Lean marketing: how to do marketing in a startup

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The world of startups is specific. Constantly changing conditions, highly competitive markets, an eternal state of uncertainty - all this imposes many restrictions. For all this, you need to manage processes highly efficiently, to achieve your goals and objectives. And to make it possible some old tools can’t help, because they were invented when such conditions did not even exist.

As an example of such an evolution, you can look at software development. In the past, the Waterfall model was enough for successful development, but now, when the market conditions have changed a lot, the industry invented new efficient tools: Scrum, Kanban, XP, etc. These new tools help effectively solve problems with all the complex external factors.

The world of chaos

Let’s use the Cynefin framework to clarify the situation. Using this framework, any processes can be categorized into Simple, Complicated, Complex, and Chaotic:

 
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Simple - the interconnections in these systems are evident to any rational person. The causal relationships in these systems are also clear and transparent.

Complicated - there are cause-effect relationships, but they are not so obvious anymore and are hard for a non-expert to understand them.

Complex - cause-effect relationships cannot be detected in advance, even with serious analysis. They will become understandable only after they happen, and it will be possible to build a retrospective to analyze.

Chaos - no cause-effect relationships. Nothing is clear. Impossible to make any conclusions.

It is generally accepted that the upper left zone (Complex) is the Agile zone. The complexity of programming processes, such as changing customer requirements, the uniqueness of each solution, increased risks and costs, is a consequence of weak ties between the client, the executor, and consumers. This is what flexible methodologies try to solve through short iterations, retrospectives, etc.

The second example is a business. There was a time when people were opening a business as a complete copy of another business, using a ready-made business plan. The motto of the 2000s, "Do something qualitative, and the market will like it." But competition is growing, all niches are occupied, in order to find our own business niche, we need to look for something fundamentally new. Get literally out of the chaos of ideas (lower left zone) a new complex business model and, through the search for repetitive practices (upper left zone), do a day-to-day business (upper right zone).

It is challenging now to create a business or even maintain an existing one. As in Alice in Wonderland, "...it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!". Business moved from the Complicated process to the Complex one, as a result of which the principles, methodologies, and books significantly changed, and even new ecosystem elements (incubators, accelerators) appeared.

Similar processes, but with a slight delay, occur with marketing. There are too many changing external factors in marketing that force to completely change internal marketing processes.

 
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What is inside the Complex zone?

In Complex systems, we begin to build hypotheses and create all kinds of experiments to confirm or dispel these hypotheses. For each point of view or theory that has arisen, we create an experiment or a series of experiments. These experiments don't have to be successful, but they must provide insights and add some understanding to what is happening. Experiments can run in parallel and even contradict each other. There is no best practices in this area. Practices arise here as experiments are conducted.

The History of Lean Marketing

In 2010, Mark Jeffery published his book “Data-Driven Marketing” in which he strongly recommends putting customer behavior data at the center of everything and using 15 marketing metrics to measure and improve marketing performance. Mark also talks about the challenges that marketers face when analyzing data. The main message of the book:

“80% of companies do not use data-driven marketing. The remaining 20% become leaders.” - Mark Jeffrey

Data-Driven Marketing is a type of marketing where all marketing decisions and actions are based on data about users and their behavior.


80% of companies do not use data-driven marketing. The remaining 20% become leaders.
— Mark Jeffrey

In 2011 Eric Ries published “The Lean Startup” book, where he offers a completely new concept for bringing products to market. The Lean startup is a methodology, which aims to shorten product development cycles and rapidly discover if a proposed business model is viable. This is achieved by adopting a combination of business-hypothesis-driven experimentation, iterative product releases, and validated learning, with the constant elimination of all types of losses and maximizing value for the consumer, until the resources are exhausted.

 
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In 2012, a group of enthusiasts at the Summit SprintZero: The Physics of Agile Marketing formulated the principles of agile marketing and called it Agile Marketing Manifesto.


