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Ask GH: How would you spend 1K as an early stage e-commerce startup?
Details: Subscription box, artisan food. So far it is just me and me alone.
I wouldn't spend it. 1k in paid marketing isn't going to get you very far, and it's far easier to spend that than to figure out how to actually market your business long term. There's a famous Stanford Business case study called the $5 Challenge that this reminds me of. In short, students were given $5 to invest in anything and challenged with getting the largest ROI on the $5, and they only had 2 hours. The winning team came back with $650, and didn't spend any of the $5.
Here's the full case study: http://www.psychologytoday.com/blog/creativityrulz/200908/the-5-challenge
I really like your long term vision @dylan, great outlook on creating a scalable approach.
Another avenue I really like is Tomasz Tunguz's "Framework for Maximizing Start-up Marketing Effectiveness" (http://tomtunguz.com/building-a-customer-acquisition-machine/). It focus on a specific method of building the long term sustainability. The first key step is lean DR marketing, product/market fit, and thorough attribution the whole way through. Using that approach, I would recommend investing the money in marketing at the lowest possible funnel audience you can. That way, although you only have a limited amount of money to spend, you can get a rough gage on initial lower funnel product/market fit, and start to learn a lot about how user's who are likely to convert act on your site. It gives you a way to tweak and optimize so you are ready for your next level of marketing investment.
To do this, I would recommend using a few different approaches. Firstly, I think it is most important to get a well built out attribution system so you are ready to host traffic and analyze the impact of the $1k investment. Then, I think the strategy @msarlitt laid out below which goes into getting the product into the hands of influencers (people already bought into the need for your product and at the very bottom of the funnel) is a great idea because you are able to learn what they think of your product.
Another is to leverage DR advertising through SEM on very, very controlled terms. That way you can bring traffic to the site which is highly likely to convert, and with $1k to invest, and assuming 1-4% CR, you should be able to get a somewhat significant estimate on preliminary lower funnel conversion rates. This is my preferred approach because if the $1k on lower funnel marketing/advertising does not go as well as you'd hope, you can fail fast and improve upon your product/website -- thereby maximizing the value of the $1k.
Ultimately, I think sticking to the very bottom of the funnel is the best way to spend initial marketing funds because of the big advantages in ROI, ability to track, and quality influencer feedback.
interesting challenge that really shows how there's untapped value in the most unexpected places. hehe
There are some good ideas here but I think many of them are long term (like building relationships with food bloggers) and later stage (referral marketing).
From the comments I assume you haven't validated the idea yet. I think this is the most important part and you should use some of your money tackling this. Here are the steps -
1) Since you already have a site up (hopefully it does a good job of explaining your value prop) create a 'Buy Now' button.
2) The button shouldn't collect money. It should redirect to a page that says, 'Sorry we aren't taking new orders. Please leave your e-mail address to get notified when we do.'
3) Track everything. The number of people who click the 'Buy Now' button and enter e-mail IDs have buying intent. You're basically pre-selling the box without any risk. These people will pay you for your product when you launch!
4) Throw traffic at your page. Start with $100 in Facebook ads. Be selective in who your ad targets. For this you need to do lots of research into who your customers are. Test different ads and repeat. Here's a series on Crazy Egg to help you out - http://blog.crazyegg.com/2014/07/29/conversion-tracking-facebook-ads/
5) Once you collect a substantial number of e-mail IDs, go to suppliers and show them you have demand. They'll be eager to cut you wholesale discounts, and you'll have an idea of how many units you'll need.
6) Switch the 'Buy Now' button to an actual checkout button. Tell your e-mail list. Start implementing the other ideas here, like reaching out to bloggers and showing them how popular your box already is and creating the referral program.
7) Enjoy your profits and buy me a drink.
Validation at its best, great comment
As a quick note i tend to stay away from referral programs for new brands, products & services.
The product or service hasn't been validated yet and is usually not good enough to have other people recommend it to their networks, friends and followers.
