Branding & Marketing

By, George Deeb

January 13, 2015

@RedRocketVC www.RedRocketVC.com 312-600-7560

Managing Partner (2010 to Date)

Chairman & CEO (2008-2010)

Founder & CEO (1999-2008)

Investment Banker (1991-1999)

BBA-Finance (1987-1991)

About George Deeb

The Problem With Startups

STARTUPS DON’T FOCUS ON PROOF-OF-CONCEPT UNTIL TOO LATE

Startups focused on product, not proof-of-concept.

Without proof-of-concept, there will be no venture capital interest.

Startups typically don’t hire the marketing skills to achieve it.

Marketing agencies are typically too expensive for startups.

Startups don’t budget for proof-of-concept, and run out of cash.

CORRECT

FOCUSCURRENT

FOCUS

Defining Proof-of-Concept?

Investors Typically Require

o Product built and tested

o Proof-of-concept behind the business

- Growing user base

- Growing revenues and pipeline

- Profitable unit economics, high margins

- Marketing tested

- Profitable COA

- High LTV

- Credible roadmap to a 10x ROI

Proof-of-Concept Typically Powered by Marketing!

The Four P’s of Marketing

Product

- What product or service are you offering

Price

- How much are you charging for it

Placement

- How is it being distributed (e.g., retail, online)

Promotion

- How are you branding and marketing it

- This will be the focus of this presentation

Branding Considerations

Company Name

- Make it is memorable and related to product (e.g., iExplore)

Trademarks

- Make sure no one already has trademarks; protect your own

URL

- Make sure it matches your name, preferably with .com

Logo

- Get the right colors, fonts, icons to tell your story

Tagline

- Clearly explain your business (e.g., “adventure travel experts”)

Look & Feel

- The images, fonts and colors you use create emotion

Voice & Tone

- The words and tone of voice you use create positioning

Very Hard to Change Positioning Once Set

B2C vs. B2B Marketing?

Consumer Facing Businesses

– Typically driven by consumer marketing

– Typically converted online, in-store or by call center sales

– Typically short sales cycle (day to weeks)

SMB Facing Businesses

– Typically driven by a mix of B2B marketing and sales team

– Typically converted online or by inside/outside sales team

– Typically medium sales cycle (one to six months)

Enterprise Facing Businesses

– Typically driven by outside sales team with F500 relationships

supported with some marketing support to trade

– Typically converted by outside sales team

– Typically long sales cycle (six to 12 months)

Offline Media (more expensive/ harder to track):

– Television

– Radio

– Print (magazines/newspapers)

– Billboards

– Direct Mail

– Trade Shows

– Public Relations

Digital Media (less expensive/ easier to track-start here):

– Website Banners

– Search Marketing (paid and free)

– Email Marketing (inhouse and third party)

– Affiliate Marketing

– Content Marketing

– Social Media

– Mobile Marketing

Types of Marketing

What Are Your Cost of Acquisition Metrics in Marketing

– What tactics are driving you the most leads?

– How much is it costing you?

– What percent of your revenues is your spend?

– How quickly does it pay back?

– What is your customer lifetime value as a multiple of spend?

What Are The Results of Your Sales Efforts

– Who are you selling to—how hard is it to reach them?

– How many decision makers involved to close a sale?

– Do they have established budgets for your product?

– Are leads converting into sales?

– Are pilots converting into long term contracts?

– What is your sales cycle—timeline to closing?

– How large is your client pipeline—are they brand name to impress investors?

– How large are your revenues?

– Are your driving any repeat sales?

Track Marketing Metrics

Competition—how many people fighting for same audience?

