Size matters, right? In some things, that’s certainly true. In the start-up phase of a business, its more like “Scale Matters,” as the mantra driving pixel-based and other start-ups is “Does it scale, and how well?” This avoids the trap of essentially creating a job for the founder, instead of a business primed for success and growth. If the founder is a limiting factor, because he can only be in so many places at once, that’s a problem with scale. It’s a structural issue, one that needs to be addressed at the earliest stages, so the business can pivot around it and grow.
Agility is the biggest single advantage small business has over their larger industry-mates, and to give that up with layers of bureaucracy, rigid policies, staunch and robust process guidelines with little room for innovation seems counterintuitive. However, there is one area where acting like a bigger company can pay much bigger dividends – Marketing.
Most small companies suffer from a couple of similar ills when it comes to marketing themselves:
- Small companies typically focus on sales rather than marketing anyway, laboring under the misapprehension that if they can just sell enough widgets, software licenses, land enough accounts, find enough clients, the marketing will take care of itself. As a consequence, most underspend, in some cases drastically, on outreach marketing activities. Oddly, these are the exact type of investments and activities that will position them for the growth they so strongly desire. Most founders are so fearful of waste, or of appearing to make a mistake, that they play everything close to the vest, making only incremental advances, taking the safe route and only repeating the actions they “think” worked the previous year. This leads to small, defensive thinking and limits growth like a vice squeezing the business until it’s frozen in place.
- Spending on the “wrong” things. The old saw still holds that ”half of our advertising works, we’re just not sure which half.” In today’s data-rich, public-sharing society, there’s almost no excuse for not knowing which half of any activity drives revenue, some types of activities are just harder to connect directly to sales growth than others. With that said, businesses who have never advertised or done any real organized, planned outreach activity almost universally find a significant uptick in sales revenue when they decide to start. But that glow is short-lived, as they try different things on an ad hoc basis without a plan, and spend themselves out of all the revenue gains they made at the beginning.
What to do? Modern marketing is about agile, “spend, fail, learn, repeat” cycles. You’re not going to hit the target on every activity the first time out, and there’s a learning curve for every business, regardless of how many consultants or agencies you engage. You’re going to fail at some point, better to accept it, get used to it, use it in a positive way and get past it. One now-famous CMO of a large consumer products company had a philosophy about how to “do” agile with a variety of marketing ideas – if you throw ten ideas at the wall, and 6 of them stick, you’ve broken even and paid for the bad ones. If you hit 7 or more, you’re up for the year. Take the education from the 4 failures and commit those resources to the other six, and double down. This creates a culture of upwardly-spiraling innovation, one that rewards success while negating the suppression and stigma of failure. Failing fast and cheap works in your favor over making big bets on untested ideas and misplacing resources at a loss.
Where small business can think like a bigger business is in their attitude toward spending on marketing activity. Small-minded miserliness is self-defeating. Do a quick cost-benefit analysis, allow founders to have the courage of their own convictions, and take a calculated risk on some outreach activity that’s informed by solid, hard-won research.
4-Step Process To Improvement
- Get to know who your customer really is, spend the time and money on research.
- Find the company’s “why” early on and use it like a weapon against your competitors.
- Differentiate the small business from their market-mates, and exploit the difference
- Designate a real, realistic portion of your sales revenue for marketing activity.
Once you reach that spending level, you’re done for the year, limiting your losses by putting a stop order on funding ideas that haven’t borne fruit. Now you have a system for testing ideas, limiting downside of investing in ideas that don’t generate revenue, and have a back-stop for using the education to apply toward the ideas that do work and drive revenue upward. This kind of test, fail, learn, repeat cycle is innovation-friendly, and can spawn all sorts of new ideas, new products, new angles, new customer segments, all of which lead to the type of rapid growth start-ups are known for.
You’ll be surprised at the benefits that the courage to innovate can generate in the long- and short-term, and the gains that can be had by simply thinking and acting bigger than you are as a company. Size does matter, most importantly, in the realm of perception.