This article is courtesy of Ex Post Facto.
In the New Yorker a few weeks ago, Malcom Gladwell wrote the US consumer is enthralled with the new, new thing. Beta is the new “it” word. If you need proof, the magnitude of this gotta-have-it feeling is measured by the number of emails on sign up lists for products yet to be released.
Technology promiscuity underpins the startup ecosystem. Consumers believe new products can improve their lives and trust entrepreneurs to behave responsibly.
As a result of this faith, entrepreneurs are granted a great privilege: they can focus almost solely on building great products, ones which spread by passionate word of mouth. Without question, consumers will try the product and provide feedback. The initial barriers to market are nil.
Traditional marketing and advertising, customer acquisition and retention are still essential functions and capacities of companies. But they aren’t essential at the beginning. Unlike in enterprise sales where customer education is an essential and often extensive part of the sales process, for consumer companies presence on social channels and mobile channels, or discovery via friend referral or tweet are effective enough.
From a small seed of passionate users, massive user bases can erupt. At Scribd, Expensify and ThredUp, paid customer acquisition are all minor channels. Scribd has more than 90M uniques and has spent less than 1% of total costs on marketing. Expensify, with 1M receipts scanned, acquires the vast majority of users through organic discovery, and ThredUp has built a huge community of moms trading clothes through word of mouth.
I’m re-evaluating when the traditional marketing tactics should be implemented for consumer startups and when classically marketers and salespeople should be hired. American culture and new distribution channels have changed startup needs and consequently, hiring plans. The basics of CPA < LTV will always hold true. But searching for that experience in your first marketing hire may not make sense anymore.
