Aligning Marketing Effort & Growth Stage


Business modeling guru Steve Blank says that a business can be at and grow through one of 4 stages:

  1. Customer (Problem) Discovery: Uncovering a problem that needs to be solved and understanding the underlying cause of the problem

  2. Customer Validation: Testing whether anyone will actually pay money for your product or service

  3. Customer Creation: Finding repeatable marketing strategies and tactics that can scale your customer base to build a sustainable business

  4. Company Building: Creating business processes to scale your customer base, revenue, and profitability

Startup Phase

The first two of these stages are what we would think of as a "startup" phase. In these initial stages, you've come up with hypotheses about a need for your product or service and whether people are willing to pay for them. When you're in startup mode, it's critical to get out of the building and have direct conversations with potential customers to confirm or reject your hypotheses and develop a value proposition for your product or service. By definition, promotion is unnecessary during these stages because there is no defined product, value proposition, or even target customer group identified.

Two mistakes businesses can make are to either try and skip the Startup Phase or over-invest in what they think is their brand during this phase.

Skipping is often the result of the assumption that you "know" the marketplace and obviously there is a customer for your product/service. The only ways this works out is 1) sheer luck or 2) you've worked in that space for long enough to identify - through direct interaction - a solution that enough people need to sustain a new business. In the case of #2, you're still essentially going through the first 2 steps of the process.

Over-investing in a "brand" is just as common as skipping. Companies will invest precious time, money, and resources in perfecting their website, logo, tagline, etc. without having a clear idea of what their product is or who they will be selling to.

Both of these mistakes will negatively impact your business. In the case of skipping the first two steps of the model, you'll accrue information debt about your product and customers in every marketing effort you undertake in the future company phase. That is, every marketing dollar and hour you spend, it will be done not knowing clearly whether or how your product meets a need and who it meets that need for. You will have a built-in marketing inefficiency until you go back and actually work through those steps.

In the case of investing in a brand that doesn't yet exist, you shorten your cash and personal energy runway without any meaningful, measurable positive impact on your business. You don't need any of those elements (expensive website, logo, tagline, etc.) to test your hypothesis. You simply need a set of questions and someone who is willing to help you answer the them. Your hypotheses may (probably will!) be wrong or imperfect. You'll need to pivot or (if you recognize that there's no sustainable market before you even launch) abandon the idea. Both of these require cash and, equally important, personal energy to survive, work through, and find a different sustainable hypothesis with.

Company Phase

Once the Startup Phase has helped you identify what your product or service should be and what potential customers will pay for it, you're ready to start growing your customer base and develop business processes for scaling. You're now in the Company Phase of your business.

It's during this phase that you have a clear idea of what your product is (what features it needs to have, what its benefits are to customers, how it will change your customers' lives) and who your target customers are. You're ready to start building a brand and marketing.

IdeasZarghun Dean