Price Point—the more expensive your product, the lower your

conversion rate will be, hence increasing COA

Sales Cycle—the more expensive your product, the longer your

sales cycle, and hence higher your COA

Marketing Tactics—the more expensive your media tactics, the

higher your COA

Marketing Rates—the higher your CPM, the higher your COA

Demographics/Psychographics—the better you target your

marketing efforts, the better your COA will be

Creatives—the more attractive your images, the more attention they

will get

Copy—the more compelling your offer, the more attention it will get

Conversion Rates—the better you close leads, the higher your

sales, and lower your COA will be

Drivers of COA

COA Case Study

You Spend $10,000 on Google Ad Words

That Drove 20,000 Website Visitors at $0.50CPC

600, or 3%, of These Visitors Turned Into a Transaction

That is a COA Per Customer of $17 ($10,000/600)

Your Product Retails for $100

You Generated $60,000 in Revenues (600 x $100)

With a 67% Cost of Sales, That’s a $20,000 in Gross Pft

Netting You a $10,000 Contribution Margin After Mktg

Model Seriously Flawed If No Profit at This Point

What is one customer worth to you over their lifetime as a

customer

What is frequency of purchase per year

Over how many years will you retain them as customers

How fast will customer list attrition over time—lists typically

attrition at rate of 20% per yr (churn rate)

What is the profit margin on your sales

Build a discounted cash flow analysis of these flows—initial

COA typically 10% of lifetime DCF

Comparing:

– adventure travel, automotive, insurance (low frequency, high ticket)

– most grocery store items (high frequency, low ticket)

– many BBBY or HD items (low frequency, low ticket)

– certain medical services (high frequency, high ticket)

Calculating Lifetime Value

THE FIRST SALE IS NOT AS IMPORTANT AS THE REPEAT SALE!!

You Are Doing a Good Job Only If Client Buys Again

– Repeat sales percentage is the most important metric in your business

Deliver a World-Class Experience for All Clients

– Fulfill on the client’s initial expectations—hit goal, timing and budget

Own Up to Any Mistakes and Provide Refunds If Necessary

– A happy client gains you one new client, an upset client loses you ten

Have Your Follow-up Repeat Sales Process in Place

– You won’t drive repeat sales unless you are asking for them

– Make sure you have a solid customer retention strategy & plan in place

Stay on Top of the Moves of Your Competition

– Make sure you always know where they are on price

– Keep your features and functionalities ahead of the others

– Keep your eye out for other interesting startups in your space

Driving Repeat Sales?

Plan Ahead: Don’t launch a business until fully thought

through your sales/marketing plan, and COA metrics

Start Cheap: Focus on the most inexpensive channels to

start (e.g., search, viral, biz dev)

Test: Do lots of A/B testing first, to optimize which

channels/creatives work best, before spending a lot of money

Track: Make sure you are religiously tracking each

campaign with tracking codes (imps/clicks/sales)

Partnerships: Find key strategic partners where you can, to

assist with acquisition efforts (e.g., NG to iExplore)

VC Desires: Do not approach VC’s until preliminary

marketing plan and learnings behind you (accelerate vs. test)

Key Considerations

How do you establish yourself as an expert in your field?

What tools are used to follow important news and

narratives?

How do you identify and create industry narratives of your

own?

How do you identify and connect with influencers and

journalists?

What infrastructure do you need to be influential?

How do you create content that attracts readers and

commentary?

How do you grow your influence in a market over time?

Other Q&A From Course Agenda

Red Rocket Blog Case Study

Started in 2011

5,000 visitors per month

10,000 page views per month

Over 350,000 reads to date

Traffic up 100% year-over-year

Over 300 “how-to” articles posted

“101 Startup Lessons” Online Book

#1 in Google for “Startup Consultant”

Large generator of leads (over 500 startups to date)

Leverage social media (e.g., G+ for SEO, LinkedIn Groups, Twitter)

Power articles for Forbes, Entrepreneur, WSJ

Further Reading

http://www.RedRocketVC.com

Lesson #20: Setting Product & Pricing Strategy for Your Startup

Lesson #21: Setting a Sales & Marketing Plan for Your Startup

Lesson #22: How to Calculate ROI on Your Marketing Spend

Lesson #52: Viral Marketing Via Social Media

Lesson #53: Search Engine Marketing Strategies

Lesson #74: Brand Building for Your Startup

Lesson #79: Determining Customer Lifetime Value

Lesson #120: Budget for Proof-of-Concept Marketing from Day One

Lesson #131: How to Design a Logo & Tagline

Lesson #137: The Basic Drivers of E-commerce Growth

Lesson #169: Budget for Startup Marketing from Day One

Lesson #171: The Basics of B2B Marketing

Lesson #174: Growth Hacking--Marketing for Startups

@georgedeeb