At Little Pim we established ourselves pretty quickly as the go-to product for parents seeking foreign language programs for their kids, but we needed to go beyond this customer base if we were going to achieve the kind of scale we dreamed about. We wanted to capture share of wallet of the same parents Disney, Nickelodeon and Fisher Price were selling to, but doing so would inevitably put us head to head with the 800-pound gorillas in our space. We knew they were spending hundreds of thousands on marketing a month, while we were trying to keep it all below something in the region of, um, $8-12k…
We spent our first two years throwing a lot of marketing spaghetti at the ceiling. We tapped our board and advisors relentlessly for tips and help, (See Luring Top Talent…), evaluated each initiative carefully, and by year three we had a pretty good idea of which strategies were actually sticking to the proverbial ceiling. We focused the majority of our marketing spend on search engine marketing, got our ROI up to 185% and our conversion rate close to 2%. This allowed us to build up a loyal customer base and keep growing while keeping our spend low.
Some of our stickiest spaghetti:
1) Work with a good PR firm. A well-placed article or interview in a nationally read magazine is worth more than any print or broadcast ad we could afford. We also got some great TV features (The View, Today Show) and those always lead directly to sales. While it was painful to shell out a fee to a PR firm month after month, we still felt it was money well spent.
2) Master SEM/SEO. We knew it was critical that Little Pim come up consistently on page one of searches (both in organic and paid results) when parents were seeking foreign language products for their kids. We outsourced this, and oversaw it very closely. We went through about three firms in three years, and became extremely SEO/SEM savvy in the process. It’s really been on of our best marketing tools for accurately tracking ROI, and is therefore adored by CEOs and boards everywhere.
3) Make it trackable. After a few months of trial and error with banner ads and the like, we opted to go with a strict policy that every advertising campaign has a coupon code. This allowed us to track the source of non-web based campaigns. I wish we had figured this out even earlier. There is almost no point in spending marketing dollars if you can’t tell who saw what, and whether it made them buy. Now we have great data and know which campaigns are working and where to spend strategically.
4) Partner with companies in the space. We found other companies also selling to our same kinds of customers, (such as clothing companies, educational toy companies and food companies) were happy to cross-market with us so long as our products didn’t compete with theirs. This allowed us to reach the right kind of customer without spending big marketing dollars and acquire many new names for our email list and customers.
5) Invest in social media. While we can’t always draw a direct line from our customers’ social engagement through our FB page or our Tweets to a purchase, we know it builds loyalty and community. Originally we had an external consultant doing our social networking, but once we brought it in-house it became a more authentic voice of our company, more of a lead generator, and has helped us foster relationships with our most enthusiastic customers.
Some of the less successful spaghetti has included:
1) Untrackable Ads. When we spent marketing dollars on ads where we couldn’t track the conversions we usually didn’t renew those ads.
2) Slice and Dice. When we went after small sub-communities of our main target population we often spent a lot of time and energy identifying web site and groups, but it didn’t really pay off in sales. We probably would have gotten a better ROI just marketing more to our main audience.
3) Tinkering with Direct Mail. Sending out snail mail seemed worth trying (we did a 5000 piece post card mailing to a group of very likely to buy parents), but learned the hard way that we probably would need to do this repeatedly for it to pay off. While trying new things is always tempting and worth doing from time to time, probably best to keep putting money into the strategies that work.
Marketing is one of the parts of the business I love, so I spend a lot of time on it. I also see it as a critical budget item since it can easily become a kind of bottomless pit if you aren’t careful. We found that the winning combination for Little Pim was building tracking into every campaign, focusing on paid search, seeking new ways of reaching customers via advice from board and advisors and setting up cross-promotions instead of simply buying ad space. This mix of things has enabled us to grow our customer list 5X within two years. We never spent more than $12k a month, which came back to us in spades in our Direct to Consumer sales. We grew our DTC business from 5% to 30% of our revenues over the course of three years and mapped out a blueprint for direct to consumer marketing. This would prove an invaluable roadmap to have when we set out to raise our first institutional round the next year…