Marketing is a key function for any business. It should serve as the arm that maintains an understanding of competitive products, audience segments, audience desires and how and where to reach customers and grow use of the product or products. Most businesses or business units start with product development and eventually reach a point where the question of hiring full time heads to create an internal marketing function surfaces. Make this leap too late, and you could see competitors with an inferior product scale ahead of you. Do this too early and you’ll have team members on the payroll who aren’t able to fully pull their weight. Ultimately, you have to make the leap of faith, but in this article, I’ll talk through a few things you should consider before pulling the trigger.
Customer Research
Throughout your journey in developing your product, you’ve likely gleaned significant insights into how and why customers use your product and who they are. This work does not have a terminus, but you should see that you are starting to have a customer focused view of your business that is based on data, and not just your original entrepreneurial vision. You should have enough data collected by this point to say with some confidence:
- What value proposition drew your customers in?
- What keeps your customers in your product or coming back to repurchase?
- Who are your customers? Age group, gender, location, first language, household income, etc.
- How did your customers find out about you?
- Where can your customers be reached?
- What social networks do they use, what media do they consume, what communities are they a part of?
These answers don’t have to be perfect, or final. Your understanding of your customers should continue to grow through the product’s lifecycle, but before you think about building a marketing team, you should be able to give some answer based on data and no longer on intuition.
Analytics
This piece varies considerably from business to business, but there are two key pieces to validate before hiring a marketing team.
- Are you confident in your method for identifying and tracking distinct customers?
- Do you clearly understand the risks of how you identify a customer? In what scenarios would you inadvertently double-count a customer or count multiple customers as one? Are these acceptable?
- Are you confident in your ability to track and measure cohort metrics through the customer lifecycle?
Without these two pieces in place, you run a great risk of misunderstanding marketing impact as you scale.
Product Performance
Most companies generate a majority of revenue from a minority of customers. To put another way, if your core audience isn’t producing substantial revenue, your product has a viability problem. This will translate in different ways in different businesses. If you run a subscription business, look at your subscription renewal rate. If you run a software or gaming business with microtransactions, look at your retention rate. If you run a DTC or ecommerce business this could look like the frequency with which customers return to make another purchase, or the cumulative revenue curve per customer. Regardless of what metric is right for you, find benchmarks in the industry and see how you compare. If your product or business is not sticky and your customers are leaking out of the bottom, your marketing investments won’t yield long term growth.
Marketing Experiments
Prior to bringing on a full time marketing team, some live marketing experimentation should be completed. This will give you a baseline understanding of your marketing performance and provide inputs for your financial model. This can’t and won’t be fully comprehensive, but it will indicate whether you have product market fit. To keep this efficient, choose on one paid channel where you believe you can reach and properly target your audience and focus on testing creative messaging, moving from simple creatives to complex as you hone in on your message. If you have unpaid strategies that you believe are key for your business, get the minimum viable versions of these off the ground as well. Make sure these experiments are well informed by your customer research.
Financial Model
Before considering recruiting a full time marketing team, make sure you have a reasonably robust model that looks at your fixed costs, variable costs and how your revenue would scale as you invested in marketing. Once you are confident in your model, create one scenario that produces your target growth rate and a second that produces your minimum outcome for a viable business. What inputs did you need to create these scenarios? Do they reflect the current reality of your metrics, and if not, how big of a gap do you have to close? If the gap is too large to expect it to be optimized away by a marketing team, it may be prudent to delay growing headcount. If you aren’t sure, talk to others in your industry, or even interview potential marketing candidates and get their opinion on the feasibility of closing the gaps through marketing execution and optimization.
What If You Aren’t Ready
The entrepreneurial journey is rarely a smooth ride. You will find your assumptions and direction are wrong from time to time. Beginning to build a full time marketing team is a major investment. It will take months to find the right people, and then months to evaluate whether their strategies and execution are meeting your company goals. As your company scales, you’ll want experienced people filling these functions, but only once you know that success is a possibility. If you aren’t there yet, evaluate which of these five key areas are not yet covered, determine which tasks can be completed by existing members of your product, engineering, and finance teams and outline what functions need to be completed by an agency or contractor. If you continue to update your financial model as improvements are made and new data comes in, you’ll know exactly when you’re ready.