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Editor’s Note: This post is part of The B2B Institute’s series of interviews with marketing leaders. Read the first Q&A in the series, an interview with McKinsey’s Michael Betz
As a think tank focused on studying the future of B2B marketing and decision making, The B2B Institute is tapping our expert network, seeking different perspectives that can provide a macro point of view on how marketers can best weather the storm.
The startup world is an interesting space to study, as frequent pivots and the need to quickly adapt to rapid change come with the territory. That said, the scale of disruption currently happening is clearly several magnitudes larger than what even seasoned entrepreneurs have previously experienced in the tumultuous startup world.
One of our B2B Institute Research Fellows is Alison Lange Engel, who previously led marketing at Stripe and is now a venture partner at the top tier VC firm Greycroft.
Below is our lightly edited conversation filled with her frontline insights into the space and what lessons there are for marketers and business leaders.
Jann Martin Schwarz: Alison, as a venture partner at a scaled VC firm, you advise a portfolio of over 200 early and growth stage startups across many industries on their marketing, sales, hiring, and overall operations strategy. While each of these businesses is impacted differently, what are some of the broad trends and themes you are seeing?
Alison Lange Engel: We have a uniquely broad portfolio across consumer and B2B. We have companies that are experiencing 50x in topline demand and then companies facing major disruption. With the recent shutdowns we’ve obviously seen apparel, dining, in-person entertainment, workplace services, and travel sectors facing steep declines in demand. And there are large ecosystems servicing these industries that are also suffering. Many of these businesses cannot effectively deliver their product/service without a human interaction, so they’re faced with disruption in every way. It’s just crushing.
The consumer behavior shifted so quickly and so dramatically to life and work at home. We’re seeing unprecedented demand across our companies that are in online grocery, food and beverage, gaming, ecommerce with products that tie to health and wellness, and then technology tied to healthcare services. For B2B, the trends are mixed with many companies affected by slower deal cycles but otherwise performing — and then others who have needed to quickly invent new products given the environment.
A byproduct from these tumultuous days is a strong interest across our companies to partner and to help one another. We’ve built a portal for those hiring to find great people who have been displaced in layoffs. And we’re spending a lot of time forming co-brand, product, and distribution opportunities which our portfolio is well suited for. It’s inspiring to see people come together.
Jann: Other experts I talked to have stressed the importance of marketing leaders acting as the voice of the customer and other business stakeholders. How does that manifest itself in the startup world?
Alison: Now more than ever you need to listen intently to your users. Behavior is going to be unpredictable for 2020, potentially well into 2021, so you need to get even more focused on your target user. People make the mistake of being solely focused on product-level data and insights. Of course, this is one key input, but there are other just as important signals. What are users doing, saying, and sharing across your social channels? What are the top issues in your customer support queue ? Send out a quick survey to check-in with your users to understand what they need from you. They may not want your product right now, but they want to be heard.
Jann: Product is a key part of marketing, going all the way back to the Four Ps of Product, Price, Placement, and Promotion. Many of your VC-backed companies are early stage and still finalizing product-market fit. It seems this process is now made that much harder by COVID disrupting our way of life. Some potential after-effects may be sticking around for some time and even become permanent, but that also may provide opportunities to innovate. What are you seeing?
Alison: One of the most challenging aspects is the lack of predictability in how buyers will behave in the near and longer term. That said, there has historically been incredible innovation born in challenging times. Microsoft and Apple were founded in the seventies recession, and there are many examples from the last big downturn with Square, Slack, and Uber founded in 2009. The innovation comes from the entrepreneurs who are exceptional problem solvers and who really focus on customer pain points, and in these times, the pain points are loud and clear. Many B2B brands are faced with buyer paralysis, slowing the sales cycle and dramatically impacting top of the funnel. In response to the rapid market shift, we’ve seen B2B companies launch entirely new products in 10 days, like the team at Blueboard, which is now offering in-home experiences for employee rewards and recognition.
Jann: Startups are nimble by design and anticipate frequent pivots. From a marketing POV, does this allow them to adapt faster to the changing needs in terms of messaging and creative? What can bigger companies learn here?
Alison: Startups can pivot more quickly given how they work, and most have less mature brands so you’re not as wedded to legacy. You’re still building your identity. In chaotic times, all companies need to test and iterate — fast. Startups sit closer to their users, and with less complexity, they iterate faster. Bigger companies need to get smaller, break problems into simpler pieces, and get closer to users at every stage of the funnel. In larger enterprises, you launch new products or marketing campaigns sometimes weekly but usually monthly. Now, you don’t have months to do strategic work like deep messaging and positioning research to inform a product launch next quarter. You need to act like it’s day one and you’re engaging your first customers. Strip away the marketing jargon and imagine sitting across from a user — what’s your simple value prop and why should they care now?
