Entrepreneurs: Measure the right KPI when it comes to your Start-ups

Entrepreneurs: Measure the right KPI when it comes to your Start-ups

The need for measurement is most evident when a start-up competes with itself. This is the best sort of competition for two primary reasons. Firstly, doing better than you did the previous year is a sure sign of growth. Secondly, self-competition is the perfect stimulus for self-motivation. Comparison with an external entity can sometimes have a damaging effect. But, competition with oneself creates a drive to get better and leaves no room for excuses.

The most elementary questions that cross our minds, when we think about measurement are why and how. I urge you to answer these questions before you read on.

Why should I measure?

Right from marking one’s height on the wall as they are grown from a toddler to an adult, to using a stopwatch to measure Usain Bolt’s speed in training, measurement is the key to improvement. If you are unsure of what to beat to get better, what are you competing against? You need a benchmark to measure progress. A performance index at the end of each year is the best benchmark for the next, considering a constantly growing start-up.

How should I measure?

There are many ratios which act as progress indicators. They can be classified under the broad category of Key Performance Indicators.

KPIs are vital to the growth of a start-up. There are numerous KPIs that can be used to measure every facet of your business. However, using every available KPI can be illogical and redundant. Picking smart KPIs for most relevant measurement is truly a challenge. The choice of KPIs for any business depends on the industry. The rest are specific to the way each business is modeled and managed.

Here, we will deal with the most common KPIs, which hold good for any start-up to accelerate growth:

– Customer Acquisition Cost:

Every business – product based or service driven – needs customers to sustain operations and consequently grow. But, how efficient is your approach to acquiring customers? This can be answered when you calculate the average resources spent on gaining a customer. When compared with customer retention rate and attrition rate, the customer acquisition cost makes more sense and acts as a good indicator to know if your start-up is improving its assets or bleeding finances without apt compensation.

– Lifetime Value:

Over time, the term brand loyalty has become so cliched, that its significance in the business world has faded. However, brand loyalty could be the difference between a sustained business and one that looks set to end before it can establish itself in the market. Customer lifetime value is the net value of all transactions, across the entire period of an average customer’s relationship with your business. The higher this number, the better for your business, because it significantly reduces the stress placed on finances by the customer acquisition cost. It also justifies the resources spent on acquiring a new customer.

The ratio of lifetime value to customer acquisition cost is known as the golden metric in business. When calculated, a number under three is considered to be poor. However, until a start-up establishes itself in the market, it is hard to acquire a customer following or brand loyalty. Keep your eye on this number to ensure that it rises with every passing year, but don’t get disheartened if your golden metric starts off below 3.

– Profit margin:

The bottom line of every organization is directly affected by profits margins, making it the easiest to grasp of all metrics. Simply put, the profit margin is the difference between the selling price and cost of production. Its simplicity should not tarnish its importance, as this metric is a very good indicator of sustainability and growth potential of a start-up.

There are dozens of other KPIs that are specific to varying industries. Some KPIs are used to measure your business against industry standards or leaders. Though these may seem a bit much for budding start-ups, it’s never futile to measure KPIs and device strategies for improvement. These smart tips should come in handy while selecting the right KPIs for steady business growth:

– The salmon strategy:

It is fascinating to watch salmon swim upstream, against the current, to spawn in their home stream. Sometimes businesses must take a page out of the salmon’s book and work backward to solve certain problems. The most notable quandary faced by start-ups is the choice of KPIs. Sometimes its easier to choose KPIs based on the data that is readily available to you. A balance sheet is mandatory for any organization, making most of the primary KPIs easily attainable.

From over two decades of experience, I have noticed that the hardest KPIs to measure are the ones that are related to marketing. With the advancement in technology, it is relatively easier to keep tabs on your marketing team. The use of link management platforms is a novel method to erase obscurity and measure marketing campaigns purposefully. The analytics on these platforms are so comprehensive that precision is never compromised. Social networks, such as Facebook, provide their analytics but do not explicitly state the number of bots that have clicked on your link. Invariably your measurement is flawed.

