7Ps in Tech-Startups or Where shall I allocate my marketing budget?

Cloud66-blog-7ps-in-tech-startups-where-shall-i-allocate-my-marketing-budget

This blog post reviews the marketing mix known as the 7P's from a startup's perspective, showing what works and what is usually a waste money. After working in tech startups for over 4 years I have tried and tested different approaches and I would like to share my experience with you.

But before I move to the marketing mix review, let’s say a few words about the industry and the target audience that tech startups operate in, and to be more precise, where Cloud 66 is mapped.

Target Audience and Industry in Tech Startups

When it comes to marketing in tech startups, understanding your target audience (in our case, developers) is the most important part of your job. What are their interests, likes and dislikes? Where do they hang out? How you can start a conversation with them? Everything else is secondary. Building a long-term relationship with developers should always win over a quick sale.

Also, to apply the right marketing mix, it helps to understand your industry and the business model. For example: Cloud 66 is a SaaS company that operates in the B2B space in a niche market (helping developers with application deployment to any server or cloud).

Cloud 66 has two product categories: Cloud 66 for Frameworks and Cloud 66 for Containers. Both categories are in a different market stage and need different marketing mix approaches.

Cloud 66 for Frameworks (Rails and Node)
This is a mature market with established players e.g. Heroku. Cloud 66 entered this market to simplify and automate the way mobile and web apps are deployed to any cloud server. The unique selling point is offering developers more control and flexibility compared to traditional PaaS.

Containers (Skycap and Maestro)
This is a new market, first evangelised by Docker in 2014, and it is still in an early growth stage. This means that there are no established players across the entire stack and the industry is changing very quickly. You need to continuously adapt your product to stay in front of the curve and be ready to take care of customers who are left out by acquihires and product sunsets like Tutum (Docker Cloud). Our unique selling point are being in the market from very early on since 2014 and our strong focus on the product, not consultancy. Additionally, we gain valuable experience by getting feedback from paying (as opposed to free) customers who have real-world use cases and also by using our own product, as we run Cloud 66 on Cloud 66 Containers powered by Kubernetes - “we drink our own champagne!”

Tech Startups Marketing Mix - Speaking from experience

During my work at a tech startup, I learned that traditional digital advertising is pointless and will bring minimum if any return on investment. So let's see how to plug the holes in the bucket to make sure most of your marketing budget comes back to you!

Product

In a tech startup, product (in our case Rails, Node, Maestro and Skycap) is the main reason for customers (developers) to engage with your brand. Product is also the centre of your marketing mix strategy, driving the other Ps.

Therefore, it is essential to show your product’s value proposition and unique selling point (USP). Beside adding new features, devote focus to updating versions, making the product secure, support with help documentation and etc. Your number one priority is making the user’s experience of interacting with your product simple, easy and friendly. The frontend is as important as the backend of your product.

One advantage that the tech (especially software) offers you is “product release cycles”: alpha, private/public beta, versions etc. This lets you build up your product in stages and easily fix or improve the product in newer versions. It also gives you an opportunity to engage with your customers: ask them if they like the changes, or what new feature they would like to see, and help you with the prediction of your product lifecycle and your product’s competitive edge.

At the end of the day the customers are paying you to interact with your product. Definitely allocate significant budget to product.

People

I would break this down into two to three categories: internal (your employees), external: users (the community) and external: partners (the ecosystem).

Internal

Your product can only be as good as the people who create it. For startups it is important to attract the right talent as they rely on quality, not quantity. You might have only one person per department, so create a strategy around the positions that face the customers.

Support engineers specifically have multiple roles in startup. They provide expertise and advice to customers to help them succeed in their goals and equally they should influence product development by bringing in customer feedback; and they can enhance your marketing by helping you build your target audience persona.

People are important at the point where you introduce prospects to your brand and product. With well-trained people you can build on your product awareness on your support channels, at events or during product demos. Since developers are not open to traditional sales and marketing techniques like cold calls and email outbound (who likes them?!), this is a great opportunity for you to reach new customers.

External

This means both users and partners; together your community. In today’s marketing, community plays an important role, and you can see this in a success of the Kubernetes project or the Rails framework, both of which are backed by strong communities.

There are a few different tactics that you can use to build a community around your brand, and this requires a lot of work in events, meet-ups, webinars, podcasts, forums etc: some of them on your platforms and others with or through ecosystem partners. This is a long-term strategy with the aim of considering the community as a big part of your brand (as an unrelated example, think about Justin Bieber and his Beliebers!). This will also help with word of mouth (WOM).

People - this is the number one spot where you should allocate your money.

Place = Distribution

“Availability is a subject of accessibility” (Baker, 2007).

Place is where you deliver your product to the users, in other words distribution. Most software startups operate online, this normally means that you can sell to the global market (Cloud 66 has users in nearly 120 countries, and with that there are a lot of different challenges to consider such as currencies, languages, time zones etc).

This “P” is essential in growing your customer base. Identify the countries with stronger customer base and growth: for Cloud 66 those are the US, Canada, the UK, France, Germany, Netherlands and Australia; and invest in distribution channels in those countries.

Examples of distribution channels that work best to promote our products (more about this in a future blog post):

  • Website - this is the best channel to convert visitors into customers. Make sure that your website is simple and clear, and showcases your product as an answer to the developers problems. Maintenance of the website is an ongoing activity, make sure you constantly review it and identify the cracks where your visitors ‘slip through’.

  • Email - this is a great channel to announce any new features, tools or improvements, but we like to keep it technical and product-focused. With email you can communicate directly with your customers, but also create product awareness with prospects.

  • Newsletters - try to identify the most popular newsletters in your product categories and try to sponsor them at least once every quarter. Make sure that it is not ongoing sponsorship, as your brand will "become part of the furniture" and stop being visible to the readers.

