Marketing Your Startup

by Simona Covel

It has worked. The device earned a cult following after Amazon ran a promotion, resulting in 215,000-plus sales in one day, along with rabid word-of-mouth buzz. Today, enthusiasts trade recipe hacks and videos in a 450,000-member Instant Pot Facebook group.

  Even with the appliance ranking among Amazon’s top-selling kitchen products in the U.S., Wang claims to still read every Amazon review. He says they provide clues for designing new features, like the fourth-generation model’s Bluetooth connectivity, which adjusts cooking time according to a user’s altitude.

  That will give you a rough idea how much you may end up paying, depending on the reach of the influencers you’re considering.

  Entrepreneur John Rampton, who says his early forays into influencer marketing weren’t nearly as successful as they could have been, recommends spending no more than 50 percent of your social media advertising budget. So, if you have $5,000 to spend on social media, you should be investing no more than $2,500 on influencers who can promote you on a variety of platforms.

  How Measurable Is It?

  Numbers range across studies but the return on investment for influencer marketing has in some cases been found to be more than $7 for every $1 spent. That certainly explains the current frenzy around it—but it doesn’t mean it’s a guarantee.

  Once you have an idea of the prices you’re likely to be facing, you may want to consider a test, especially if you’re working with multiple influencers or on more than one channel. Start with a test budget—it’ll depend on your payment amount, but maybe a few thousand dollars—and figure out how funds will need to be allocated. A majority of your budget will go to paying your influencers. But you may need to allocate funds for influencer marketing tools, any paid marketing you’re putting against the campaign, or any other elements like contests or promotions.

  Don’t assume that just because an influencer promotes your product x number of times to x number of people, the campaign is “successful.” Monitor performance closely. Try tracking:

  Referral traffic

  Increase in your own social media following

  Links acquired

  Qualified leads

  Revenue/conversions from campaign

  Shares of campaign

  If any of the influencers are underperforming, you can choose to exclude them from the next campaign. Once you see how things are going, you may want to build in an incentive for performance for your top influencer partners.

  6

  TAKING IT OFFLINE

  DIRECT MAIL

  Direct mail is just what it sounds like: sending messages to target customers through the mail. Postcards, mailers, catalogs.

  Sounds a bit quaint, right? At one time, direct mail was a particularly attractive option for small business owners. It can communicate complete information about a product or service and reach almost any conceivable target group, all for a relatively low cost.

  It seems so analog. With text messages, Facebook messages, tweets, and Instagram—not to mention good, old-fashioned email—why would anyone use the post office to reach out to customers? Depending on what you’re trying to accomplish, it can be surprisingly effective.

  Let’s start with the response rate for unsolicited messages. When it comes to direct mail, anything from 0.5 to 2 percent may be considered a solid response rate. In some cases, response rates can reach 5 percent or more when you use a “house list” of existing customers and opt-in recipients, according to the Direct Marketing Association’s 2016 Response Rate Report. That’s dramatically higher than email marketing, where a 0.01 percent response rate is considered solid.

  Plus, research shows that physical media, such as a paper letter, postcard, or flyer, leaves a greater impression on the brain than electronic media does—not surprising in an increasingly cluttered digital world. There’s also a higher chance it will stand out from the crowd since people get less snail mail—and more email—than ever before.

  There are certain situations where direct mail is particularly effective:

  You Want to Reach High-Level Decisionmakers

  Email marketing to this demographic virtually never works, since they have tight spam filters and often human gatekeepers who clean out their inboxes. A direct mail piece that looks like business correspondence may have a better shot of landing on their desks.

  You’re Introducing Yourself

  New to the neighborhood, or the industry? A direct mail piece is a great way to grab people’s attention in a crowded marketplace. An oversized postcard with compelling graphics might just catch their eye when an online ad or unsolicited email would be ignored.

  You Want Precise Targeting

  It sounds counterintuitive, but it is possible to target pretty tightly when you use direct mail. When you buy a list, investigate how it can be sliced up. You can target by zip code, profession, or by association membership, for example. Use your personas to create direct mail campaigns targeted tightly to those people.

  That can help you save on costs as well. If tight targeting has produced a list of only a hundred people who truly fit your target customer profile, and your direct mail item costs $0.65 apiece, you can reach that target market for only $65 plus the cost of buying the list.

  You’re Promoting a Holiday or Event

  Direct mail is an especially good way to get the word out and customers through the door when you’re running a promotion that ties in with an event such as a sporting match or a holiday. You don’t have to have a product or service that’s overtly related; you just need to be able to draw a connection. Think a landscaping service targeting high-end homes around Arbor Day, or a meal delivery service targeting working moms on Labor Day—which happens to correspond to the busy back-to-school season.

