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Marketing Lessons for Start Ups to Survive a Recession


Tom Newton, strategy partner at ad agency Hell Yeah! says this story has a happy ending to its first chapter

Marketing Lessons for Start Ups to Survive a Recession

Just over 14 years ago, two of the defining moments of my career happened in the same week. 

In mid September, 2008. Graze, where I was one of the co-founders and in charge of marketing, got its first £1m of funding. 

And - in the very same week - Lehman Brothers collapsed, almost precipitating the complete meltdown of the US (and therefore, global) economy. 

The recession had already started revving up, but Lehman sent it into warp speed. Within the next two months, Iceland (the country) almost went completely bankrupt; there were riots on the streets of Greece. By the following March, the drop in global stock prices was compared to the Great Depression. Anyone want a box of spicy cashews?

But on that day, we sat in co-founder Graham’s flat (where we ran the business for the first year) and surveyed our options, relieved that we had a runway to launch the business and apprehensive about the world seemingly imploding around us.

Today as Britain creaks its way towards its third recession in 15 years, there must be a lot of founders with a similar feeling. We’ve had some good times, funding has been flowing - but it’s getting hairy, word on the street is funding is drying up and future planning right now feels like sitting on the edge of a very crumbly precipice.

I am here to say don’t panic. The story has a happy ending to its first chapter - Graze is still going strong as part of the Unilever family.

But how did we get there from the depths of a recession?

The first thing we did was breathe a small sigh of relief. We all became aware very quickly that we wouldn’t have got any funding at all if we’d been two months later. So if you’re a recently funded startup - you’re in luck, even if the future feels uncertain.

The recession made us more determined in many ways. We didn’t want to be one of the statistics of a startup that burned through loads of cash and went under. We got our heads down, became hyper aware of value and spent every penny like it was our own money. 

But we also realised that if we weren’t going to go under, we needed to be as different and make the experience as special as possible. We had a great intro offer but we needed to connect with people and become the last little luxury they sacrificed when they were cutting back. Even in a recession, people with some spare cash will still want things that make them feel good. 

So, the back office was held together with sellotape and cable ties, out of a deserted industrial estate in Feltham with no heating. But we made sure that what customers got looked and felt great - lovely packaging, bespoke labels - we spent money on what they could see and feel, and on making our brand stand out. We ran very lean in terms of staff though, and if it looked like we were running close to missing the Royal Mail delivery, the whole team would be down in the factory helping pack boxes. 

Like all new businesses, we made some mistakes. At a later point, we bought in new people, spent money on a fancy office. But it was a mistake - it really changed the feel of the business and made it impossible for us to plead poverty with visiting suppliers.  

We also spent a lot of time trying to come up with new products in new categories. But in fact, our core business was broad enough - we just needed to focus and we did. You can’t be all things to all people - you just have to make something that people really love and buy into.

It’s very intoxicating to think that everyone could buy your products, but if you really boil it down, there are a core group of customers who are going to be a lot more sticky. You’ll reach the others eventually where they are, but don’t waste money on trying to get to them now.

It was simplifying our operations and working out who our core customers were and focusing on appealing / communicating to them that worked in the end. We spent a lot of time trying to understand and reach these people and making sure every single interaction with them was amazing. 

We spoke to our customers all the time. At startup stage, as the global economy tanked around us, we would reach out to those that lived close to the office and invite them to try new products. We would even invite some of them out for a coffee with some of the team so they could tell us what they thought. We moved into more formal market research as we got bigger and had the budget for it, but as a very small business, we built relationships directly with as many customers as we could - creating an informal panel of users we could talk to when we needed to.

There is so much noise out there and you won’t have the same budget as others, so every message has to count in making customers really love you. It’s easy to focus on sales promotion and discounts, but these aren’t what will make customers stick with you and buy you no matter what. Brand building versus short term sales is an eternal battle, but for start ups in this market, even if an offer brings them in, it’s the experience, the quality of the product and the brand that will keep people coming back for more.

So what are my core lessons from launching a business into a collapsing global economy - and making a success of it?

1. Really understand your core customers

2.  Focus on giving them a great experience

3. Spend money like it’s your own and invest in the things that customers interact with

4. Where possible simplify your offering and in turn operations

5. Don’t do the same thing as the competition, focus on doing what you do best.


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Hell Yeah, Wed, 26 Oct 2022 09:06:25 GMT