The four biggest mistakes scale-ups make
The four biggest mistakes scale-ups make
Time & time again these mistakes hold scale-ups back
INTRODUCTION
We are fortunate at Defiant to work with a number of amazing scale-ups. Those that are not only building new business models but are genuinely looking to make the world a better place. Yet despite their noble ambitions and the new products or services they provide, too often we see these brilliant companies struggle to not only thrive but survive. Why? Well of course there are many variables here depending on the company in question or the category they operate in. However, taking a step back there are four common mistakes we see time & time again. Mistakes that we will cover in this his week’s newsletter. Mistakes that we can all learn from in the hope of adopting a more effective approach to scaling and brand building. As always we would love to know your thoughts, so drop us a comment below on whether you have experienced any of these for yourself. Ok, let’s begin…
#1 OBSESSED WITH BEING LIKED
Perhaps the biggest mistake I see time & time again is an obsession with being liked. Now you might be thinking “Hang on Will? Are you crazy? It’s essential that people like our product!”. Well of course you have to build a product or service people want. You have to ensure you have a fantastic product market fit. However, as you look to go from startup to scaleup. As you look to go from 1000s of customers to millions, brand owners need to park their obsession with likeability when it comes to communications. Let me explain in more detail below.
As a scaling brand likeability is one of the most dangerous metrics to evaluate your communications against. Why? well, likeability runs the risk of your communications being softened or muted. If you are obsessing over whether your communications are ‘nice’ or ‘appealing’ you are prioritising the wrong thing. You see as a scaleup your biggest threat is not whether people will like your ads. Your biggest threat is that people will never notice them in the first place. I have seen this issue play out all too often. Either a brand becomes distracted by not wanting to offend or upset potential new customers. Or the marketing team is more worried about keeping the founder(s) happy than creating work that has a real impact. In both these cases brands fail because they are prioritising persuasion (ie we are nice/like us) over what really matters, fame and memorability. Dr Jenni Romaniuk, the author of ‘How Brands Grow 2’ articles this perfectly below.
“A lot of advertising is geared to persuasion rather than building mental availability. Persuasion is about assuming you’re in the room and you’re arguing your point, whereas mental availability is about getting into the room. And so that’s the big challenge: most organisations are failing to get into the room, but they’re spending all their money on arguing as if they’re already there.” Dr Jenni Romaniuk, How Brands Grow 2
To reassure you here I am not saying just make something offensive or rude. What I am advocating, however, is that you always prioritise the two most important drivers of growth (fame and memorability) over likeability. When you achieve fame (getting talked about) and memorability (being top of mind) you inturn grow your ESOV (excess share of voice). This means that every single dollar you spend on communications works far harder for your brand. It means that in a category where you are massively outspent, you have a far greater chance of cutting through, being noticed and in turn scaling.
Reference #1: Fame not likeability is the single biggest driver of brand growth.
Reference #2: Smaller brands that achieved ESOV are significantly more likely to report improvements in large business effects (ie market share growth, sales, profitability).
Actually taking a step back I even question whether you need the data above to get to this conclusion. Spend a few minutes looking at the most successful scale-ups in recent history. Nearly all of them always prioritise fame and memorability over likeability. In the early days, Brewdog literally drove a tank down the streets of London to convey the beer revolution they were starting. Liquid Death has been calling out the bullsh*t in the legacy water category from day one. And AirBnB took a stand against division and hatred, promoting a world where ‘anyone can belong anywhere’.
Reference #3: The most successful scale-ups have always prioritised fame and memorability over likeability.
So what can scaleups learn from this? Always prioritise fame and memorability. No matter how uncomfortable it may feel at first or how overreaching your founder may be, encourage them to ditch their obsession with likeability. Look I am not saying you have to create something offensive or brash. What I am saying is that you have to be ruthless with your evaluation of communications. You need to always be aiming for something big and bold. Something that will cut through in your category, growing fame and memorability and ultimately ESOV.
Finally, on this point, I am also a realist. I have worked with many brands over the years with company cultures that are risk-averse or where founders are unwilling to listen to reason. That’s why at Defiant we have developed a free workshop, which combines our network’s 20+ years of experience. A workshop full of brilliant data and case studies, that has managed to make even the most risk-adverse founders see the light. If you working at scaleup and are interested in us running a free workshop on this drop me a comment at the bottom of this article or send me a message on Linkedin.
