Eric Samson is the founder of Group8A, a boutique consulting firm focused on developing and executing integrated marketing and digital solutions for companies of all sizes.
For a small business owner, constant news stories about startup successes and wealthy entrepreneurs are certainly inspirational -- but these shining examples of entrepreneurial achievement represent only a small fraction of all new business ventures. In fact, the majority of new companies fail. According to research from Harvard Business School, approximately three out of four venture-backed startups flop. These numbers suggest that while it is relatively easy to launch and pitch a new company, it is extremely difficult to ensure its profitability over time.
If you are looking to establish a small business, you cannot simply count on the quality of your product or service to sell itself. This is especially true if you enter an already saturated market. In order to run a successful enterprise, you also need to leverage marketing. If you do not know where to begin, here are two exemplars to take direction from.
Using Brand Recognition to Thrive Against the Competition
When Lyft, an on-demand, peer-to-peer ridesharing company, launched in 2012 in San Francisco, it faced stiff opposition from Uber, which delivered a similar service. At the time, Uber held serious advantages over Lyft. The firm had been around since 2009, so it already had a few years experience under its belt. Uber was also looking to expand internationally, reflecting the company's strategy to tap into new markets.
Uber was displeased to see competition when Lyft entered the ridesharing marketplace, and the two enterprises have been fighting over customers ever since. Both have spent millions to attract passengers, recruit drivers and maintain a competitive advantage over the other. The rivalry has gotten ugly, as both alleged that the other company pulled dirty stunts to slow down their service.
In the face of aggressive antagonism and serious competition from Uber, how has Lyft continued to flourish? Much of the firm's success is due to marketing. Lyft sought brand recognition from its very inception, with vehicles sporting bright pink, hyper-friendly mustaches on their bumpers. The big mustaches were hard to ignore and caught a lot of public attention and continue to do so. Lyft also advertises itself as a friendly ridesharing service and encourages fist bump greetings between drivers and passengers.
Other successful marketing tactics include Lyft's referral and ambassador programs. Under Lyft's referral policy, passengers receive credit for rides for each friend they refer. Lyft ambassadors also recruit new customers by promoting the brand. Going forward, the company will continue to emphasize its marketing efforts. Lyft anticipates spending nearly 60 percent of its revenue on marketing by the end of 2015.
Coffee Meets Bagel: Tapping Into Social Media to Differentiate Itself
When Coffee Meets Bagel, a free online dating service, came out in New York City in 2012, it entered a packed online dating market. In order to compete with a number of popular services, including Match.com, PlentyOfFish, OkCupid, and Tinder, Coffee Meets Bagel needed to advertise why it was better than existing sites.
It promoted itself as a dating service that provides higher quality matches and dating experiences with little work on the part of the consumer. To accomplish these goals, Coffee Meets Bagel utilizes two low-cost marketing approaches: it exploits Facebook and partners with local businesses. Using an algorithm, Coffee Meets Bagel finds matches through mutual Facebook friends. Users receive only one match, or "bagel," per day. Other online dating sites, on the other hand, usually have an overwhelming number of choices. This makes individuals treat their matches on Coffee Meets Bagel more seriously. It also reduces the amount of time they waste poring over higher numbers of - and also poorer quality - options. Additionally, Coffee Meets Bagel teams up with local businesses to offer deals that matches can use on their dates.
Coffee Meets Bagel also received a lot of exposure and generated tremendous Internet buzz when its co-founders appeared on "Shark Tank," a reality TV show in which contestants make business presentations to potential investors. The co-founders were offered $30 million but rejected the deal, believing their business could be worth much more. Now, they are concentrating their efforts on global expansion.
Both the stories of Lyft and Coffee Meets Bagel demonstrate that marketing facilitates brand recognition and loyalty and expedites the development of a customer base. Even for a small business, marketing is critical to your ongoing success.