Be careful with this method. i know it seems tempting as a growth hack and a "free" distribution channel.
I would spend it...
1. Setup shopify or www.cratejoy.com
2. Do your research to create you customer segments and personas (Very important and much more in depth than i can explain here) Takes me a few days straight to do this. I have to sleep on my intuition in a way. Think like the customer here.
3. Spend a few hundred to do a free giveaway campaign on fb based on data derived from your research. U can use ad http://adespresso.com to run that. Take note of conversion rates
a. use Facebook Website Custom Audiences to install pixels
b. Use gochime.com to create custom audience segments of the users who signup for the giveaway.
c. Create lookalike audiences for 2 sets of users. one for people who signed up and another for people who just visited your site and didn't sign up
5. Do some more research and tweak your FB campaigns
6. run some tests on your tweaked lookalike audience. take note of conversions
If good. Spend the rest to drive users to site to buy. Take note of conversions.
The key to all this is the research part. Which is unintuitive and takes a level of expertise.
Thanks for the action items!
I have the basics of an store already setup on squarespace and its running.
You touched on Cratejoy and that is somewhat related/triggered this question.
Thanks for sharing cratejoy! I actually have a friend who can benefit from this! hehe :)
Agree with @dylan. I'd use that $1k as an internal cost for customer development. For example, find some influencers in your space for feedback and beta testing in exchange for free product (no monetary compensation -- there is some psych research that proves this backfires).
@andrewchen wrote a great essay on the ways to scale user growth: http://andrewchen.co/2014/07/08/theres-only-a-few-ways-to-scale-user-growth-and-heres-the-list/
Check out the list of "unscalable ways to get users." This is where to start as an early stage startup when you're working on product/market fit.
Thanks! yeah def not focused on external spending only.
This startup is literally from my dining room table in my "off hours"
Looking for the best advise from those that have been there before.
I would spend it on tools to give you insight into your users and get in conversations with them and understand them, to support your non-paid user acquisition efforts. In other words, I would pay for tools to help me get: qualitative feedback, live chat, screen recording, click heatmaps, questionnaires, email surveys, direct mail surveys, etc. This could help you start building an understanding of your ideal customer profile, why they buy from you, why they don't buy from you, and where they hangout and what they do with their time other than order artisan food. You can generally find these tools for free if you are low volume enough.
I am definitely looking at tools for building the ideal customer profile. then of course the marketing to that profile
If you have a really slick product that's quite unique then running giveaways is one of the best early forms of cheap promotion.
Build a contest, partner with relevant food bloggers in your niche & ensure they also get benefit from the contest.
Then have an instant followup for all entrants to try x months of your service for a discounted rate with a coupon code. Followup again with another offer when you're contacting the winner, anyone that doesn't win say "We're sorry you didn't win but we've rustled up a special offer for you instead:"
Seen this work wonders many times to kickstart E-Com businesses, the only real cost is your own product (which you can get at a discount).
Use http://SureDone.com to set up your store and consider selling your products on eBay or Amazon to build awareness. (Note you can not send customers who buy from you at Amazon anything at all, so it is critical that your username matches your domain name - but it should anyway. ALWAYS use the same username everywhere for strong branding and to make yourself easy to find.)
SureDone allows you to manage ONE inventory, but sell it on multiple channels.
Claim your username on all major social networks. You can use http://Knowem.com free for research or as an inexpensive way to claim those accounts.
Use http://UBL.com to get your business listed on major local directories. NOTE: Always use EXACTLY the same business name, address (1234 main street is not the same as 1234 main st - be exact), and phone number.
Having these social accounts and local listings linking to your site which also has exactly the same information in the header / footer / sidebar will contribute to your visibility and ranking for whatever is important to you.
Get organized because building relationships with your buyers is essential. Find a CRM that you like. I actually bought a Windows PC to return to Time & Chaos Intellect as nothing else solved my email / CRM challenge as well. I looked for 12+ years and never found anything like it. See http://www.chaossoftware.com/intellect.aspx
Use http://Trello.com to organize and keep track of everything you do. I can show you boards I've created to manage all aspects of business, social, marketing, blog outreach, content creation, etc.
