I was recently speaking with the founder of one of our startups about the right approach to marketing for his business. The startup recently parted ways with their chief marketing officer (CMO) and our founder stated that he didn’t believe that early stage startups should have a marketing department. Instead, he stated that all departments should be thinking about how they can better serve customers in order to grow demand for the startup’s product.
I agree that all departments should work with the ultimate customer in mind. For example, the IT team should build its infrastructure to minimize server down time and page load speeds as the company scales, the operations team should deliver products in the right condition to customers on time, and the product team should build referral loops into the product to facilitate new customer acquisition. However, this doesn’t mean that there shouldn’t be a specific team responsible for creating demand at an early stage startup.
After digging deeper into why our founder concluded that a marketing department isn’t necessary for early stage startups, we discovered that the underlying reason wasn’t because the startup didn’t need such a department but because of how the department mistakenly thought about its role. Specifically, the marketing department had thought that its responsibility was to allocate a fixed marketing budget across different channels. By taking a predetermined budget that it had to spend each month, it didn’t distinguish between the relative customer value generated and customer acquisition costs of different channels. It simply spent on the most common channels which come to mind when you think of an internet startup’s marketing (search engines, social media, affiliate networks, …).
A startup’s marketing department’s role isn’t to allocate a fixed budget. Instead, its role is to drive as much customer value as possible per dollar of marketing spending. This resourceful approach enables the discovery of creative strategies to gain new customers while avoiding those traditional channel segmentations that don’t make sense for the startup’s specific context. It’s not about properly allocating a fixed number of dollars but about creating as much leverage as possible with every marketing dollar you spend. If spending doesn’t make sense, it doesn’t matter if it’s budgeted. You don’t do it.
Placing the relevant team in charge of growth or demand creation rather than marketing may help the team’s members internalize their responsibility to drive customer value at the lowest possible number of dollars, and hence the highest leverage. But whatever you decide to call the team, getting the right customers through the door at the right cost is a very important role for early stage startups. It deserves its own team.