Agile Marketing Manifesto:

  1. Validated learning over opinions and conventions

  2. Customer focused collaboration over silos and hierarchy

  3. Adaptive and iterative campaigns over Big-Bang campaigns

  4. The process of customer discovery over static prediction

  5. Flexible vs. rigid planning

  6. Responding to change over following a plan

  7. Many small experiments over a few large bets


2012-2014. A series of books from different authors, with proofreading by Eric Ries. This is a successful attempt to apply the principle of “Build, Measure, Learn” for the lean development of customers, user interfaces, corporations and even brands.

  • Running Lean By Ash Maurya (January 2012)

  • Lean UX By Jeff Gothelf (February 2013)

  • Lean Analytics By A. Croll, B. Yoskovitz (March 2013)

  • UX for Lean Startups By Laura Klein (May 2013)

  • Lean UX Workshop By Jeff Gothelf (April 2014)

  • Lean Customer Development By Cindy Alvarez (May 2014)

  • Lean Branding By Laura Busche (September 2014)

  • Lean Enterprise By Jez Humble, Barry O'Reilly, Joanne Molesky (December 2014)

Lean Marketing Fundamentals

In traditional marketing, the final product is determined beforehand and teams can’t adjust and adapt throughout the creation process. Sometimes, marketing specialists start to repeat certain activities until the end of time without measuring success regularly. Customers’ interest is not a constant and they often disengage pushed away by not precisely targeted, personalized or creative messages.

Here lies the most valuable cornerstone of Lean – continuous improvement, testing and learning more, never taking a good trend for granted and always seeking perfection.

To put it in practice, Lean marketing relies on the following key points:

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The algorithm of work:

  • analyze the market;

  • study the successes / failures of competitors;

  • set goals;

  • make several hypotheses;

  • set a prediction for each KPI;

  • do a microtest of channels;

  • select one the most effective channel;

  • boost this channel and take the maximum out of it;

  • go to the next one.

 
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Small case study

English School via Skype with native speakers.

The goal: to increase sales for a new school. To generate many leads from digital channels with a limited budget.

The main problem: highly competitive market, big competitors (old-timers on the market) who have a large share of the market.

Niche identification: competitors are targeting anyone who wants to learn English. We identify a promising niche with a responsive audience: mothers who want the best for their children. They are ready to pay more for the better future of their children. Main pains: not interesting to study; kids study, but there are no results; bad grades in school. Goals for children: overcome language barriers; get an education abroad; get a good job.

Tested the channels: google, yandex, vk, facebook. Fb worked best.


The idea for the channel:

Moms insight: need help how to motivate a child to learn English.

Idea: educational content in the format of virtual characters, that in a playful way help to learn the language.

Scaling: Because the channel proved to be the best, and the idea with the characters worked, we scale the channel: increase the budget from $50 to $500.

Result for the channel: 10-15 leads per day.

When the hypothesis is verified, and the model confirms viability, we scale it to other channels (instagram, youtube).


Summary:

  • identified a niche (English for children);

  • tested channels (google, yandex, fb, vk, ok);

  • found the most effective channel (facebook);

  • determined the format for the channel (virtual characters);

  • optimized efforts within the channel (SMM activities + fb ads);

  • repeated for the next channel (instagram).

 
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Conclusion

On the one hand, marketing is becoming more complex every day. And using old approaches, it is no longer possible to unravel the tangled ball of modern tasks. On the other hand, challenges in startups are partially similar, and there are new agile-based strategies to deal with it. As a result, we see the era of new marketing - Lean Marketing.

Summarizing, I would give such a definition to Lean Marketing:

Lean Marketing is a type of marketing that focuses on the permanent elimination of all kinds of losses and maximizing the value for the consumer. The maximum value of the product is provided via the iterative "Build-Measure-Learn" approach and continuous contact with the final users.


Lean Marketing is a type of marketing that focuses on the permanent elimination of all kinds of losses and maximizing the value for the consumer. The maximum value of the product is provided via the iterative “Build-Measure-Learn” approach and continuous contact with the final users.

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