Tech Startup Marketing Budgets: How to Spend When Every Dollar Counts
For early-stage tech startups, the road ahead is paved with uncertainties. If your technology does well initially, you are laying the foundation for future success. If it falls flat in the marketplace, you could very quickly drain your financial resources.
Ultimately, winning the business of potential customers in a crowded marketplace can be a challenge, especially if your technology’s value proposition is complicated to explain. To grab the attention of buyers and develop brand equity takes the right investments in marketing – and a healthy startup marketing budget to sustain them over time.
LEARN MORE: Outsourced Marketing for Technology Companies
Following these guidelines can help ensure that you are spending your marketing dollars strategically, in ways that generate the quality leads you need to build your customer base and profitably grow your business.
Step 1: Build Your Website
As you launch your new company and technology, the most important investment you can make is in your website. Your website is the house for your brand, your message, and the user experience you provide. If it doesn’t effectively communicate what your company and products do, visitors will quickly jump off your site and onto a competitor’s.
READ MORE: Why Your Website Is Your Best Sales Tool
Be prepared to spend $25,000 or more on building the website, and plan to finance a couple of months of a fractional chief marketing officer’s (CMO) time (or an internal marketing team’s) to learn your goals and ensure that the design, navigation, and content of the site align well with your brand and product positioning.
Remember that your website is a communications platform that tells potential buyers three things:
- How they are going to use your technology
- Why they need it
- How it is going to help them
If your technology represents an entirely new product category or application, you will need to include content that clearly defines exactly what it is and the tangible benefits it offers. Use cases are a great way to accomplish this. You also need relevant calls to action (CTAs) on every webpage to help you build your opt-in database, and collateral to fulfill those CTAs. Offering a free trial is also a proven method for engaging customers and capturing their contact information as well.
When starting out, it is important to invest in other long-term branding elements. For example, having a unique, well-designed logo will serve your brand well for years to come, and should be developed upfront so you do not have to rework your website and other marketing materials down the road.
As far as an overall startup marketing budget for the first year, your investments in marketing should be consistent with your growth metrics. And be sure to embrace modernized, targeted marketing practices as you approach your launch. In today’s market, dialing for dollars doesn’t work. Ultimately, you can expect the first year to be a financially heavier lift because you are putting in place the basic foundational elements for your future outreach initiatives.
Step 2: Plan Your Work
Whether you are creating a new product category or breaking into an established market, the next step in your marketing journey is to build a go-to-market plan. Because your product or service is unknown in the marketplace, the purpose of this plan should be to develop name recognition with the right audiences.
I recently read a brilliant book called Crossing the Chasm, which lays out a very effective blueprint for tech startups looking to grow their businesses by selling into mainstream markets. As a best practice, the author recommends that businesses focus on getting there by addressing one market segment at a time. This practice will allow your tech startup to focus the resources you have, in their entirety, on gaining visibility with a key audience of potential buyers. Once established in an initial target market, your startup can more easily “cross the chasm” into broader mainstream markets.
Trying to be all things to all people in the early stages of a business launch is a pitfall to avoid. Instead, focus on landing somewhere specific with your marketing messages and campaigns by picking an initial segment to target – and sticking with it, for now.
So, how do you know which market segment to target? You do your homework, and that means investing in research. Budget for both your own original research and secondary research that has been developed by industry experts. And be sure to interview potential buyers who have already expressed interest in your technology so you can gain an understanding of their needs and use cases.
Ultimately, research will uncover the data you need to identify the optimum market to target initially. It should also help you develop your ideal client profile (ICP) within that market and other relevant insights that are based on data and that will inform various elements of your go-to-market plan.
As you review your research, ask these and other questions:
- Is your own technology truly better at serving potential customers in this market than other technologies they are already using?
- Is the market growing? While there are always exceptions, there is rarely a good reason to target a market that is not growing.
- What types of companies are best to target – and do you have the budget to reach them? Remember that larger companies typically have longer sales cycles than smaller companies, yet smaller companies often have more limited budgets.
Step 3: Work Your Plan
Once you have selected your initial target market and established your ICP, you can begin assembling the pieces of your go-to-market plan.
Remember that it takes time to build up organic search results for your company and products in today’s market. It is much harder than most business owners think. So be patient, methodical, and strategic as you proceed. To effectively execute your go-to-market plan, we always suggest playing a little of the short-game, medium game, and long game.
Short game: This is where advertising, paid media, and paid social platforms come into play. While you are building up name recognition in your initial targeted market, you will need to rent eyeballs, and that means paying for the exposure your brand will ultimately command on its own. This may produce your least qualified traffic but is critically important to getting some early momentum in the marketplace.
Medium game: Once you begin to achieve name recognition and generate web traffic, we recommend investing in thought leadership, webinars, public relations, and other initiatives to boost brand equity and give potential buyers helpful content.
Long game: The long game is built around content marketing, social media networking and outreach, and optimized email nurture campaigns. These efforts take time and talent but will ultimately be your sources of highly qualified traffic.
Throughout this process, it is important to establish a well-rounded marketing effort. Don’t just play the short game or cash will end up being an issue. Also, make sure you are bringing the right team members on board. Be prepared to hire or contract with a variety of creative and technical professionals as well who are all highly skilled and experienced – and who have worked with tech startups before – if you are not working with a fractional marketing team.
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Step 4: Track Your Success
Measuring success can be tricky in the early stages of marketing. Depending on the companies you are targeting and their respective sales cycles, generating qualified leads on a steady basis could takes many months. Initially, the best indicators that your marketing investments are paying off can be gleaned from your own website data. Here are a few key questions to ask:
- Are potential buyers visiting the website?
- Are they staying on the website for any length of time once there?
- Are they responding to CTAs to join your opt-in database?
- What percentage of website visitors is being converted into qualified leads?
If potential customers are getting to know your company and brand, and if your web traffic is increasing over time, then your go-to-market strategy and plan are working.
You should also consider investing in a customer relationship management tool like HubSpot which can help you automate processes and more efficiently measure success.
SEE ALSO: Marketing Analytics & Optimization
Ultimately, marketing a tech startup is both an art and a science. While budgets for your company may be tight in the beginning, taking a strategic, methodical, and data-driven approach to marketing expenditures will make every dollar count and set the stage for future growth and success.
And as your tech startup gains the mind share and market share it deserves, you can move forward by bringing your next groundbreaking innovation to market – and by starting the process all over again.
Contact me to learn more about what Marketri can do to help you get your tech startup marketing off the ground and allocate your dollars to the right strategies and tactics.