– Split the responsibility:

Division of labor, based on one’s skill set is the best way to tackle any challenge. In keeping with this axiom, measurement of KPIs is often split into few sizeable chunks and assigned to particular teams. Not only does this ease the burden of measurement, but ownership also ensures that these teams take upon themselves the onus of improvement. Such motivation is a key ingredient to the growth of any start-up.

– Measurement without action is futile:

The sole purpose of measuring KPIs is to improve upon existing business tactics. Without such impetus to improve, measurement is like a mirage of success. Be it to up the bottom line or expand the business, the need for progressive action is only surpassed by adept execution.

– Concentrate on the most important KPIs:

KPIs vary in importance depending on the type of business and strategies employed to achieve business goals. The most important KPIs for a start-up may be the customer acquisition cost, whereas an established brand, in the same segment of the business, may consider customer lifetime value to be more significant than the rest. Whatever be your elixir to accelerated growth, the right KPI must be measured and monitored on a regular basis to stay on track to success.

5 steps for start-ups to run a marketing campaign

5 steps for start-ups to run a marketing campaign

Marketing is self consuming, once we get in there is no way we feel we have had enough of it . We always want that additional few likes, Extra viewership, Extra Reads, Extra Leads and such. While we may be right in wanting the ‘extra’ and the ‘additional’ it requires  an exceptional campaign to get there. While not all exceptional campaigns require resources, most do. It is therefore important to attempt to create a good clever campaign without the need for resources burning  us out. Here are few things to consider

Step 1.  Identifying the right audience. Knowing whom we are selling to i.e.  the target market whom we want to address is first most important thing. It is important that we understand the profile of the person/s we want to target our campaign to. For example –  In a B2B scenario a campaign targeted for Purchase or vendor Management teams could be different from  a campaign targeted to CEOs of companies for the same solution, product or services.

Task : List down the profile of the desired audience in a simple excel sheet. (Hints: What type of Companies, Who within the company, His Level of Experience etc.)

Step 2.  Messaging.  Once we have got the profile of the audience, identifying and creating the right message, for our audience inline with what the audience wants is key. Often times, we get carried away by the exceptional product that we have and focus on it ‘more’ that what our audience wants. A simple example would be our desire to talk about the great underlying technology of our product while the problem that our audience wants addressed is maybe just a simple and secure way to share data over the internet. While technology is important, we would lose crucial attention seconds to technology tidbits which we would rather have for the audience to figure out how to reach us.

Task : List down the simple problems we have set out to solve. It could be technical if the audience we are going after is technical or simple life problems or business problems if the target audience is such. (Hints: Improve data crunching for higher data throughput in a cloud transaction or simple way to identify stock-outs in a retail store).  It is important to keep in mind that the same message can be represented in multiple ways. Once we have the messages listed out, brainstorm on them till we arrive at one or two most powerful messages (keeping in mind the delivery mechanism- for e.g. a message for a mail campaign with the reader’s own interpretation could be different from a print message where we could have visuals guiding the message)   

Step 3.  Getting the delivery mechanism/vehicle right. This is what, which generally takes away the resources. Marketing campaigns are run through expensive media Ads, Print Ads to downright and significantly inexpensive email campaigns. Generally a right combo of multiple delivery mechanisms work. In our case of Start-ups and SMEs, a combination of email campaigns alongside a well designed website and a dose of social media could help create the visibility and therefore the perception of availability. It would not serve the purpose if we reached out with a good email campaign and we did not have a good (within our means) website to support our claims in a campaign email.

Task : As a takeaway a from the step 1 derive the best and the 2nd best possible hang-out where the audience is available ,  Once we have identified  that, the decision of choosing the Delivery Mechanism is a function of the budget and resources . It is important however to know the trade offs in going for the 3rd best hangout due to resource and budget constraints. However, in a IT service/product business the most economical delivery mechanisms may often be the best delivery mechanisms.

