Some Friday marketing thoughts - a portfolio founder asked me today when is the right time to start marketing?
It's a great q - I think most founders step on the pedal too early. Here's what you need to understand *before* really scaling out:
1) Are you solving a real problem?
If you charge for your product, are ppl paying you?
If you don't charge for your product, are ppl using this "ALL" the time?
2) If you have customers, what does behavior look like?
You should understand:
-who are they? (customer persona)
-why are they using you?
-what do they hope to achieve with you?
The flip side - interview everyone who tried your product and figure out the opposite.
3) Beyond that, you should really understand the workflow of your customer persona.
-what is the day-in-a-life?
-where do you fit into this person's life / workflow?
4) Where does this person spend time?
-online? where specifically?
-offline? where specifically?
5) On the product side, are you getting "better" or "worse"? Do you even know?
E.g. most founders know their aggregate CAC, revenue, conversion rates, etc.
But this is NOT HELPFUL.
More helpful: are your #s getting better or worse? Is engagement better or worse?
6) How to know if you are getting better or worse?
No one does this. This might help get started: youtube.com/watch?v=wErY_I…
7) Compare your cohorts against each other. All the ppl who started your product in Aug -- are they more engaged than your customers in July? Are they paying more?
Compare your cohorts and see if you are getting better over time.
8) Metrics - there are TOO many #s you can be tracking. CAC, revenue, engagement, time on site, conversions %s, etc.
Pick "1 metric that matters" now, and focus on making it better across cohorts.
Then, once that is in better shape, pick a diff "1 metric that matters"
9) In the beginning, your focus is on figuring out:
-do we solve a real problem?
-do we understand the customer?
-are we getting better w/ our solution?
It's not about adding more customers. You add customers in the beginning ONLY to know if you are getting better over time
10) As a result, it's ok to NOT grow, as long as you can measure your growth of learnings about those 3 things.
Trying to throw money at adding more ppl when you haven't nailed those learnings is a waste of money.
11) The right time to start ramping up customers is when you understand those 3 things.
With regard to product, your retention is going to be key.
12) What is the right engagement retention? It will differ by product - eg:
A social network: daily
A weekly newsletter: weekly
A monthly SaaS product: monthly
An ads prod where mkters have qtrly budgets: quarterly
A travel prod where ppl travel yrly: yrly
13) It would be ludicrous to expect Airbnb to retain customers daily. (well maybe during COVID it's different)
But based on what you think the engagement should be, are you hitting that based on your category?
Be honest with yourself.
14) Once your retention is good, now it's time to focus on CAC and LTV and start stepping on the gas.
Most VCs encourage dealing w/ retention later.
In my experience, it leads to harder problems to fix later on, which is why I prefer retention fixed early (it can be done tho)
15) As mentioned in another thread, it's easier to increase LTV over time than to optimize CAC. But you'll still want to try working on CAC. twitter.com/dunkhippo33/st…
16) Try many channels, but in my exp, successful companies tend to hone in on 1 that actually works quite well even with scrappy creatives and really milk that one channel and focus on that channel for a long time.
17) You won't know your LTV at first so guestimate conservatively.
E.g. if are a SaaS product, just 1 mo of rev. If you are an e-commerce prod, just what you make on first purchase.
Be conservative at this stage as you aim for a profitable payback period.
18) Over time, (see other thread), you can increase CAC as you learn that your LTV is actually higher.
BUT having a quick payback period is helpful regardless because it means you can be capital efficient.
You won't have to raise as much capital.
19) Once you've optimized CAC to the extent that you can, and you're still tracking your cohorts for the 1 metrics that matters, then it's time to work on increasing LTV.
This is through better retention and upsells.
20) In conclusion, you'll want to work up to stepping on the pedal.
Do marketing campaigns only to add enough people to your cohorts to understand those 3 things discussed above.
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