the same risk that you’ve been taking all along.
Mike: I think for large companies like that, it doesn’t matter nearly as much as we might sit here in armchair quarterback it, you know Monday morning quarterback. Just because their existing customers are still going to be paying them money, it’s about them acquiring new customers, not appealing to the ones that they already have. That’s the way I see it.
Rob: That’s the thing. As long as you don’t do such a pivot that you completely turn your existing customers off and have a bunch of churn and stuff, man, that would be really hard to do, especially with ESPs where there is some lock-in in the space.
Mike: Yeah, it is hard to move from one to another. I’ve done that before. It sucks.
Rob: Yup. So what are we talking about today?
Mike: Today, we’re going to be talking about a couple of pitfalls of some commonly recommended marketing tactics. This topic was inspired by a tweet from Scott over at KickoffLabs and we’ll link that into the show notes. But he said, “One of the worst startup diseases is AB testing. Such a colossal waste of time when you don’t have significant traffic,” and it got me to thinking, what other things are there that are commonly recommended marketing tactics that I see and hear about or you’ve see and hear about, that are either colossal waste of time or there’s pitfalls or things that you don’t necessarily know about until you get into it, and only to realize that you’re walking into a hornet’s nest and there’s more trouble than it’s worth or it’s just not going to work for you or it’s something that you can do short term, but it’s not going to be sustainable for you.
Rob: Cool. Let’s dig in. I was pretty excited when you talked about doing this topic today because I think there are a lot of, I won’t say misinformation but it’s more like myths or people making things look easier than it actually is in order to sell things, in order to sell their software or sell their infoproducts.
Mike: I think that’s the big piece of it is that they think it look easier or sound easier than it actually is. For split testing, we’ll start off there because of the tweet from Scott but you need substantial traffic and most early entrepreneurs don’t have it. It’s not just that you need substantial traffic, you need substantial traffic and a short enough time window where your test is going to be able to give you at least some sort of significant results.
The other thing that I think is a little bit misleading is about whether or not the split testing that you actually could do, if you were to get 1% results or an increase every month for 12 months, would you actually be that much better off? I have seen some odd anecdotes where people will say, “Hey, we did all these split test or we split tested something against itself and one was significantly different than the other.” It does make me wonder a little bit as to whether or not with the resources that we as small business owners have available, can we actually even effectively execute on that stuff in a way that is going to move the needle for our business?
Rob: If you’re thinking about the early days of your startup and you’re trying to build something people want, you’re in customer development, you have a website, a little bit of traffic, split testing is the furthest thing from your mind or should be the furthest thing from your mind. You need to be talking to customers in those early days, to figure out what is that I can build that people are willing to pay for, that’s different enough from the competition that I can communicate that and people will sign up.
Typically, you’re going to split test your home page or your pricing page or your sign-up funnel, and I would not even consider it before I had, let’s say 5000 or 10,000 uniques a month. Really, at that point, it depends on what revenue is and if I have the time to test the headline here or there. But if I were to do split testing at that point, let’s say I had 10,000 uniques a month coming to their home page, I would probably just set up one or two alternate headlines and just let it run and see what happens. But it wouldn’t be some massive effort where I would be redesigning the entire page to spending a bunch of time to try to get some major difference in conversions, because there are other levers you should be pulling at that point. When you have 5000 or 10,000 uniques, you should be worrying about more traffic, or you should be worrying about, frankly, converting more of the existing trials you have to pay the customer. It’s going to tend to move the needle more than spending a lot of time on split testing.
Mike: The next marketing tactic is using affiliate programs. I see a lot of startups from Product Hunt, BetaList, and a couple of other places that startup it up where they’re pitching this affiliate program and saying, “Hey you can manage your affiliate program through our SaaS and you’ll be able to get more customers for your business.” But the reality is that the attribution itself is fine within those pieces of software, but finding the affiliates who are able to bring in enough leads to make it worth your time is actually pretty hard.
