Marketing Options for Software Startups

Marketing Vs. Engineering (part 3)

This is the third in a series of three posts addressing how marketing and engineering should work together in a software business.

In the first post we covered why engineering and marketing disagree in software companies.

We then looked at how large software companies successfully get marketing and engineering to work together effectively by establishing teams of product managers and product marketing managers.

Smaller software companies, even from the initial startup stages need to invest time in marketing. Learning from large software companies can help smaller software companies get on the right track from the start.

The challenges for smaller software companies are, of course, very different

Smaller Software Companies Large Software Companies
  • Lots of ideas, but not enough resources to implement them
  • Difficult to get attention in market
  • First sales are very tough without reference customers
  • Cash is extremely limited
  • Lots of resources, but difficult to get alignment internally
  • In the spotlight, worried mistakes may harm the brand
  • Large product lines and installed base that must migrate from legacy products slow innovation
  • Cash in the bank, but overheads are very high

Do Startups Need Marketing?

In a word—“Yes”—Software companies need professional marketing from the start.

As we’ve discussed, software engineers have a natural disdain for marketing and would much rather spend their time writing code. The tempting thought is that surely “if they build it they will come”

FieldofDreamsMay06

Field of Dreams: "Build it and he will come".

 
In a word—“No”—If you build it but don’t market it, they won’t come.

I’m a marketing consultant, so of course I am going to say software companies need professional marketing right from the start. Well don’t just listen to me, listen to experienced developers and veterans of the software industry:

If there was one thing I could teach every engineer, it would be how to market.
Steve Yegge, Senior Software Engineer, Google. Quote from codinghorror.com

Ignore Marketing and Become Irrelevant
Steve Yegge, Senior Software Engineer, Google. Keynote Open Source Convention 2007

I want our company to be an engineering-driven company, where our goal is to build products that delight users, and marketing is a means to that ends… I want to think of our marketing … as a way to connect our efforts to the marketplace. It’s a necessary and important work for our company to survive, and I want to make sure that “Engineering” is giving “Marketing” the resources that are necessary, but that the fundamental values of the company is not compromised.
Tim Su, Software Engineer, Silicon Valley

Poor sales are almost always due to insufficient marketing. A fact that is borne out by 13 case studies. It doesn’t matter how great your software is if no-one know about it, or if you can’t persuade them to try it when they do find out about it.
Andy Brice, Software Developer, Founder Oryx Digital

The Options for Including Marketing

So marketing is essential, even if you do see it is as a necessary evil.

You basically have five options to include marketing

  • One of your founders is already a marketing expert
  • Do it yourself
  • Recruit a marketing employee
  • Hire a marketing agency
  • Hire a marketing contractor / consultant

We’ll look at each option in turn.

One of Your Founders is a Marketing Expert

This is an ideal scenario, but it’s rare.

There are many talented software developers in the world, and many people with great business skills. And while there are some lucky enough to be both, they are a tiny minority. Hence the number of great software products that never become great businesses.
Dave Collins, Founder, Software Promotions

Most software companies are founded by engineers who want to work together and have identified a problem that would be fun to solve.

They have to define roles for themselves, even loosely:

  • Someone will be the grownup and have to think about money, getting funding, limiting costs, dealing with the boring paperwork, legal stuff.
  • Someone will have to do the website and presentations to explain what the software is.
  • Someone will design the user interface
  • Someone will focus on the back-end code, architecture…

These roles will naturally be defined, whether planned or not. It is simply too inefficient for all decisions to be discussed and agreed by everyone.

And one of these roles is marketing.

If one of your founders is a marketeer you are happy to work with – you have a huge advantage over companies founded solely by engineers.

You can try and bring one in as a partner, but unless you know them already it will be extremely difficult to find the right person:

  • In the right location
  • With the right experience and skill set
  • To share your vision
  • To trust and feel comfortable working with

They are rare, and may well not want to join your startup

Do it Yourself

If none of your founders is a natural marketing expert, you could learn.

Advantages Disadvantages
  • Keep costs down
  • Enthusiasm, shared vision, trust
  • Understand product, domain, problem
  • Not scalable, a short-term fix
  • Takes time away from your other activities, slower to get to market
  • While you learn, you’ll make mistakes and it will take you longer

Just because you’re the best at something doesn’t mean you should do it yourself.

As a startup founder, you’ve likely got some impressive talents. You might be a remarkable blogger, a great speaker, a well-connected deal maker or a phenomenal engineer. But, no matter what, you’ll reach a time in your business where you can’t be “that guy” for the company. If you continue to be a load-bearing beam in your startup’s tower, you’ll never be able to scale, grow and join the top of the skyline.
Rand Fishkin, CEO, co-founder SEOmoz

The important points to note here are that you can learn to do your own marketing, if you want to and you have the time. It will be a great asset for your career. It’s not actually that hard for engineers to learn. Most of marketing is logical, and analytical – natural abilities for an engineers.

The big drawbacks are:

  • Most engineers don’t want to spend time learning marketing
  • Most startups don’t have the time

If you don’t have a marketeer as a founder and you don’t have any money to spend on marketing then you’ll have to learn to do it yourself.

Recruit a Marketing Employee

If you have funding you can go out and hire your first marketing employee.