Step 4.  Creating and executing the Campaign. Creating the campaign is an involving activity and a culmination of our knowledge about our identified audience, understanding the messaging that we want to project, the time we have, tuned for the delivery mechanism we choose. Once we have the above 3 steps in place and we know our budgets, it is a mixture of creativity and resources (that our budgets define) and the available time. Therefore the key here is to assign a budget and identifying the time by when the campaign needs to be executed, for example a holiday season or a Financial year closure. Budgets and time also define the creation of the target pool – the email databases for email campaigns, the Blog topics for Blog campaigns, Phone numbers for Phone-out campaigns etc. (not touching the print and media campaigns which focus more on the content)

Task : This is the most time consuming part of the Campaign Preparation. Our creative team, the marketing Team (Including the leadership) works on developing the content, design and the message. Another team identifies / builds the target market list/database, complete with email IDs, phone numbers, company profile data as required. A plan for running the campaigns is created covering sequential and parallel runs and the plan is executed accordingly.

Step 5.  Yield Management – Measuring, tracking and follow up. Good marketing campaigns always have this step well thought out before the campaign is executed. Lack of preparation of post campaign activities can be disastrous. Imagine not having enough sales force to address request for meetings before a holiday season across multiple geographies. The prospect that responded to our campaign of ‘let’s meet’, if not met, will most likely never respond to our future campaigns.  Also, not being able to measure the number of  responses received , type of responses etc. in mail campaign would deny us of crucial learnings to be accounted for in our next campaign.  Our preparation for this activity could also influence our messaging and the vehicle of choice for our marketing campaign.

In all Marketing Campaigns are involved activities, much beyond sending out random emails and tele-calling and the success depends on how much preparation goes behind. While resources are required, smart and less resource intensive ways of campaigning can also yield desirable results.

Task : In case of email Campaigns, create a simple excel sheet with the number of emails sent, day, time, messages and capture the responses, both negative, positive and neutral and build action items for all responses that require action. Collate the info and use the analysis for the next campaign.

Happy Marketing !! 

Frugal Marketing and Sales

Frugal Marketing and Sales

New entrants by their nature of operations have limited resources at their disposal and after investments on their core products/services have very little for their Marketing and Sales activities.

Pitched against the might of behemoth companies in almost any field of service or product leaves only few options for the new entrants, unless they are ground breaking ideas and/or are driven by a set of extremely nascent technologies which take off on their own.

Till the time the Start-up or an SME is funded it is important to follow a frugality in approach and measure every spend aspect against an expected ROI. Though there may not be a direct ROI for many of the activities in marketing, still it is good to keep the end result in mind.

Splurging on a media campaign will surely get us the ears and eyeballs but if we are not prepared to capitalize on the attention we generate, the marketing campaign would not yield the desired result. Therefore while planning for a marketing campaign we must include a clear plan for absorbing the results of the campaign and taking it to the next level. For example the advertisement for a patient management software product meant for hospitals could attract interest across multiple cities and if we do not have pre-appointed sales/sales support folks available who could engage with the hospitals for a demo/discussion, the impact that the marketing campaign made, would be lost and the huge investment with it.

A frugal approach would be to go through a restrained campaign through emails and social media, which can be controlled to a great extent. The investments are limited, however these campaigns need to be sustained over a period, therefore requiring a greater degree of planning and sustained efforts in execution. However tactical it may sound, it would be proper to invest in a basic in-house sales+ marketing team which could anchor the campaign.

The preamble of a Marketing campaign would be to clearly know The specific Product or the service that would be considered for the initial campaign (It becomes very tempting to use a single campaign to promote everything that we offer thereby diluting the message and the impact our limited budgets can make )

Since Marketing is akin to show business, there is never a way which could not have been done better with more resources. A first step towards a measured campaign would be to define budgets.

The next step would be to identify the audience and the hangout most frequented by the majority of the audience. This could be Social Media, Office (Office Email), Mobile Phones for FMCG it could be TV and Radio.