I’ve done this a couple of times. It seems to me the software itself is reasonably straightforward in most cases to implement, but finding the people who are actually going to bring leads that are qualified to you is a lot more challenging. It’s just, you have to do a lot of education to those people, you have to make it worth their time, and you have to be finding affiliates who have a substantial traffic source already or existing list where you can point them back to your website, give them an affiliate code or something like that, and give them an offer that’s actually going to get them to convert. If you don’t have all of those things, then it’s just not going to work. It doesn’t matter how many people you sign up for your affiliate program. You need the qualified leads to be coming in.
Rob: Yeah. Finding affiliates is way harder than most people think unless this is a primary strategy for you and you have a network. The people who I’ve seen make it work—let’s talk about Clay Collins of LeadPages—it was built mostly on the affiliate model. He did that because he knew all the people in the internet marketing space. He had the clout to get them to do webinars with him. It wasn’t just, “Hey, send me some traffic.” It was, “Let’s do a webinar,” and then he pitch an annual deal and it was 50% off, there was time pressure and there were bonuses, I should say, that you got if you sold there. That’s how he grew it that fast.
ConvertKit did the same thing. It was the same playbook. If you’re going to do that, then do that and go all in on it. I recall, at one point, Clay was doing 20 webinars a month or something in the early days, 15 or 20. It was crazy. He’s just a machine. In that case, you’re an exception. You’re not going to start from a cold network where you don’t know other people who have big audiences and make affiliate programs work from the start. It’s going to be a ton of work. In addition, the process side I just talked about, I’ve only seen it work in one niche and it’s in this aspirational business niche. It’s in the people who want to be bloggers or be info marketers and they’re being sold info on how to start your own biz from home.
You look at LeadPages and ConvertKit and they both serve that same path Flynn-ish niche. You can’t just go to enterprise software and think you’re going to do this big affiliate model, sell to Fortune 500 companies or Fortune 1000 companies using that. Or even freelancers would be possible because there are people with those audiences, but it wouldn’t work to the same extent that it does because the audience is just aren’t as big and they aren’t as prone to buy. I’d say there is one or two other spaces that I know of that are similar to that, that aspirational thing where you can sell them the idea or the promise of, “Hey, you’re going to have a landing page provider or here’s an ESP and here’s how to start your blog and make money.” But beyond those, it is really hard to get an affiliate program profitable one off the ground.
I had affiliate program with HitTail and Drip, and they made money, they were profitable, but they were not major driving factors. Even when we did joint ventures and we did joint venture webinars, we’d do JV mailings, it made money and it was fine, but these were not the major drivers of growth that I’ve seen in most of my startups. Again, not saying it can’t work but it’s definitely different than it appears.
Mike: Yeah, it’s definitely a lot harder than it appears. You have mentioned enterprise software sales where affiliate models wouldn’t really work and I agree with that, but there’s a slightly different model for those enterprise deals where it’s basically a reseller arrangement. You don’t have direct contact with the enterprise companies, you resell to other companies, you sign them on as resellers which is a slightly different take on an affiliate program, but it’s not substantially that much different. It’s the same basic idea–somebody else is bring in the lead in. The difference with a reseller is that the reseller is basically managing the customer relationship versus with the affiliate, they’re bringing them in and then they’re hands-off at that point.
The next one is content marketing. I think that the content marketing has been all the rage for the past several years and I don’t see it necessarily ending anytime soon, but I think the bottom line for content marketing is that it is time and resource intensive to general content on a repeated basis. If you’re trying to blog once a week or put out a few articles each week or each month, that’s fine, but it’s not just the generation of those which is time and resource intensive, it’s also the marketing and distribution of those. If you’re trying to post it to Quora and various startup list and out your email newsletter and social media, that gets to be time and resource intensive, especially if you’re trying to cross-promote between different channels and schedule everything–it just gets complicated.
There’s also very long lead time to getting results and getting measurable results from them. It could be anywhere from three to six months, it could be as much as a year or 18 months. Regardless if that, it’s a lot of time and effort to get that engine running. But once it’s running, you’ll do really well with it but it just takes a long to get there and there’s probably better places for you to spend your time if you’re early on.
Rob: Yeah, this one is tough because content marketing can and does work. You just got to remember content marketing is more about SEO and it is a long-term play. That’s why when we get the questions from someone like, “Hey, I’m at $2000 MRR. Should I start my content marketing?” It depends. Probably not, but it really depends what niche are you in? Are there distribution networks? Not even networks but like growthhackers.com and YCombinator are distribution avenues for you to get the content out and are there people daily reading stuff like this? Are you going to be able to drive it? Are you going to build your list? And then long term, are you targeting SEO terms? Organic terms that are going to bring traffic? That’s how the play has really been successful for these larger companies.