Jann: For most startups, rapid user acquisition and retention is the lifeblood of the business. What advice are you giving to companies struggling with this in a tough macro environment?
Alison: Start by critically evaluating thebuyer’s path to purchase — what’s the easiest way for users to buy and how you can remove barriers to adoption. Marketing and sales need to feel embedded so they can together deliver the right story, proof points, demo or trial the buyer needs to help increase their confidence to buy. You also need to recognize that you likely now have a CFO or financially-minded decision maker as a key influencer in your sales cycle, so you have to pivot with proof and data that speaks to this audience.
Your true north acquisition metrics are likely out the window. You need to establish new benchmarks for every part of the funnel and be ready to critically evaluate them daily or weekly. For some companies with favorable product market fit in this environment, new user acquisition costs have declined by 30%-50% and you might 2x your budget. For others, your top of funnel declined by 90%, and it’s impossible to be confident in your Lifetime Value (LTV) and Customer Acquisition Cost (CAC) targets. In either scenario, you have to test and make decisions quickly to capture demand or cut off campaigns that don’t work.
Finally, you need to deliver the best experience possible for both new and current customers. With sales likely spending less time with new customers, shift focus and get ahead of renewals. Invest in support, which is often a challenge for both scaling startups and for bigger companies to manage the complexity. Don’t neglect your sales and marketing tech stacks, and invest in tools that help you work faster and with better insight.
Jann: Many Silicon Valley startups are product-led and often skeptical of brand building and any marketing that goes beyond short term user acquisition. That is, until they grow bigger and all of a sudden need a brand. As someone who knows about the importance of balancing the long and the short approach, how do you help them understand brand as a growth driver earlier and better?
Alison: Most entrepreneurs understand the importance of brand; they’re consumers themselves. Great entrepreneurs are obsessed with solving a specific problem, and the fastest path to solving a problem is through a great product. So brand building just does not have much early mindshare. In younger startups, the founders are the sales team, and their conviction in their company’s purpose carries them for a while. But especially once you move past the founder-led sales phase, you have to invest time to codify the brand and narrative so you can take others with you. It doesn’t mean you need to hire a fancy agency or write a brand dissertation. To scale revenue, you have to differentiate, and you have to hire great people — a strong brand is critical to both. I try to help founders do two things: 1) translate their mission and vision into simple, clear messaging and effective creative and 2) accept more input from users. I try to bring lightweight qualitative and quantitative research into our companies even at the early stages, to help validate our gut and instincts which drive many decisions.
Jann: Once the economic threat for a portfolio company is no longer existential, how do you help them seed plans for a recovery?
Alison: Buyer demand in most categories will slowly recover, but behavior will look different. You need to plan for when things do improve. Spend 10% of your time now on this, and start to ramp up future planning every week. Or if you can, dedicate one team member to work through your Plan B, C, and D.
Jann: What advice do you have to motivate your teams in the short term, and what longer career advice do you have for marketing professionals to thrive in the startup world, where marketing is often not the central focus?
Alison: You need to tap into intrinsic motivation for a positive, lasting team dynamic. People who are bought into your purpose who have the opportunity to learn and grow are more motivated, resilient, and resourceful. Teams get paralyzed with uncertainty, so as a team leader, you need to be out in front with a simple plan and clear milestones. Learning to be more efficient, accomplishing goals with fewer resources are valuable skills that benefit all marketers, and especially for those looking to join a startup. Earlier in my career, I wasn’t fulfilled in a siloed role in a large enterprise. And so, I jumped at the chance to join an early stage startup. It was crazy at times but also one of the highest periods of growth that set me on my career path in tech. Startups are deeply rooted in passion — for the product and the problem it solves. It’s intense and tangible every day. To thrive in that environment, you need to live that passion with the founders, be willing to pivot, accept candid feedback, and manage through ambiguity. Marketers thrive at startups when they can be super agile and add value across the company, not just in marketing tactics.
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By: Jann Schwarz
Title: What Marketers Can Learn from Startups Responding to Crisis
Sourced From: business.linkedin.com/marketing-solutions/blog/content-marketing-thought-leaders/2020/what-marketers-can-learn-from-startups-responding-to-crisis
Published Date: Thu, 23 Apr 2020 05:00:00 -0700
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