Last year, my co-founder Hiten Shah and I decided to acquire a sales CRM company Strideapp. Typically, we don’t like to acquire or build new companies because we already have enough on our plates.
But the deal was too good to pass up. Plus, a mutual friend of ours, Mike – who was very familiar with the sales space, was looking to run a startup. So, Hiten and I decided to put up the cash and let Mike run with it.
What’s interesting about this acquisition is that it’s the first one that Hiten and I are not running on a day-to-day basis, not to mention we are not experts in this niche.
In the past, we would only acquire companies that were in the marketing sector and focus on the small and medium business markets. Why? Because that’s where all of our connections are, which makes it easy for us to market our products.
Due to the fact that Strideapp is in the sales space, leveraging my name doesn’t open many doors. It’s like I am starting from scratch. Sure, I have over 10 years worth of knowledge as an entrepreneur, but none of my “shortcuts” work here. In essence, I’m in the same place you are with your company.
Here are 7 marketing lessons I learned from acquiring Strideapp:
Lesson #1: Market cap trumps traffic
As an SEO, the first thing I look at is keyword volume. Most of my companies are in the web analytics space. Naturally, I would try to optimize those companies’ sites for “web analytics” related terms.
Strideapp is in the sales CRM space. So, I did some keyword research to see what’s popular in that space.
If you look at the graph above, you’ll notice that Google Trends shows the web analytics space to be twice as popular as the sales CRM space. This should mean that it’s easier to make money in the analytics space, right?
Boy, was I wrong! Both of the spaces are competitive, but it is much easier to generate sign-ups in the sales CRM space. Why? Even though not a lot of businesses are searching for keywords related to sales CRM, more of them are looking for a solution in that space than in the analytics space.
Just think of it this way. From a financial standpoint, the largest sales company is Salesforce, which is worth a bit more than 33 billion dollars. The largest analytics company is Omniture, which Adobe bought for 1.8 billion dollars. That’s roughly an 18x difference in size between Salesforce and Omniture.
That’s a huge difference!
The larger the market cap, the larger the company. And the larger the company, the more revenue it’s generating.
When you are trying to market a business, don’t just focus on keyword volume like I used to do. Focus on the market cap. You’ll find that if the market cap is large, word of mouth will play a very big role in generating sign-ups for you.
Lesson #2: Perfection is overrated
When I told Mike that I was going to do a blog post on Strideapp, he tried to convince me to wait. Why? Because he wanted to roll out the new product and design first, which should, in theory, help him generate more sign-ups.
Here’s what the current design looks like:
Here’s what the new design will look like:
Here’s what the current application looks like:
And here is what the new application will look like:
As you can see, Mike has a valid point. The new design is much more usable and should create a better user experience.
But why would you wait for a new design or a better product to start promoting it? The reality is you shouldn’t. Chances are you are not a designer or a developer. This means you will probably have delays that are out of your control.
If you keep waiting to promote your product, it could be months before it starts growing. Never wait for your product to be perfect because it never will be.
What Mike doesn’t realize is that once he releases the new version, he will get a lot of feedback from the users, and he’ll find ten other things that will need to be fixed. In essence, the cycle will never end, which is why you, as a marketer, should never wait for designers or developers to finish major updates to start promoting a product.
Lesson #3: Nothing beats free
I actually learned this lesson from one of KISSmetrics’ competitors Mixpanel.
If you look at the graph above, you’ll see that their brand is growing at a faster pace than ours. Funnily enough, we probably have twice or three times as much traffic as they do. But still, their brand is growing faster than ours.
Can you guess why? It’s not because of their product. It’s because of their free plan. We don’t have a free plan at KISSmetrics, and no matter how bad or good your product is, people just love free.
Because Strideapp is in a competitive space, we decided to take a similar approach and make the whole application free. I don’t know how we will make money in the future, but I’m not very concerned about that as long as I can keep bankrolling the company.
Can you guess what happened the moment we transitioned to the free model? Our sign-ups grew by 1100%. That’s a huge increase! The beautiful part about this is that I didn’t have to do much as a marketer to create this traction.
I am fairly confident that once the new design is out and optimized for conversions, I can triple that number of sign-ups without driving any more visitors to the site.
There are a couple of great points about releasing a free product:
- Consumers forgive – people don’t complain much when they sign up for a free product.
- You’ll find opportunities to make money – users are telling us that they will pay for the product if we add certain features. This is a simple way for us to turn the product into a freemium.
If you want to disrupt a market, whether it is old or new, consider releasing a freemium product. It’s much easier to market something that is semi-free than something that costs money.
Lesson #4: Marketing isn’t just about optimizing the front end. It’s about optimizing the back end too.
As marketers, we tend to focus on optimizing the front end. Just think of it as a funnel. You optimize the flow of people to your home page and from your home page to your pricing page, to the checkout page, and finally to the credit card page.
In theory, the more people you get across that funnel, the more money you will make.
But what’s wrong with that approach? If you focus only on the front end, you will miss out on a lot of money opportunities. If you focus on optimizing both the front end and the back end, you will make a lot more money.
