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strategy/marketing
Entrepreneurial marketing Forty-four years old Shellye Archambeau is one of the most successful women in corporate America. After having spent her first 15 years at IBM, where she rose up to be the highest ranking African American woman ever in the company, she moved to many smaller, entrepreneurial companies. She is currently the CEO of MetricStream, a provider of compliance software. She is the co-author of “Marketing That Works”, a book on entrepreneurial marketing. Shellye, is guest gue t faculty at Stanford University and the Wharton arton arto Business School, and also a member of the Information Technology Senior Management Forum and the Forum of Women men Entrepreneurs Ent En in the US. Here she shares her insights into insi effective marketing practices for start-ups and entrepreneurs. //Sreejiraj eejiraj Eluvangal Shellye Archambeau
After having avin ing spent sp most of your you career at IBM, how did you end up writing a book on entrepreneurial marketing? Even though I spent the first 15 years at IBM, I was typically in situations where I had very little funding. Usually, I had a new function to launch, a new product to get going, a new market to tackle and things needed to be turned around. So, I worked in a very Skunkworx environment. The time at IBM gave me a lot of insight into the importance of marketing, because in selling, even if you have a big brand, if you don’t have the right
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marketing message, if you don’t have a clear value proposition, and the right marketing materials, your customer is not going to buy from you. When I moved on to the entrepreneurial companies, I saw that they needed the same things. They needed a strong value proposition, they needed to have in place the materials to communicate that, and they needed to make sure they were going after the right target market. I saw a lot of people struggling with this [marketing]. This tends to be the reason why, especially for entrepreneurs, even though they have a great idea, a good product concept or a good service concept, it never makes it out of the garage.
Why do many entrepreneurs mess up? What should they do differently? Couple of reasons. One, entrepreneurs get very passionate about what they
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strategy/marketing are building and sometimes they fall in love with their product. When you fall in love with somebody, you are blinded from everything else. When you are in love with your product, it’s the same thing. You don’t see the flaws, you don’t see what needs to be worked at, you are so in love, your view becomes narrow. What actually needs to happen is, before you actually start building that product, when you have the concept, you need to start thinking about who is this product going to work for? Then you need to start having conversations with those types of people or companies to ensure that the concept you have is one that actually meets a real need. Before you actually start taking the time to build out your concept, you should start having conversations with people within companies to ensure that the need they are seeing is a need they can fill. If you are working in an environment where you are already y touching those kinds of companies, s, you can have those conversations and try to understand not just if your product is valuable, but if you are going to pay for it? How much would you pay for it? You can do that kind of research informally before e you get started. The other thing do g you ne need to d when you have those conversa conversations, find someone meone who says, “oh, I will abmeo solutely pay for this if I can have this.” this So you say, “O “Oh, great! reat! Would you be first beta, I won’t you.” on’t even on en charge you. One of the things you need ed first is your you very first customer, which is typica typic typically the hardest customer to Another o get. An Anothe thing is to get involved in some groups ome gro or organizations that are in th this area of interest. Link with people because it helps you figure out what’s happening in the market, what’s going on. Because once you have built a product you don’t want to find out that someone else has it too. So, the most important thing to start with is your target market. Does your idea actually have a market that will pay for it? Targeting the market is a critical point in being successful. For example, in our book, we take the peo-
ple through the basic steps—what’s a market, what’s a value proposition and so on. People want to jump straight to creating the product. You don’t create the product until, say, step five! Creating the product is fun, it’s exciting, but if you don’t do the work upfront, what happens is that the product gets ready, but it never leaves the garage. You have to ensure that what you have built, can fulfill the need that the market has. The pricing, sales, everything ng has to be worked out before designing ning nin the product. Otherwise, you may end nd d up designing a $100,000 solution for a $10,000 price market. If you think about all those things, might des,, you migh sign the product differently. fferently. ffe y
Any strategies es for f r effective e low-budget marketing ma ting for start-ups? Don’t charge the initial itial custome customer, give it away free. Once you got your u have go initial customer, you look other ini in ok for ot o companies one. compan mpani that are just like mpan e that one selling a piece of software So, if i you are se oftware and you found an for or financi nancial people, ople, a nd da initial tial customer customer, a finance person,, in What the energy sect sector, start there. W hatt you y u are customer re asking king fr ffrom your first ccu stom mer is justt a re reference, not money. What’s referen on ney. W more than the e important impo he firrst dollar that comes omes in is a referral. erral Odds are, this person erson knows other finance professionals onals in the industry. You ask him to make introductions. You want h tto look for things just like what you have just done, because that’s the h easiest. Once you get a couple of customers, look for scenarios. Is there an educational class where financial people go to? You can go there for a couple of hundred dollars, compared to a couple of thousand to go to a conference. Try to meet people and establish relationships. Once you have got your first few customers, you take the kernel of what you have got and spread it out. Once you get a few customers, you have two choices. One, you build your value proposition. Why did that person use it, what value did they get? And you want to get that articulated as crisply as possible. That’s your mar-
keting message. ‘This person was able to reduce the resource required to do that by so much’ - this is your value proposition. Then, look for companies that are selling to your target market, with complementary products, and try to bundle your product along with theirs and d maybe mayb even give them a part of the revenue. So, even though you don’t he reve reven have a sales force, you are leveraging someone else’s sales force. There are sa also contract sales sale people, who sell a lott of things. Y You can also become a subject author and get bylined bylin articles out, ine, and get ut, both online and offline yourr company known. That Tha gives give you some credibility market-place. redibility in the m rket-pl A common mistake tha that entrepremon mistak neurs make is tha that tthey y sspend more time tim talking about outt how their product works versus whatt va value it gives. ks ver v
What att about abouut start-ups stta who use the Internet n rne as their distribution ntern mechanism mec channis and whose products are re essential e digital, such as mobile applications? How do m mob they tap the global markets? th What has happened here is that you have a neat idea, you created a product and then you are trying to figure out how to market it. That’s backwards. You need to think about how you are going to market before you build the product. If you have a way of reaching your channels or customers, then that’s probably not a business that you are going to be able to build. The reason why people get caught in it is because they have done it backwards. They get a concept and they say “Ah, this is neat! And they spend hours and days and months creating it. They get it out and then they don’t know what to do! There are literally millions of products that are developed every year that never get to market. A successful business isn’t always the one with the best products. Building a business is not about having the best product. Building a business is about having the right model. It is a combination of value proposition, products, access to DAR E markets and more. MARCH 2008 67