Look at http://Agorapulse.com as the easiest way to manage Facebook campaigns. Big Brands consider Facebook the most critical - but that may not work for you if it is too costly.
If you want to run pay-per-click consider Looksmart (low traffic, but far higher ROI) and Bing (potentially less expensive than AdWords).
Several books you should read:
Be the Best at What Matters Most by Joe Callaway
Free Publicity by Jeff Crilley (see his short videos on YouTube at https://www.youtube.com/user/jeffcrilley
Get Recommended by Andy Lopata
See his videos in http://growmap.com/get-recommended
You can get some great insights from the show The Profit http://www.hulu.com/the-profit
That show is an eye-opener on how people are blind to what they are doing wrong. The only reason their businesses were saved is because he had the money to MAKE them listen. My heart aches for the small businesses who destroyed themselves and would not listen to reason when the cause was obvious.
For a full list of what I recommend see http://growmap.com/growmap-services
Success is possible, but it isn't easy. It takes a long time and dedication if you don't have a lot of money and resources. You have to know how to prioritize and who to hire (that you can afford) to make things happen.
As others have suggested I would hold the $1k.
Ideas to start with:
- kick ass referral program = people who like artisan food tend to have other friends who eat artisan food. Why not create a referral program that provides a discount or something to someone as they refer more people. This way you are not losing that money till they have provided you customers to make up for the difference.
- Food bloggers - artisan food is trendy. Food bloggers are trendy. Contact food bloggers and guest blog for traffic, do some contests or recipe write ups or something. Bloggers will do
- Pinterest - TONS of free pinterest marketing discussion out there. Pinterest is big on pictures of food.
- Study what other bootstrapped subscription services have done to kickstart. Subscription services tend to do very well by word of mouth because they hook into a trend.... learn to tap into that.
Hope some of this helps :)
Thanks to the ideas. Def taking notes and looking to kick....
The referral program seems smart and cost-efficient. I like this idea.
I would purchase UserTesting.com credits and watch your ideal demographic go through google search queries and all your competitors sites. Collect the common language and ideas of what problems your ecommerce store is selling.
This is will help you dial in your customer profile and anticipate the questions they will have before they arrive at your site.
Then I would set up bigcommerce, shopify or just a landing page with products that are all coming soon. Collect emails address of people who may be interested in your products. The thank you page of the email collection could be a survey and I would also put a survey in an autoresponders. You can do that free with mail chimp and survey monkey.
Ask your list if they would buy the products in your catalog before stocking inventory. Get your ideal customers involved and they will become invested to become raving fans.
I would spend it all on developing a solid team (meetings for coffee, beer, etc).
If I already had a team I would set it aside and use it as my clarity.fm fund for when me or a team member wanted to get a set of experienced eyes on it.
A business's lifeblood is its ability to create and keep customers. The single most important thing you can spend your early money on is getting customers.
Hell, you ought to be getting them for free. Collect preorders, build a mailing list. Do NOT start spending money until you are reasonably certain that there is a market for what you're selling, and that you have product/market fit.
Thanks everyone for the feedback and ideas.
Just to close the loop for everyone, I do have a live site over at www.nomalicious.co and we are open for orders.
Feedback from here and other conversations are leading me to keep the cash, use it for unexpected expenses and of course some solid giveaways to influencers and outreach.
Lots to think about and of course I will be back I am sure.
Just me, my kitchen table and some good food powering this startup.
Hey @dswiese ! Any update on how things went for you :)? What advices here worked best for you eventually?
@littleoto apologies for the late response. Since I am bootstrapping this out of an existing paycheck, I didn't get the full 1K I was hoping for in that scenario, but we did invest into some targeted giveaways and product reviews. Finally we used it to switch platforms to one that is a bit more flexible for growth.
I am a GH newbie, but check us out at www.nomalicious.co
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