  You Want People to Take an Action

  While direct mail is a great way to earn eyeballs and attention, it’s not as useful for straight-through selling: You can’t link to a product page from a direct mail piece like you can with an email. This is why your direct mail marketing should have a strong call to action, which in most cases will be to send people to your website for more information, to receive a discount, or to download a free piece of content. You want to use the direct mail to generate interest and ideally, to create a warm lead.

  CASE STUDY

  Kopari Beauty Catches Eyes

  BRYCE GOLDMAN AND JAMES Brennan know a thing or two about what it takes to look good. The co-founders of Kopari Beauty, a San Diego-based skin care product maker, have been using direct mail for years because, even though it is more expensive than email, it has unbeatable stopping power.

  A typical mailing would consist of 25,000 two-sided color mailings. “It’s about catching their eye,” Brennan says. Kopari’s mail pieces, he adds, “are looking to make conversions and sales, but it’s just as important to make impressions.”

  They’ve gotten pretty good at both: The company gets a response rate of 2.5 to 3 percent, triple the national average of the standard email campaign.

  How Much Does It Cost?

  All that postage and paper means it can cost more than twice as much to get a customer response as it does for an email campaign. Besides the postage and printing, you need to have the pieces designed and written, and possibly pay for a mailing list. Altogether, depending on the size and weight of your piece, you may end up paying anywhere from $0.50 per piece to a few dollars for something like a catalog.

  What would you do with $10,000 for marketing?

  “ Direct mail—it’s a hidden gem. Everybody thinks it’s old school; nobody focuses on it anymore, which provides more opportunity for those of us who do. People who open up mail are a specific demographic. If your product fits in with the responsible, middle-aged group who typically open their mail, direct mail can be huge.”

  JIM CARLSON, CEO, Zurixx

  Can I DIY?

  You can handle all of these tasks yourself, you can outsource some of them—for instance just the sorting and mailing—or you can find a vendor to
take on the whole process. Outsourcing your mailings to a specialist shop means you won’t need to study postal regulations, mailing-list composition, or what’s ominously called “list hygiene.” Direct mail must be sorted by ZIP code and route, and doing that “improperly might cost an additional two pennies per piece,” says Brian Johnson, founder of Mail Shark, a direct mail services company.

  Creating Mail That Works

  To capture a consumer’s fleeting attention and avoid being tossed into the garbage bin, direct mail needs to check a few boxes.

  First, your pictures are crucial for maximizing direct mail’s “trust factor,” says Joy Gendusa, CEO of marketing company Postcard Mania. “With B2B mailings, for example, I always recommend that there be a photo of some person at the company on the card,” she says. “That just makes it real, instead of a stock photo.” Passport Health, which operates more than 250 travel-immunization clinics around North America, has successfully used postcards that feature exotic animals. In a recent spring, a postcard campaign increased the rate of customers seeking booster shots by 10 to 14 percent in the first month, according to Vicki Sowards, Passport’s director of nursing resources.

  Next, decide what you want customers or potential customers to do.

  “Our company sends out over 100,000 direct mail pieces per month. We love that direct mail busts through the clutter of an inbox and can become a billboard on your prospect’s refrigerator,” said Todd Toback, CEO of Get It Done House Buyers, a volume home-buying company. Direct mail campaigns can generate phone calls and leads; for his company, it’s used to follow up with prospects to help close deals. Depending on how your marketing is structured, you may want customers to call, or to visit your company’s Facebook page. “In our experience, direct mail often starts the conversation, and the Internet helps us close it,” Toback says. “Multiple touches take credibility through the roof, differentiating you from competitors.”

  If you want customers to buy something, be aggressive. “Business owners will pick a wimpy offer, something that doesn’t cost them a lot of money,” says Steven Wagner, owner of the postcard mailer Health Media Concepts. “You’ve got to break through the clutter, or you’re going to waste your money.” So instead of a 10 percent discount, offer a substantial freebie—an important report, a product sample, or even a tote bag—to make an impression.

  What About ROI?

  When done right, the return on investment is surprising, say founders who have come to rely on direct mail as a powerful tool in their marketing arsenal.

  As the marketing manager of Fox’s Pizza Den, a family-owned franchise business spanning twenty-five states, Adam Haupricht mails 500,000 promotional postcards at a time. The campaigns cost 25 cents per piece including postage, and Haupricht says he’s seen new stores increase sales as much as 30 to 40 percent over thirty weeks using them. Keeping it fresh is the key, he says. “A generic postcard with the same old coupons on the back—no menu, nothing fancy—is the least effective,” Haupricht says. He talks to the owners of the company’s 250 franchises about ideas for each new mailing. “I say, ‘Hey, what do you want to try? What’s working? What’s not?’ ”

  Sometimes, effectiveness can be measured by a single response. That’s what happened in 2014, recalls entrepreneur Brian Roberts, when he was stuck.

  “My goal was to get my former fashion accessories brand into Urban Outfitters. We had just landed several major media features, but the coverage got the attention of everyone but my intended target: their accessories buyers,” Roberts says.