#2 NOT GOING BEYOND GROWTH MARKETING
I have an apology to make to many readers of this newsletter. When I started to work with scale-ups I kind of hated the term “growth marketing”. I used to sit in meetings and think “WTF is ‘growth marketing’?! All marketing deals in helping brands grow!”. However, over time I have come to not only respect growth marketers but in fact have developed a huge admiration for them. Working in a startup or scaleup is incredibly difficult. Too often you have very little time or budget to work with, when it comes to brand growth. And it amazes me the often ingenious tactics growth marketers & founders have adopted to unlock new levels of growth. Three special mentions here must go to Molly Johnson-Jones & Beth Carter at Flexa and Dan Murray-Serter at Heights. Each of them has achieved phenomenal results through ingenious growth marketing, whether it be by building a strong personal brand or media assets (ie podcasts/newsletters). However, despite my newfound admiration I still think growth marketing needs to be treated with caution as you begin to scale. Let me explain why below.
Most of you will know that brands grow through a combination of short AND long-term effects. The former is focused on short-term sales and the latter on long-term brand building. Whilst growth marketing is brilliant for short-term sales it can be limiting, if your sole focus, when it comes to scaling. You see the truth is whilst short-term sales are great for the short term, they never help to build a brand or contribute to long-term effective growth. However investing in brand can help to grow short-term sales, as Les Binet points out.
“Long term effects always help short term sales, yet the reverse is not always true” Les Binet, Long & Short of it
Think about any brand that has truly successfully scaled and gone mainstream. None of them did so through growth hacking or short-term sales alone. All of them took the time and investment to invest in their long-term brand. Now when I talk of brand building a common misconception is that I am advocating expensive TV or OOH advertising. Let’s be clear, I am not. When I speak of brand I am more pointing to ‘top of funnel’ communications that convey what your company stands for and believes in. Sure this could be expressed via a TV ad but there are many and more varied ways to do it. Liquid Death does it via awesome long-form content and influencer partnerships. Brewdog does it via a wide variety of stunts. Whereas AirBnb does it via TV ads and CSR initiatives. Now some hardened founders and growth marketers reading might be thinking “Come on Will! I need more than one quote from Les Binet to buy into this”. Sure no problem. Let’s run through three specific examples below.
Gusto operates in the incredibly competitive recipe box category. A category filled with brands that all too often communicate the same stuff (ie price, convenience) and spend the vast majority of their media budget on short-term performance marketing. Ever wondered why you get followed around the internet by recipe box ads? It’s because almost all of their spend goes on short-term performance marketing. Gusto, thankfully, had the foresight to pivot against this category's generic approach. Recently they have moved away from category generic messaging with their brand line ‘Give It Some Gusto’. Furthermore, they have adopted a healthier short & long-media split. As we can see from the data below this has helped them to grow their user base and equally lower their customer acquisition cost.
Reference #4: Gusto has pivoted from pure performance to both brand and performance, to great effect.
In truth AirBnb in its earliest days, being an online tech brand, spent the vast majority of its marketing budget on short-term performance marketing & stunts. However, as they recently reported a shift to greater brand investment has massively increased revenues and also improved their profitability.
Reference #5: AirBnB is doubling down on the great success it has had from brand building.
Finally a warning from a brand that has finally admitted that it got things very wrong. Having worked with ASOS myself in the past I can testify to their mistakes first-hand. I was brought into the company as part of a new brand strategy team, to help them focus on and improve long-term growth. However whilst their heart was in the right place, their wallet certainly wasn’t. I was shocked whilst working there to learn that of their huge $100M global ad spend over 80% was spent on performance marketing with less than 20% being spent on long-term brand building. ASOS by their own admission, has now realised the error of their ways.
Reference #6: As ASOS shows only focusing on short-term sales via performance marketing, is a dangerous game to play.
There are some really important lessons here for scaleups. First, DO NOT do away with your growth marketing team. If you have managed to find a good growth marketer they are worth their weight in gold. Those that can help to deliver real growth, with very few resources, are few and far between. Second, once your growth marketing team are consistently helping to deliver short-term sales be wise with how you spend this profit. Don’t simply re-invest all profits back into short-term performance marketing. Begin to set aside some budget for brand marketing and increase it over time, if you really want to scale. However before you begin to do this, you need to define a strong brand strategy. We will cover how to do this in the final sections of this newsletter.
