Four Things Startups Get Wrong About Branding
As startups begin to mushroom in and around the region, it is interesting to see how each startup progresses with the age-old question being “Will they make it?”. Consider the following fun facts (and hard-to-swallow, sobering statistics):
An average of three new startups launch globally every second - that is 100 million a year! (Source: Get2Growth)
90% of startups fail; 30% in the first two years, 50% in the first five years and 66% in the first 10 years. (Source: Failory and Nexea)
Mentored startups grow 3.5 times faster and raise 7x more money. A founder’s and concurrently, their respective startup’s success can be amplified with the support of a mentor who can help keep founders focused and in check. (Source: Forbes)
Founders of failed startups have a 20% higher chance of succeeding in their next venture. Failing fast and being open to new directions will eventually lead to future successes. In most cases, overnight success can take well over a decade. (Source: Forbes)
About 1% of startups evolve into a unicorn startup. (Source: CB Insights)
The main reason why startups fail is due to misreading demand - this occurs in 42% of cases. (Source: CG Insights)
Impact-driven founders are the most successful. (Source: Entrepreneur)
With startups becoming a hot commodity and being an entrepreneur is considered cool, we have bore witness to a multitude of business ideas - some of which take off while others are not so lucky. Having said that, it seems that the common factor that causes startups to not come to fruition is simple - startups tend to overlook the simple yet powerful art of branding.
It is crucial that in today’s ever changing business world (ask Covid19), branding has become more important now than ever. What used to be a concern only for medium to large size enterprises with more resources is now an important focus area for startups because to put it quite simply, there are just too many startups out there that offer similar products and services that it becomes difficult to differentiate yourself from a competitor.
So what is it that founders get so wrong about branding when it comes to their startups?
1. Lack of brand purpose
Great brands have purpose. As a result, great brands can influence customers without trying too hard (Source: Foundr). In many cases, startups rush to sell and make big bucks early in the game but eventually, the hype dies down and startups are left with little to no understanding of what it is that makes their product or service resonate with its customers.
In order to find your brand’s purpose, founders need to ask themselves “What am I here to do?”, “How do I make my offering indispensable?”, “What will my customers miss about me if I ceased to exist?”.
Develop your purpose. Make it known. Build customer trust. Once you nail down your purpose, your customers themselves will never question your existence.
A classic example of a brand that understands its purpose to its very core is Apple. With its promise to continue delivering innovative tech that disrupts industries, the brand is never short on delivering its brand purpose to its loyal customers. Take the introduction of the revolutionary iPhone back in 2007. In what has been considered a bold move, Apple was not afraid to kill its own iPod program, a huge revenue driver at that point, to introduce the iPhone. While most companies seek to protect its cash cow, Apple possessed the intuition to out-innovate itself due to this very same principle being at the core of its brand. The same applies today. How many brands can confidently debut its latest MacBook Air and iPad Pro in the middle of a pandemic?
2. Understanding the difference between branding and marketing
Many (and we mean, many) think that both branding and marketing serve the same purpose.
Branding creates the story. Marketing delivers the story.
To put it simply, branding creates the pull whereas marketing creates the push. Branding is more strategic whereas marketing is more tactical. Without a strong and strategic brand, your push tactics run the risk of resulting in less-than-desirable results. Some of the major differences between the two areas are:
Where branding brings reputation, marketing increases sales.
Marketing is a set of activities done to bridge the gap between the customer and the company, while branding is a practice to positioning the brand in such a way that customers connect to it and can recognise it every time they come across it.
You make a brand for the customers, but you do marketing for the company.
Marketing adds customers, while branding builds trust and customer loyalty.
Marketing promotes the value of the product, while branding creates the value.
Marketing targets potential customers, while branding targets emotions.
(Source: 9Series)
It is crucial for startups to clearly define who you are as a brand before devising your specific marketing methods, tools, strategies and tactics as branding is at the core of your marketing (Source: Outbrain).
3. Not addressing the market’s actual needs
There is a difference between assuming you have got the holy grail solution through your product or service and proving that you are fulfilling the market’s actual need. Founders can spend so much time perfecting a business concept in their heads that they eventually fall in love with their own idea. This leads to the detrimental habit of not asking for customer feedback or worse yet, ignoring the negative feedback being received (Source: Hubspot). It has been reported that 14% of startups fail because they ignored their customers (Source: Fundera).
Instead of dropping dollars and cents on overly ambitious marketing campaigns to get the buzz going about your startup, consider taking a step back and addressing your customer’s fundamental needs. Conduct interviews with your actual customers. Put in place a customer feedback loop to gain real insights and sentiments into how your customers perceive and value your startup. You can then use this feedback to iterate your offering and improve your brand rapidly.
Create value before extracting value.
4. To advertise or not to advertise
There is no doubt that you have got to spend money to make money. However, the question then becomes what do you spend your money on? While startups are keen to get their hands on the biggest slice of pie in the market, this may prove to be a costly and counterproductive exercise. With the lure of mass advertising being able to reach millions of customers, connect with them and build brand awareness, this move could spell disaster if done too soon, too fast. Spending the limited funding on advertising during the early part of your startup’s journey when the business model has not even been proven right might end up being a waste of business resources.
Startups are better off considering the impacts of referrals which is far more desired whilst focusing on getting the brand positioning and product right first (Source: ET Rise).
In order to increase your chance of success, it is important for you to consider what meaning you can give to your startup and how you create and shape the brand in the minds of your customers. Once you have nailed down your branding, it becomes easier to differentiate yourself from your competitors and create a bond with your customers that cannot easily be broken. This will prove to be more beneficial in the long run as you look to build and accelerate your startup’s growth.