For example, with Strideapp, we have to focus on optimizing the application (back end). Otherwise, if we can’t get people to use the product and log in on a regular basis, we are going to have a hard time converting those free users into paying users.
The same goes for an e-commerce company. Just because you got people to buy your product doesn’t mean you should stop there. The question is: How can you get them to purchase more products from you? Or even get them to refer their friends? Leveraging marketing tactics like email blasts is a great way to increase back end sales.
When you think about conversion optimization, don’t just focus on the front end of your website. Also focus on the back end.
Lesson #5: It’s hard to separate yourself from your competition in a crowded market
When you enter a saturated market, like we did with Strideapp, it becomes very difficult to separate yourself from the crowd. No matter how good of a product person you are, it’s challenging to create a product that is radically different from your competitors’.
That’s what made Steve Jobs special. Very few people have such a skill set.
Take the sales CRM space again as an example. Even if we figured out a way to create a superior product, we still wouldn’t beat Salesforce. Why? It’s the backbone of many large sales organizations, and it connects with a lot of their existing solutions. Plus, most of sales reps are already familiar with it.
For this reason, creating a better product in the b2b space isn’t enough. It doesn’t guarantee that people will switch over to you.
So, how do you stand out in a crowded market? There are a few ways…
- Lower price point – by undercutting the market or by going free, you can start gobbling up market share.
- More usable product – making your product easier to use than your competitors’ is a great way to gain market share.
- Carve a niche – you can always create a new niche within your market, similarly to how RelateIQ created a niche within the CRM space, which led to their sale.
- Be a better marketer – from SEO to paid ads to content marketing, the possibilities are endless. In competitive spaces, good marketers are always needed. If you can create better content than your competitors, outrank them, and have more popular social profiles, you can eventually start taking customers away from them.
Sadly, there is no one simple solution to standing out in the crowd, especially in a competitive market place, but if you leverage a combination of the tactics above, you can succeed.
This is the reason why we are focusing on creating a free, highly usable product at Strideapp. Plus, over time, we can outrank the competition and drive more traffic through methods like content marketing.
Lesson #6: The hardest part about marketing is nailing the message
Most people will say that execution is the hardest part about marketing, but you can hire people to solve that. No matter how smart of a marketer you may be, you will struggle with messaging.
Why? Because you can’t determine what the best messaging for your product or service is. Your customers will determine this.
It’s extremely hard to nail your messaging in the early days as you won’t have a lot of customers. But once you do, your customers can help you figure it out. All you have to do is survey them.
- Why did you sign up for this product?
- What are you hoping this product will solve for you?
- If you had to describe the product in one word, what would it be?
- If you had to describe the product in one sentence, what would it be?
As you continually survey your customers, you’ll start seeing commonalities in the way people are describing your product. Once you have these words and phrases, you can integrate them within your messaging.
Keep in mind this doesn’t ensure that you will nail it. It just gives you a head start. You’ll still have to test and refine it until people stop asking you questions such as:
- What does your product do?
- How do you differ from your competitors?
- What is the main benefit of your product?
- What’s the biggest problem you can help me solve?
Sure, you can answer all of these questions through multiple paragraphs of text, but the key to good messaging is to answer all of such questions in as few words as possible.
Once you nail your messaging, your sign-ups will skyrocket.
Lesson #7: The world doesn’t revolve around the United States
As an entrepreneur living in the United States, you typically build companies for your own country. Unfortunately, you may neglect other countries without even noticing it.
When you are creating an innovative company in a new space, focusing on one market, such as the US, is fine. But when you are in a saturated market, like the one Strideapp is in, focusing on one market doesn’t always work, especially when that one market is expensive to penetrate.
From talking with other software companies that target the small and medium business markets, I learned that they were able to penetrate competitive spaces by focusing on international markets first. Why? It’s because those markets are under-served, and companies within those regions have money to spend.
By talking to Get Response and a few other international software companies, I learned that you can increase your international reach by accepting currency from different countries.
For example, taking multiple currencies can increase your international conversion rates by up to 30%. And by translating your website into the languages of the markets you are pursuing, you can typically increase your conversion rate by up to 50%.
If you want to grow your business, don’t focus just on the market everyone else is focusing on. Sometimes the best marketing strategy is to go after the under-served markets, which are less competitive than the US market is. Once you dominate those, you can then expand into the competitive markets.
It’s been a long time since I’ve been in your shoes, meaning that I can’t use any shortcuts or cheat codes to market Strideapp. Why? Because I have very few connections in the sales world.
Nonetheless, I’m still confident that the business will thrive. Sure, it will never be as big as Salesforce, but it won’t be hard to create a business that’s worth at least eight figures because the space has a huge market cap.
If you want to grow your company, don’t let anything stop you. I could have thrown in the towel with Strideapp once I learned it would be more work than I’m used to, but with some elbow grease and a bit of creativity, I’m confident that I can still succeed.
So, in what other unique ways can you market your startup?