Growth Hacking – Why Geeks are the Salesmen of the 21st century…Startup Class – If You Build It, Will They Come?

eToro

This class focused on how one builds, sells and markets their products. The class was privileged to be joined by eToro’s VP of Online Marketing, Nir Orren. The class focused on how distribution plays a pivotal role in allowing a company to maximise its value, using the methods of sales, marketing, PR and media and as Nir explained the emergence of growth hacking.

The class acknowledged that there are great ideas and great products, however these do not often reach the market nor maximise their own potential value. Therefore how does one get a product out to their customers? How does one maximise the potential value of their company?

The key is distribution.

The concept of distribution acknowledges that the best product does not always win. Great products do not sell themselves. Quantitative analysis recognises that in order to build a great business in a world with friction and uncertainty, customer lifetime value (CLV) needs to be greater than the cost per customer acquisition (CPA). This means a company must have a distribution strategy. A company selling expensive software or data to governments will have a different sales strategy to a company selling cheap cutlery in a department store. However each strategy requires a thorough means of how to distribute the product. The product needs to come to the customers not the other way round.

‘This product is so good that it sells itself”, a sentence heard many times, that ussually means shit. This is almost never true. Companies say this in order to absolve themselves from the responsibility to create a distribution strategy . Sometimes we need to be humble and accept that no matter how good ‘we’ think our product is- ‘they’ need convincing. Will ‘they’ simply just come after product? No. The product needs to get to them first.

People are not willing to part with their hard earned cash like the flick of a switch. Does a product sell itself or does the sales pitch?

Advertising is a 95 bill business, if products sold themselves then there’s a lot of people wasting their time. There are plenty of great products that want to expand the reach of their product beyond their own conventional borders. How do you build and expand your company’s reach?

Sales and advertising are subtle means of doing this. These methods are often hidden. Hidden for a reason. No one wants to admit that we’re being sold to. However we have become so used to living in a world with advertisers and sales that we feel uncomfortable if a product is not sold to us in one way or another.

Product sells itself, no sales effort= Does not exist (imho – rarely exists)

Product needs selling, no sales effort=You have no revenue.

Product needs selling. Strong sales pitch= Sales-drive company.

Product sells itself, strong sales pitch=This is ideal.

To succeed, every business has to have a powerful, effective way to distribute its product. Great distribution can give you a terminal monopoly. It can take you from being the first mover to the last mover. A unique product requires a unique effective method of distribution. Space X for example, under the leadership of Elon Musk has aggressively marketed itself, to the extent that it now has governmental support in helping it launch rockets into space and in sending a man to Mars. It has become a new face in an industry previously controlled by old traditional institutions.

If you cannot solve the distribution problem, your product doesn’t get sold- even if it’s a really great product. Zynga invested a lot of money on targeted advertising despite its viral growth. They monetized users much more aggressively than people thought possible. Then Zynga used that revenue to buy more targeted ads.

Nir Oren explained to the class that growth hacking is playing a crucial role in distribution- the ability to combine traditional marketing skills as mentioned above with product developing skills. Such as building features to expand the number of users you have. Nir presented to us a number of slides, growth hacking is effectively high-impact, high velocity marketing. It has become a mainstream method in allowing companies such as PayPal to be able to expand their user base. Companies that invest in growth hacking at the right stage outpace and outmanoeuvre their competition. Growth-hacking is the present and future of distribution.

geek salesman

Viral marketing is a key means of distribution. This is harder than most people think. If you’re the first mover who is able to get a product to grow virally, no one else can catch up. Depending on how the exponential math shakes out in a particular case, the first mover can often be the last mover as well. Viral marketing requires that the product’s core use must be inherently viral. The emergence of viral marketing has been born out of the emergence of the new peer led revolution that we are witnessing. See how Facebook reached a billion users.

In an idealized world perhaps distribution would not be necessary but it matters in this one. Distribution isn’t just about getting your product to users. It’s about selling your company to employers and investors. Moulding your company as one, with a unified tight-knit strategy is fundamental in laying the foundations of distribution. Just like the mafia I suppose, but in order to understand this similarity you’ll have to check out my blog next week…

 

About Yoni Assia

Founder and CEO of Etoro.com