Of the three we’ve talked about so far, I think content marketing is the best and most viable, but your critiques are absolutely correct in that it often takes a long time to get results and it is very resource intensive to generate content at the quality, and these days at the length that’s required to make it dent because there’s so much noise, man. I have not been on the social news sites like inbound.org used to be one but it shut down. growthhackers.com is still there, Hacker News, even SparkToro Trending, I had not been on any of those. I just don’t go on them regularly.
I’ve looked at a few of them this morning and the volume of content is crazy. It’s so much more and so much of it is highly targeted and you can tell it’s targeted to try to just get clicks to it. It’s a startup that is trying to get people to come through from Hacker News or from Product Time or from whatever to generate traffic to then funnel into the leads. We’ve all been there. I totally know that playbook. I was doing it back in 2012-2013 or even before that from my blog in 2010, but there is just a lot of noise out there. To rise above that, it’s a lot of time and money to create content that is good enough to warrant people’s attention.
Mike: The fourth item on our list is social media marketing and by this, I don’t mean paid ads like if you’re going on Twitter or Facebook or Instagram, whatever you like. You can pay for advertising, but that’s not what I’m talking about. I’m talking about building an audience and then trying to market content to them. I think the reason that this can be a substantial pitfall for people is that it seems like it should be easy but it’s time-intensive to gain followers. When you post things, a lot of times only a fraction of your followers are going to see a particular piece of content.
For example, I think on Twitter, the stuff that I’ve heard is about 5% of your followers are going to see any given tweet that you put out. So even if you have 100,000 followers, only about 5000 of them are going to see that. So the strategy to overcome that is you tweet multiple times a day and use something like Buffer to put those tweets out at different times a day to try and catch people on different time zones.
At that point, I feel like you’re also oversaturated in the people who are on Twitter a lot and it could very well be a turn-off to those people, but again, it’s a matter of, “What type of product are you promoting to people and is it going to be relevant to the people who are on Twitter?” I tried Twitter advertising for AuditShark, for example, and it just absolutely did not work because the people who are in the enterprise are just not the type of people who are looking for security software on Twitter.
Rob: Yeah and that’s not to say that Twitter advertising won’t work for anyone. I also think LinkedIn could be better for you, but I tried LinkedIn many times with multiple products and never got LinkedIn advertising to pay itself back. Again, not saying it won’t work, it’s just going to take trial and error if you can get it to work at all.
Mike: On that note, James Kennedy is going to be speaking at MicroConf Europe on a LinkedIn strategy for acquiring leads, so that might be interesting to you.
Rob: Awesome. That would be a cool one. I agree, man, social media marketing is great for B2C and it can be great for prosumer stuff, aspirational entrepreneurship, or even photographers–they tend to be aspirational. But when you’re talking about real sales tools, or real email marketing tools, or real tools that you want people to buy and use for years, and you need businesses that are making decisions, comparing you to competitors and all that, social media is a nice to have. It is not something in general that’s going to drive your bottom line if you are a B2B SaaS app. I’m sure there’s one exception to this, maybe two, I’m sure there are a couple, but overall as a bootstrapper or as someone who is really just trying to block and tackle, there are so many more things that you could be doing than to tooling around on Facebook and Twitter.
Mike: I think the real challenge here is just the fact that entrepreneurs tend to be on the internet a lot, we see Twitter a lot and we see Facebook a lot, so it’s natural to assume, “Hey, I should test that out or use that as a marketing strategy.” But again, it’s time-intensive to gain the followers. The reality is that what you want and most of those cases is actually just send them over to an email list anyway so you […] email address. Assuming you can get an engine up and running that can do that for you then that’s fine, but you still need a way to make it work and it can be very time-intensive to gain those followers and it’s not obvious always how you’re going to be able to do that.