  Since he couldn’t get them to reach out to him, he had no choice but to reach out to them. He knew he’d never break through the email clutter. Phone calls just aren’t viable for a visual product like accessories. “I needed a different way to reach out that wouldn’t result in me getting lost in the pile.”

  He typed up a letter and ordered several custom postcards and catalogs from an online printing company based in California. Less than a month after sending the mailing, he says, he got a call from a buyer who liked a few styles in the catalog. Shortly after that sit down, the brand was picked up by Urban Outfitters.

  How Measurable Is It?

  Direct mail is extremely testable. You can try out different sales messages on various audiences in order to find the most profitable market for a new product or service. Using consumer data from providers like Experian, you can target your direct mail to your ideal market, and then link responses to individual customers’ social media accounts, email addresses, and mobile phones.

  TV

  These days most small businesses focus on digital rather than TV, and they’re in good company: In 2016, digital advertising sales overtook TV advertising for the first time ever, according to AdAge.1

  If you’re like many entrepreneurs, you may view TV as too expensive and may believe that only large national companies can advertise there. While that may have been true a generation ago, the advent of cable television and the explosion of stations and programming has made TV an advertising medium that can be effective for even local businesses—somewhat surprisingly, it’s a medium that businesses of virtually any size can afford.

  For certain types of small or mid-sized businesses, television may be a better advertising medium than any other. If your product is visual, for example, TV may make a lot of sense. “If you’re a local firm, such as a jeweler, you don’t need to run ads nationally,” says J. T. Hroncich, managing director of Capitol Media Solutions, an agency that helps companies buy advertising. “Cable TV is very reasonable. As opposed to taking out an ad during American Idol on broadcast TV, you can take out a local ad on a popular cable show, such as Top Chef. It all depends on who your target market is.”

  What’s more, TV still has a certain cachet, and can signal to a certain market that you’re for real, making it appealing to businesses that are looking for a strong branding play or trying to boost name recognition. Plus, if you have a clear target audience, and you know they’re watching something, it can be an effective tactic. Just take DraftKings and FanDuel, two of the biggest startups in fantasy sports. The two companies spent hundreds of millions on TV ads during the 2015 football season—ads that aired during games, when they knew their target market would be glued to their couches.

  Expensive? Often. But it doesn’t have to be.

  How Much Does It Cost?

  Before jumping in, you need to understand your budget for advertising. Be sure to include the costs associated with producing your commercial. You can produce your ad independently or with a television station, but costs can vary wildly. “It really depends on what you want,” Hroncich says. “If you’re a family-run business and you want to film a thirty-second spot that shows a screen shot of your dinner special, it’s not going to be very costly. But if there are actors employed, that will cost you more.”

  Then there is the cost of the advertising campaign. You typically don’t want to spend your advertising budget all at once. You want to air it with a bit of frequency so that people will see it a number of times and it reaches a larger percentage of your target market. Typically, television stations will accept spot lengths of ten, fifteen, thirty, and sixty seconds—but the good news is, shorter commercials are becoming the norm: Fifteen seconds is increasingly common.

  Options for advertising on TV include national networks, which reach a national audience; local broadcast or independent stations, which reach a regional or local market; and cable television, which can be national, regional, or local. If you cater to a specific demographic, consider niche cable channels that may have lower numbers of viewers overall—but those viewers may be a strong match for your products or services.

  With all of those variables, costs can vary widely. If you can self-produce, and your fifteen-second ad is going to run locally, you may only spend a few thousand dollars, all in. (Though note that local markets like New York and Los Angeles will cost dramatically more than smaller cities.) Contrast that with a national, prime
-time ad, which can run into the hundreds of thousands. According to AdAge, the average cost of a commercial during a recent season of The Walking Dead was $400,000. Keep in mind, too, that rates will vary depending on timing and seasonality—rates tend to rise when anticipated hot new shows premiere, or when a closely watched election is on the horizon.

  Make It Local

  The best local ads target not the faceless millions but actual customers and neighbors. They deepen the sense of community identity. “When you are in the community, these ad campaigns draw on a set of shared references” that everyone recognizes, says Melody Warnick, author of the book, This Is Where You Belong: The Art and Science of Loving the Place You Live. The ads also “create new references as people talk about them, and those become part of the city’s narrative,” says Warnick. “Everyone has seen them and can laugh about them together.”

  Finding a Bargain

  There are ways to get a commercial on the air more cheaply than the advertised rate.

  • Pay up front. Station sales reps love it when their income stream is secure, and they’ll work hard for you as a result.

  • Commit to a multiple-week schedule. Most cost-efficient packages are sold on a ten- to thirteen-week basis, and stations would rather have spots booked in advance, to help manage their inventory and plan against it. If you work through a cable company that has many different stations, you might be able to strike up multiple-week deals on a variety of programs. You may be able to plan for weekend placement that runs across different programming types, for example, if that’s important for your target market.