Advantages Disadvantages
  • Bring in specialist skills to complement founders’ skill sets
  • Completes tasks founders don’t have time for
  • Company has more bandwidth to get more done
  • Time and costs to hire someone and bring them up to speed
  • Increases fixed overhead costs
  • Risks they won’t have right skills, won’t “fit” with rest of team

This won’t take up as much of your time as learning to do it yourself, and after a short period your new employee should be up to speed and adding a lot of value.

The chief drawback is of course cost. Can you afford to add an employee to the payroll? At some point as you grow your company, you will need to add employees. And having someone who fully understands your software and marketing will be essential to own your marketing strategy. This role is core to your success, and cannot be outsourced long-term. You need to make the right hire and they should be a full-time employee, probably with share options.

If you’re not ready to hire your first marketing employee—or you are the first marketing employee and you’re thinking about the second marketing employee then it’s time to bring in an outsider.

Outsider

The role of the outsider. Only the rich can afford to hire an agency. Everyone else needs to do it themselves. Have to learn how to apply the invaluable ingredient only available from the outsider.
And what does the outsider supply? An ingredient called ignorance. In other words, objectivity.
By not knowing what goes on inside a company, the outsider is better able to see what is happening on the outside. In the mind of the prospect.
The outsider is naturally attuned to outside-in thinking, while the insider is more comfortable with outside-in thinking. Objectivity is the key ingredient supplied by the advertising or marketing communications or public relations agency.
Al Ries, Jack Trout "Positioning: The Battle for Your Mind"

Advantages Disadvantages
  • Objective, brings a new fresh perspective
  • A flexible cost, charge per day or per hour
  • Quick to get started
  • Can be brought in to help with workload peaks
  • Needs to learn company’s software and specific market
  • More expensive per day than an employee
  • Less personal enthusiasm, loyalty
  • Likely to try and sell you more services

When you bring in an outsider, you’re either hiring a person for a period of time, or you’re hiring an agency.

Hire a Marketing Agency

Marketing agencies are most commonly associated with fast moving consumer goods and advertising. These are the agencies we see in films and on TV, as this is where the truly massive marketing budgets go – tens of millions of £/$/€.

But there are marketing agencies that specialize in all sorts of industries and have a range of services including: advertising, marketing communications, public relations, search engine optimization, events, telemarketing, web design, and social media.

Advantages Disadvantages
  • Objective
  • Quick to get started
  • Assigned account manager
  • Large pool of people to draw on
  • Expensive
  • Less personal enthusiasm, loyalty
  • Likely to try and sell you more services
  • Working with multiple people in an agency can be slower as they are brought up to speed

Usually the best way to use agencies is either:

  • Strategically, where you commit to a longer term relationship and have a few of their staff really get up to speed on your company and provide a broad range of services; or
  • Use them to provide a generic service, where you use them to provide specialist skills e.g. search engine optimization. This way the specialist does not need to know a lot about your company but knows all about SEO.

But for most software companies starting out, agencies are too expensive and they would rather hire an individual that they select personally.

Hire a Marketing Contractor / Consultant

What’s the difference between a contractor and a consultant? According to the jokes it will be some combination of higher fees, more hot air, more grey hairs and wrinkles.

Really there is not much difference between a contractor and a consultant. You hire them to work on a project over a specific period of time. They will charge more or less depending on their experience, skills, duration of the project, supply and demand, how interesting the project is. Normally you’re charged based on a daily or hourly rate, but sometimes you can agree a fixed price in advance.

In the UK there are some technical differences for Inland Revenue (IR35) but so long as you’re not paying retainer fees or hiring them for several months at a time, you probably don’t need to worry about that.

The main differences are that consultants are more likely to:

  • Work on shorter projects (days not months)
  • Work for multiple clients
  • Have more experience and need less direction
Advantages Disadvantages
  • Cheaper than an agency
  • Quick to get started
  • Personal attention
  • More flexibility than hiring an employee, contracts can be ended quickly
  • Less cost effective than employees in the long-term
  • Need strong knowledge and understanding to be productive quickly
  • No backup if they are ill
  • Need to be local, or used to remote working

Which is Best?

I’m a marketing consultant. I have been a marketing employee, a marketing contractor, and I’ve managed contracts with marketing agencies. So I know there are plenty of advantages and disadvantages with each approach.

For me the consultancy approach works best. I get to work with lots of software companies on interesting projects, and I can use my experience to help them grow their businesses and keep a broader perspective.

For your company, there is no one right answer. It depends. Typical sit-on-the-fence answer, what else would you expect from a marketing consultant, right?

If there was such a thing as a typical startup software company, I would recommend:

  • Get an experienced full-time marketing professional on board as soon as you can or bring in a marketing consultant in the interim
  • As you grow, bring in marketing consultants / contractors to provide specialist knowledge and additional marketing bandwidth for peaks such as your initial web site and product launches
  • Your first marketing hire should use an agency (or two) to build a first-class website optimized for search engines and internet advertising campaigns.
  • Next it will be time to hire your second marketing employee. Look for enthusiasm and willingness to learn this time.
  • Every time you use marketing consultants or contractors think about how you can wean yourself off them. Ensure they are transferring skills and knowledge to your team especially to your second marketing hire.
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