The last one we have on our list today is offline advertising. By this, you can take it a bunch of different directions. It could be billboard advertising, […] response in a conference or podcast or anything where the direct attribution is a little bit more challenging. That also include things like sending postcards or physical mailers to people. I think, is it GRC marketing that does that? They advocate that a lot for sending out the bulky mail to people just to get their attention. That works great for those situations where you have a higher price point product or it’s a service, and there’s going to be a relationship that you’re trying to establish with them or the dollar amount is high enough that it’s worth it to send those.
The biggest downside of those is that it’s extremely hard to do the attribution in most cases and then there’s also a much longer iteration cycle. Instead of looking at couple of weeks for paid ads on Facebook or Twitter, you’re looking at a month, two months, maybe three months for an iteration cycle to send out a mailer and then figure out whether or not you got results from it, track those back, then make some adjustments or tweaks, and then move on to the next group. It can get very complicated to juggle all of those things at once because even if you’re just doing it repeatedly over the course of a month or two, it’s just going to suck up all of your time and attention. You’re not really going to be able to do very much else.
Rob: Yeah, it is expensive, too. It’s a long turn-around time and the iteration cycles are just, I would say, too long for a startup. Now, once you’re down the line, you have product market fit and it you’re in a space where offline is a really good option, obviously you could experiment with it. But it’s not something I would be messing with in the early days. And as you said, attribution is rough. I did some trade publication magazine advertising for one of my products once or twice and it didn’t work. Again, it’s not saying it wouldn’t work for you, but I quickly realized how expensive it was and just how you can’t tell if it’s working.
There’s a little adage, “50% of advertising doesn’t work.” You just can’t tell which 50% and that’s when people are talking about magazine and TV and radio and that kind of stuff. Obviously, you can tell which 50% works when you’re online and we are spoiled by that, in all honesty. I think that’s a real boon to the online marketer today. Offline is not something that I think you should get into lightly unless you really know what you’re doing.
Mike: I do know people who make offline advertising work. The problem is just that the iteration cycles are anywhere from 8-12 weeks just to find out whether or not a particular mailer got through to the right people and whether they got those people into their sales funnel. It does work especially in his particular business, but again, it’s just the lead time for you to go from one iteration cycle to the next and get the information back. It’s just hard if you’re still trying to make ends meet.
I think generally speaking, when you are trying to evaluate a marketing tactic is to whether or not it’s going to work for you or decide whether it’s going to be something that you want to try, there’s a couple of things to keep in mind. The first one is, is there a complicated setup that needs to be done first? Are you going to need to go create a bunch of accounts or are you going to need to integrate a bunch of different tools together? Is there ongoing effort that needs to be done? Are you going to have to constantly be creating or doing things? Any of those things where it takes your involvement on a very repeated basis is going to eat into the feasibility of using that strategy in the long term.
For blogging, for example, or content marketing, if you have to do that every single week, it can be difficult. It’s not saying you can’t outsource it. If you have money, you can obviously substitute that in for your time, but again, that’s a resource trade-off that you’re going to need to make down the road. You can start off doing it yourself or you can outsource it to somebody else. But those are the type of things you need to think about when you’re trying to figure out, “Is this something that I’m going to try and do long-term?” or are there better places that you could be spending your time?
Rob: Right because it’s one thing to intentionally try something and know that it’s not going to scale, but to do it as an experiment. It’s another thing to try a bunch of different tactics that really you don’t have much hope of sustaining without really doubling down on them. If you shotgun it and you try five different things but all of them need a tremendous amount of resources and effort, and you only go 10% of the way with each of them, you’re throwing an article here and you set up an affiliate plan here, and you do a Twitter and Facebook post a week, it’s like you’re not doing anything well.
But if you dive into one and experiment, figure out is there any way to make this possible, you dig in for a month or six weeks or whatever it takes, and you do these sprints where you dig in, learn everything you can about it and execute on it or you hire someone to do that if you have the budget. Determine, “Is this going to work right now given my business, yes or no?” Answer that question and then move on to the next thing–that is much more of the approach that I would recommend and the approach that I’ve taken in the past. You don’t need many of those to work in order to scale your business. If you find one or two pretty substantial marketing practices and you figure out the angle and you figure out how to get in there, that can grow your business to well under seven figures. It doesn’t take 10 different marketing tactics to get there.
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