  • Social Media - this is a low cost distribution option, and offers a number of categories and platforms that your brand could be part of. Create a profile on as many as you can (always helps with your SEO), but focus only on the few that work best for you. Also, become a part of different focus and special-interest groups (e.g., we’re part of DevOps Engineers in London). Remember, the paid social media options are not always the best ones.

  • Partner platforms - we often find great synergy here, as large brands constantly look for content and small companies need exposure. Guest or co-blogging, webinars etc. are great and usually don’t involve a lot of cost once you’ve built a relationship, relevant content, and figure out your incentive tactics (like giving out free credits for trials).

  • Advertising - e.g. AdWords or Google Ads, AdRoll etc. This is an area worth monetary investment, however be tactical and increase/decrease your budget when needed (we decrease spend in August - when many users are on holidays).

  • Events - a tempting option, but also a tricky one as is it notoriously difficult to measure ROI. Events help to create local awareness of your brand, and can also encourage developers to try your product. It’s very efficient to do dozens of demos in a day or two. In my opinion, you don’t have to sponsor every single event (most likely you will be limited by your budget anyway). Instead understand the audience, the knowledge level, and try stuff out.

Note: Make sure that every piece of content you create is distributed with UTM - this is the easiest way to track where your traffic is coming from, but also to identify which distribution channel works best!

Promotion

Promotion is a key element of your marketing mix, with which you present your product/service to potential customers; and by that I mean content. Invest time in well-designed promotional strategies to strength your brand and to achieve long term success.

Identify the content building blocks that work best for you, e.g. articles, videos, gifs, animations, images, charts, graphs, talks, workshops - but also include documentation and help pages. As well as type of content, think about content itself - develop messages that easily describe what you do but also support your brand, e.g. “Built by developers for developers, Cloud 66 builds, deploys and maintains (containerised applications) or (Ruby on Rails applications) on any cloud provider or any server.” Be consistent but flexible with your messages.

When creating promotional content, think how they will interact with “Place”, i.e. what type of content works best where? Video works best with social media (YouTube) but it can also be used on your website or on your blog.

To ensure the right content production, remember about the four stages of the lifecycle below and implement suitable marketing tactics:

  • Introduction - your aim is to create awareness, by using push and pull strategies to inform and educate your target audience. This can be an expensive exercise.
  • Growth - this is where you fight to gain market share. Focus on expanding brand awareness, conversion and your customer happiness (happy = loyal).
  • Maturity - market share is established and your focus will switch to protecting it. Define your unique selling point and clearly communicate to your target audience.
  • Decline - this is where your focus shifts only to your existing customers and the tactics to slow the decline process, or help them move on. Remind your customers about features they might have forgotten about.

Packaging

“You never get a second chance to make a great first impression”, thus make your product visually stand out. The role of the packaging is to create brand recognition and brand image. The Packaging can be as important as Product (for example, the UI), and should be treated as such.

This is the place where you decide on the colour, shape, size... of your logo, materials and UI; and once you do, document brand guidelines to ensure consistency. Packaging helps your target audience to connect to and value your product/brand, therefore it is important that the packaging is also functional and informative.

In the software industry the most important part of packaging are the UI and UX design, as that is how developers interact with your product every day. Your design should be simple and easy to navigate, orient towards problem-solving, be informative and not overwhelming. This is challenging for tech startups like ours, as the target audience is also technical and therefore expects more than in other industries.

Packaging is the first moment of contact and it triggers the purchasing process.

Positioning

This is the part that helps you shape how you want your customers to perceive your product/brand in the relation to your competitors. Regardless of your efforts (you can be proactive or reactive), market positioning will happen—but you can positively influence customers perception by implementing deliberate market positioning strategies (Promotion is an important contributor to Positioning).

Market positioning or market mapping can help you establish where you are at the moment and help you define where you want to be (budget, low-end, luxury, high-end...). There are a number of methods you can implement in your strategy: a “me too” strategy allows you to position yourself next to the market leader and adapt to their marketing strategy; a differentiate strategy allows you position yourself as far as possible from your competition.

Cloud 66 uses differentiation through the following message: “built by developers for developers”. We focus on making sure we are known as a product company that is developer friendly, and beside the message, we aim to instil this as a core value of our company culture too.

Positioning is the most flexible marketing mix element to create the desired market positioning.

Price

Pricing can be the most complex part of the marketing mix, and it is difficult sometimes to get the balance right. Price can be affected by distribution plans, value chain costs and markups and how competitors price a rival product; as much as by the value to the customer. Lucky startups (especially at the earlier stage) can afford to change their pricing strategy. From our experience, a price increase ends up in more churn, as much as 10% lost in new sign-ups in the first quarter after the change (Top tip: grandfather existing customers with the pricing plan they have opted for and reward them for their early trust in you).

Whatever you decide on the pricing plan, remember that price is subjective, and although it directly affects your company’s profitability, it should be based on willingness to pay, not cost (take the iPhone XS, which retails for more than $999: is it really worth that much, or are you paying for the desirability of the brand and model?).

In the end, it is important to get all the other six Ps right and build strong perceived value, to help you build strong value-based pricing strategies.

Conclusion

Where to allocate your marketing budget for a maximum ROI?
As a startup, you have a limited marketing budget at your disposal and you want to make sure that every dollar you spend drives traffic to your website, interest in your product, and brings about conversion. From my experience there are three parts of marketing mix that would add the most value to your tech startup: Product, Place and People. Traditional advertising does not work in a tech setup and with a developer audience, but you can drive your numbers higher through investment in product improvement, distribution channels (with the consideration of the different content types) and community.

Try Cloud 66 for Free, No credit card required