How to Use Lean Startup as a Growth Marketing Tool
Successful entrepreneurs know that simply attracting customers to a business is not enough to ensure success. Instead, startups need to determine how to attract and keep the right customers over time. Pam Webber, Chief Marketing Officer of 99designs, the world’s largest on-demand graphic design marketplace, finds Lean Startup techniques effective for this kind of growth marketing. Here are Pam’s recommendations for how to use the practice as a growth marketing tool:
1. Analyze your team’s skillset
The first step in any growth marketing process, Pam says, is to make sure your team is on board with the philosophy and a shared vision for the campaign. However, a team with a common goal is only as effective as the skillset you’ve gathered together. “Have the experience, or someone who can advise you who has the experience, to set up the tests to get meaningful results,” Webber says. If you don’t have the right skillset, “Don’t be shy about seeking it from outside influences,” she says. The most important goal is that “everyone on the team can play the role that best contributes.”
There’s no magic bullet to assembling the right people with the right expertise. A creative marketing team requires a diverse group of personalities and skillsets, so sometimes it may require shifting people to the right job. “You need people who are detail oriented and analytical, but also people who are big picture, creative, out-of-the-box thinking type of folks.”
“Lean can help everyone understand their role in the process,” she says.
2. Choose a limited program
Pam recommends that any business approach growth with a limited program first. “Remember when you’re doing something relatively new, it’s better to test hypotheses and have the objectives be the learning, not so much the results.”
After eight successful years attracting and retaining one customer segment, 99designs was ready to go after a new segment. The team brought her a marketing plan for a multi-channel acquisition campaign that Pam felt was too broad. “This is great if you know your customer and channels well, have confidence in your message and offer, and where speed of growth versus efficiency of spend is of highest priority,” she says, but if any of those three elements are not true, then a broad-based marketing campaign will likely result in a lot of waste. If they’d run with that first plan, she says, it would have been difficult to pinpoint which part of the plan was not working, the channel, the message, or the offer.
Instead, she encouraged them to apply a hypothesis-driven plan isolating variables intended to prove key assumptions one at a time, such as: “Does buying keywords have potential as a channel?”, “Does the ‘low-cost’ message resonate better than the ‘quality service’ message?,” etc. They cut the plan down to three tests, “each of which is being run on its own with its own single-variable hypothesis to be tested,” she said, with success.
3. Use Lean Startup to spend less time and money
A startup is a “big endeavor,” she says. Anytime a company puts a product in a segment or industry where that product has never existed before, there will be lots of risks, and potentially a lot of time and money spent to get there. “There are lots of things to prove out: functionality, customers, and whether they value this service or product,” she says. How can you do that in ways that take less time and money? She recommends simulating or prototyping with limited functionality “just to see how far you get.”
4. Let the learning be the goal
There’s much to be gained from hypothesis testing rather than rushing a product out to a segment of customers. “You need to figure out the learning you need to do so you can scale efficiently,” she says.
As an example, 99designs spent the last year and a half building out functionality and capabilities just for the hypothesis testing process. In their case, the hypothesis didn’t prove out the way they hoped and they were forced to rethink the direction of their plan. That’s not a loss, Pam says, but an important part of the learning process that will improve future hypothesis testing. “So be mindful that you may need to build out some infrastructure that might not make sense once the hypothesis is proven one way or another.”
She acknowledges that it can take “a decent amount of patience” to take the slow, systematic approach, particularly if you’re in a competitive environment that’s changing quickly and you get pressure from your executives or board to grow quickly. “It’s almost against the ethos of Silicon Valley,” Pam says, and adds that there are trade-offs when you shoot for efficiency over speed. Of course, sometimes speed depends upon the size of a company and the reach of your budget. “If you’re Uber and you have really deep pockets, then maybe in the shorter-term it’s not about the perfect or optimal way to get in the market, it’s more just about getting to market share first.”
For most companies, learning, testing, and adapting to those lessons will be more successful.
Are you an early-stage founder looking to hack your growth? Join us at Lean Startup Week Nov. 2 & 3 to catch Pam’s full session on “Driving Accelerated Growth Using Lean Marketing Techniques.” We’ve reserved 50 highly-discounted Boostrapper Passes for early-stage startups and small non-profits. Apply for your $350 pass (80 percent off standard pricing) here.
Our friends at YC have a core goal of increasing the number of underrepresented founders in the startup world. To receive funding and join the YC community, please apply at ycombinator.com/apply by Oct 3rd at 8pm PT.