Barros, Marc (2013, July 8) Build Brand Awareness First – Distribution Second. from http://www.hackthings.com/build-brand-awareness-first-distribution-second/
This post is part of a series about how to bring your hardware product to market. The first post was “How To Price Your Hardware Product.“
A lot of startups get this backwards.
I know I did at Contour. We spent our money on great product and distribution, leaving nothing left to compete against GoPro in the marketing arms race.
Even though you started your hardware company to build an amazing product you quickly find yourself doing everything but building product. Which is both confusing and frustrating, especially as the Kickstarter buzz wears off, leaving you wondering how you grow your business.
Unfortunately this is where a lot of startups get side tracked. Focused on growing, they ask themselves the wrong question, “How do I sell more units?” A subtle difference, the right question is to ask, “How do I get more customers?”
When they prioritize more units, startups end up down the wrong path of growing distribution first, brand awareness later. They proceed to spend all of their energy, profits, and capital to reach the retail shelf only to realize the retailer then expects them to pour millions into marketing to sell the product off the very same shelf. A tough reality, they eventually figure out that retailers are simply order-takers for the demand already created.
The right question, how do you get more customers, is much harder to answer. It requires a startup to spend a lot of time understanding their customer, why they bought the product, and what influences them to tell their friends. Never a single answer they spend a lot of time trying, measuring, retrying as they push towards the magic point of Product Market Fit.
If you get this question wrong, you’ll end up where I did. The best product, with lots of distribution that no one knows anything about. But get this question right and you become a marketing powerhouse (i.e., Apple) that can profitably dictate the terms to its retailers.
So, if you survived your Kickstarter experience and are wondering how you get more customers, here are some things you can do.
Understand the Funnel
A simple framework to identify who to target, the marketing funnel helps you prioritize the most profitable path to paying customers who influence their friends. The funnel has three parts:
Ready to Buy – closest to making the purchase decision they are by far the most familiar with your category and specifically with your product. Generally their friend has the product, they have touched it, and now they are researching it online. Have Heard of You – their level of familiarity will vary, but they have heard of your product and remember your brand name. Perhaps they saw an advertisement, read about it in the media, saw a Facebook promotion about it, etc., A general rule of thumb is that people need to see the brand multiple times before being ready to buy. Everyone Else – ignore this group for a very long time. They have no idea that your category exists and they aren’t likely to buy until the price is affordable and everyone else around them has made the purchase decision. Start With Existing Customers Most startups skip right past this group of people and try targeting potential customers who have never heard of them. Having existing customers is fantastic, so facilitating them to tell their friends is critical.
The best way to enable existing customers is to understand when they talk to potential buyers. At Contour we realized this was happening on the chair lift when the person sitting next to them would ask, “What is that?” Unfortunately the conversation ended when they got off because we failed to enable the Contour customer to sell the product and/or send them a special offer. The fact that our customers already had an existing Contour mobile app, should have helped to turn these conversations into sales.
Outside of direct word of mouth you can try any ideas that get your existing customers talking about you, reviewing the product, sharing photos, or receiving credit for bringing you new business. E-commerce companies have been rewarding their customers for a long time, even offering discounts, credit, and cash for bringing new buyers.
Regardless of which tactics you choose be sure to learn how your existing customers heard about the product and what influenced them to buy. It will help you prioritize which channels are most effective.
Online Search These people are the most ready to buy, already searching online for your product. Strong SEO and SEM strategies are great ways to make sure people don’t miss you because they couldn’t find you. Or worse, they find a competing brand because you show up way too low in the search results.
If you don’t have this experience in house you can hire a consultant who can set up your system, figure out the most important key words, and help you manage your campaign. Just keep in mind that the volume of interest is correlated to how well your other marketing tactics are working. Search captures the interest you created elsewhere, it doesn’t create new demand.
One last point, search is a basic way to measure the impact of your overall marketing. If more people are searching for your brand name it means the rest of your marketing efforts are working.
PR PR will continue to be one of the most rewarding channels, sworn by everyone who has successfully built a consumer brand. Not only because the press keep the brand relevant, but because they provide third party recommendations for the product. A double edged sword, negative press can bring you down as fast as positive press can bring you up.
A lot of startups try to outsource this from day one, which I think is a massive mistake. Even at Contour we didn’t hire a PR firm until years down the road when we understood what stories the press liked and who was most likely to write about us. Being great at PR takes time, patience, and willingness to understand which editors like you and what stories they find interesting.
If you can target a variety of publications you can begin to learn which verticals are most interested in your product and convert into sales. Thankfully most of the PR efforts are done online, providing you valuable data on which media sites bring the most traffic. Something you want to know before you start advertising.
Trial and Error The rest of your marketing tacts are a continuous cycle of trial and error. A horrifying realization, you have no idea what is going to work until you try it. Even if you copy other successful brands, you have no understanding of how it will impact your own sales until you see the results. This is where the Lean Startup mentality of try, measure, and repeat is valuable as you learn to listen to customers and measure the results.
Tactics that have been successful….
Building Community. You had this when you launched on Kickstarter, so figuring out how to carry this forward to build a larger group of passionate people is super important. Product. Announcements for new versions and new features can be powerful to reaching more and more customers. Content. Whether it’s content to entertain, educate, inspire, or inform content that people are willing to share is especially effective. Give Aways. Unfortunately free stuff does work and being consistent about it through social media does drive people to sign up. Email Blasts. Finding new email lists and partners who will help you target their users is a fast way to learn which demographics will buy your product. Retargeting. Focusing on people who visited your website but didn’t purchase is an awesome way to stay present, making them think your brand is everywhere! Events. High touch and high cost, they are great for talking to real people to learn what they think, what questions they have, and what ultimately influences them to buy. Creative Ideas. Anything out of the box that gets people talking about your brand, including the media. Limited Distribution What do you do with all the retailers who want to sell your product?
The answer is to limit the distribution, opening up select new retailers.
First, make sure it is easy to buy and fast to ship from your own website. Focusing on english speaking only, you eventually want to make it convenient to buy your product from anywhere in the world.
Second, open up a handful of e-commerce partners who can hep you reach customers, deliver a great experience, and provide data. You need online retailer partners who can use a variety of marketing tactics to help you reach different demographics, while providing you consistent data on what is and is not working.
Third and only when the two channels above are working really well, can you add select specialty retailers with a high touch experience. You are looking for partners that will experiment with you on point of purchase, training, packaging, local events, etc. You have a lot to learn in being successful at retail so assuming you can just open a national account without any understanding of what works, is a massive recipe for disaster. Remember, retail is expensive.
Keep in mind that if you hire an internal sales team they will blow this distribution strategy up. They will push you to open every door saying, “We have one shot with this retailer, we have to do it now!” You can always find consultants or independent reps that can help you open these initial doors until you are ready to grow distribution.
Conclusion Focusing on brand awareness first enables you to deeply understand your customers, while having real data about which tactics convert into sales. Only until your select points of distribution sell through at increasing rates, for several months, should you think about growing your distribution.
Most startups severely underestimate the cost of opening and supporting retailers, including the missed opportunity to grow your brand awareness. Every dollar spent on a retailer is one less dollar spent on telling the world you exist.
I learned a very hard lesson at Contour. The best product doesn’t always win, the product everyone knows about does.