The next task would be to freeze on a media (email, Social, radio, TV) or a combination of media to reach out to the audience. Primarily the budgets and volume and distribution of the audience would determine this. For E.g. A combination of Drip marketing and social media presence could do well for marketing a Technology Event.

The objective of Marketing is not just creating an awareness and impact but benefitting from the impact, otherwise it would become journalism. Once the budget, audience and the media is frozen, it is time to plan for capitalizing the effect or impact that we would generate. i.e. we should have a ready list of FAQ answers for possible queries that our targeted audience may have when they call in, after a campaign or we should be prepared with enough resources to handle Demos in various locations quickly if the campaign promised a demo and our targeted audience asks for it.

If you notice, the focus of this Blog has been more on the less expensive means of marketing namely Email Marketing, tele-calling, Social media Marketing, Blogs and Drip marketing.

Typically a combination of vehicles / media used works and there are many more ways of expanding visibility – some are expensive while some or not. Some have great ‘Value for Money’ while some others are just hygiene factors and must be done. If we are into ‘Frugal marketing’ it will be great to explore few other ways to Market ourselves. Few online options

  • Networking (with a significant supply of Business cards) at RELEVANT events is a good way to spread the word,
  • Alliances with eco system partners – both large and small and to ensure that we get a mention in all/some of the marketing material/web pages that they have.
  • Getting featured in few Industry Magazines  and eZines (if the articles are good – they sometime come free)
  • Other options, apart from regular Social media Tools (FB, LinkedIn etc.) is to Blog regularly
  • Participate in discussions and Blogs of others and in groups

The success depends on planning and relentlessness of execution (rather than brute force of being available everywhere and hence visible and therefore making the chances of being recalled by the audience is higher).

Happy Marketing !!!

Marketing is an Attitude. Sales, is a Culture

Marketing is an Attitude. Sales, is a Culture

Marketing is all about building the right perception and Sales is the grit behind this suave perception. While it is critical to have the determination and perseverance needed to sell, a culture that amplifies the values of the organization is what creates differentiated organizations.

It is not just the job of a marketing team or an external agency to create the external hype, which we call Marketing, it is much beyond and actually goes deep inside the core of the organization.

The way the company represents itself, communicates, deals with its internal organization, and its employees behave while faced with their peers in other companies is what represents the company and this defines the marketing Culture of the company.

While it becomes difficult for smaller organizations to create a visible culture, which can be resonated by its employees, certain steps can be taken to ensure that the entire company brings the same face of the company to the outside world. Lot of it is to do with communication.

Going tactical, marketing cultures can be created right from standardizing email signatures to the way MoMs are recorded and circulated. Aligning of websites with marketing collaterals create a perception of seamlessness across other aspects. Uniformity in communications to customers slowly but steadily helps in creating a brand that an organization stands for.

Therefore a facet of Marketing is into spending big on creating visibility and perception, it also has a lot to do with the culture an organization chooses to adapt

While Marketing can be equated with ‘Soft Skills’ of a human being , sales is the actual character of the organization. While sales at the very minimum an exchange of product, solution or services in exchange of money, in practicality the sales is the process that leads to this final act when the exchange takes place. The tenacity with which the organization conducts itself, the perseverance, the innovation in positioning, efforts and investment in relation building defines the attitude of the organization.

A luxury brand can be in demand because of its ‘don’t care for buyer attitude’ while a similar attitude for an organization with a product which has multiple competing products can spell doom for the organization. A services company expecting repeat sales from an organization would do great with dedicated account managers, while an organization with low cost product line would sink with investments if it chose to do the same with all its buyers.

The attitude of an organization would therefore determine how it takes its product/solution/service to the market and the position, in terms of quality, price and value that it commands. In simple terms, this attitude determines, how we negotiate, concede, refuse and win business deals. This attitude defines the nature of not only the organization’s sales force but the entire leadership of organization that contributes to the sales process.