Getting traction by consistently acquiring new customers and building revenues is important for every startup business. In this the final article we look at how to avoid some of the mistakes entrepreneurs make in their sales and marketing. There’s no one-size-fits-all solution, every startup faces unique challenges, but there are a number of common best practices.

Develop a Clear Picture of the Niche and Audience You Are Targeting

A common reason for ineffective sales and marketing is not being clear on your target niche and ideal customer. Your product, positioning and messaging needs to be aligned with this customer. To get clarity it can be helpful to use the Segmentation, Targeting, and Positioning framework. Segmentation helps you to identify niches with specific needs, targeting is used to evaluate the potential and commercial attractiveness of each segment and positioning assesses your competitive advantage and how you can position your business to be the more attractive option in your consumers mind.

Another useful tool is the Value Proposition Canvas, this helps you to pinpoint the reasons why your customers will buy and the emotional triggers you can use to inspire your customers to take action. For some businesses it can also be beneficial to develop a customer persona and understand the customer journey. These will help you to define the core messages and your customers language so that you can develop your marketing content in a way that resonates with them. It is important not to focus too much on the features or specifications of your product, you should promote the benefits or outcomes for your customer.

The key takeaway here is not to spend time or money on marketing before you nail down who your target customer is and what the value proposition is for that customer. You can then move forward to develop your brand, and sales and marketing tactics.

Decide if you Need to Build a Brand

Building a brand can set you apart from competitors and build a community of followers. But branding takes time and money. A typical approach might be to spend 60% of your marketing budget on brand and 40% on tactical selling. Ask yourself if your business has the resources to brand build, if you need revenues to survive or are testing initial traction then a direct sales approach is required.

Where branding is an important differentiator, start with the “why”. Brands don’t sell products they sell stories, so focus on something like your origin story, values, purpose or develop a unique personality that will resonate with your customers. Everybody loves telling their friends about something new or cool, so help them to tell that story.

If there is a lot of noise or competition for your customers attention consider how you will stand out from the crowd. Ask yourself if being average will be good enough for your business to succeed or if your marketing needs to be more radical.

Choose the Right Tactics

As a startup you have to explore different tactics and channels, running small but calculated experiments, and slowly validating to identify the channels that work. In the book Traction, Gabriel Weinberg and Justin Mares provide a three-step “Bullseye” framework to help entrepreneurs find the best marketing channel.

Take a project management approach to undertaking these experiments. Set a goal whether that is paying customers, downloads or website visits. Develop a list of tasks, a budget and a timeline. Make sure that you have a tracking system in place that provides the data to clearly identify what is working and just as importantly what isn’t.

Use this experimentation to understand how much it costs to acquire customers, which messages work best, the level of engagement and potential volume of customers you could attract through a particular channel. Remember that at the early stages it may be early adopters that show interest in your products and you may need to target other channels to attract the mass market.

Social media and pay per click platforms can be good for lead generation and community building, but these platforms can change the rules or algorithm, increase their charges for advertising or may decrease in popularity over time, so don’t rely on building your audience on a platform that is outside your control. Drive traffic to your own assets such as your website and email list.

Once you identify which tactics are the most successful, double down on those and work on optimising the costs of customer acquisition. When you have the financial capacity you can start to expand your marketing incorporating other customer acquisition or retention tactics.

Develop a marketing process

Poor marketing is a common reason for failure among technical founders who don’t relish the idea of sales and marketing, so they avoid it. Don’t wait until you have finalised your product development to start thinking about how to sell the product. You should pursue traction and product development in parallel and spend equal time on both.

You need to develop a system that you implement consistently, when you feel like it and when you don’t, when you have time and when you don’t. Automate the process wherever possible or consider outsourcing elements if your marketing efforts are starting to fall behind.

Develop a sales and marketing funnel that converts cold leads in your target market into prospects and then customers. Measure each stage of your marketing funnel. Where are the leaks that are stopping conversations. If you are not getting leads check your customer targeting and messaging. If you are attracting leads but nobody is buying check your offer, your pricing and your sales process. Consider what marginal improvements you can make at each stage of the process to improve profitability.

Acquire Customers in a Cost Effective Manner

Some business failures have occurred due to poor understanding of the Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLV). These metrics help you determine if a specific group of customers is profitable. In some markets it can be a case of whoever spends the most money to acquire customers wins. A useful benchmark is to target CLV to be >2x with a target of >3x CAC on average, although this does depend on your gross margins.

Recent trends have shown that startups using a direct-to-consumer route to market are looking less attractive as their Customer Acquisition Cost increases due to more expensive social media ads and influencer costs. The costs of fulfilment and a high level of returns in D2C business models can compound this. One solution is to cross sell / upsell or partner with companies of complementary products so that you can increase the Customer Lifetime Value once you have acquired that customer.

For some businesses, such as those relying on subscriptions and those experiencing high Customer Acquisition Cost, you need to achieve the right balance between new customer acquisition and customer retention. Acquiring a new customer can cost five times more than retaining an existing customer. The success rate of selling to a customer you already have has been shown to be in the order of 60-70%, while the success rate of selling to a new customer is 5-20%.

At the early stages of a startup it is all about achieving traction. If you’re not seeing the traction you want, look for sweet spots in your customer base, where consumers are truly engaged and are advocates of your products. See if you can figure out why it works for them and if you can expand from that base. Experiment with a range of sales and marketing tactics. If there are no sweet spots and your experimentation has failed to identify a winning formula, it may be time to pivot.