#3 BLINDED BY PRODUCT
Look I get it. Your a founder or someone working at scaleup who lives and breathes your brand every single day. You have built something amazing and want the world to know about all the features and benefits you provide. Well, I have some bad news for you. Most people simply don’t care. Now before you get offended let me explain myself in a little more detail.
The incontinent truth is people live busy and hectic lives and they are more distracted than ever before. For example, did you know the average attention span of a human being is now less than three seconds? Or that the average person is exposed to roughly 10,000 ad messages a day (up from around 2,000 twenty years ago). The implication of this is you have literally seconds to hook people in and grab their attention. How best to do this? Well, you won’t do it by simply listing an endless array of product features or benefits. Sure you might have spent years building the most amazing thing in the world….but non-customers simply aren’t as invested in it as you are. So what to do? What is the best way to grab attention and ensure you do cut through? The approach we take at Defiant is to go from product out into culture. Let me explain.
As discussed countless times in the newsletter the single biggest driver of brand growth is fame. Fame is different from awareness. It’s about getting people to actively talk about your product. And one of the best ways to do this? Tap into existing conversations in the real world (ie culture). What we always do at Defiant is dive deep into a truth about a company and think about how we link this to a ‘cultural truth’. That is what is the one powerful thing about the brand that we can link to a big conversation in culture. Doing this allows you to build the most powerful and effective brand purpose & positioning. One that will ultimately lead to messaging and brand work that more easily resonates with the wider world. And if you do this really well? Fame is so much easier and growth comes so much more quickly.
So our third lesson for brands is that as you look to scale, you need to look beyond yourself. You need to stop being distracted by the product features you love. You need to find a way to place your brand into culture, by linking a powerful truth about the company and connecting to a bigger conversation in the world. How best to do this? Lets me explain in our final point for today.
#4 SUBPAR STRATEGY
If it’s ok with you readers, can I have a little moan? I am just so tired of non-strategists claiming they can do brand or business strategy. So many times I have seen scaleups get a big funding round and waste a considerable money hiring the wrong people when it comes to strategy. Often they will go to a design agency that talks a big game. About how they do brilliant strategy as well as visual identity & package design. Pro tip…they don’t. Truth is, they will always put design first and strategy second. Other times companies will go to an expensive strategy consultancy. A consultancy filled with very smart (and often overly intellectual) people who write a super clever brand strategy that ultimately falls down when it is brought to life. I always say to our clients to look beyond the clever words & pricey PowerPoint and ask what was the groundbreaking brand work that came from it? Where was the real impact on the bottom line? Often it is nowhere to be seen. In many ways, these frustrations are one of the many reasons we set up Defiant and our process is designed to mitigate against these problems. Let me explain.
Even if you come to us purely for brand design or creative work, we will always begin with strategy. Even if you come to us with a pre-defined brand strategy (via a design agency or an expensive consultancy) we will leave no stone unturned. We will rigorously investigate the viability of your existing strategy and test whether it can go from ‘product into culture’. At the same time, we never get into our ivory towers. Our collective backgrounds are pragmatic. We have spent decades in the trenches with clients, helping them to sell in and deliver impactful work that is born out of great brand strategy. So you can rest assured you will never see overly fancy words or intellectually impractical strategies.
Phew! OK rant over. Why do I highlight all of this? Well, it’s not a sales pitch. I just want to land a really important point here….of all the points raised today this last one is the most important. Because you won’t achieve fame, over likeability, unless your brand strategy is set up for success. There is little point moving beyond growth marketing into long-term brand building unless you have a smart brand strategy. And you have little to no chance of going from ‘product out into culture’ unless you have once again a great strategy team helping. So our final lesson? Treat good strategy as equally if not more important than your design and creative work. If you get your strategy wrong everything else falls down.
CONCLUSION
Thanks for taking the time to read this week’s newsletter. Whilst we have highlighted the four most common mistakes scale-ups make, it is not all doom & gloom. By learning from them we can identify four things scale-ups should do in order to succeed. In summary, these are as follows:
AIM FOR FAME NOT LIKEABILITY
GO BEYOND GROWTH MARKETING
BUILT OUT FROM PRODUCT INTO CULTURE
FOR THE LOVE OF GOOD HIRE A GOOD STRATEGIST 😂
BTW please do drop a comment below to let us know your thoughts and/or if you would like to discuss the workshop.
Please excuse the typ0s i’m proudly dyslexic
Will Poskett
Co-Founder | Strategy Partner
Website: hellodefiant.com
Email: hello@hellodefiant.com