Top Mistakes Startups Make: Marketing Budget Cuts

As a tech entrepreneur or startup founder, you likely have a range of specialist skills. Many are focused within your industry, while others cross boundaries and allow you to collaborate with people across the wider tech communities. What you probably don’t have, however, is years of experience as a marketing expert or executive.

You’re not alone — digital marketing accounts for 34% of outsourced work in the United States, as savvy businesses try to find the right team or individual to promote their products and services effectively.

Yet a staggering 9 out of 10 startups still fail, with 34% due to poor product-to-market fit, and 22% due to insufficient marketing efforts. What mistakes are these startups making, and how can you avoid the same pitfalls?

Not Investing Enough into Marketing

Successful SaaS companies invest between 80 and 120% of their entire revenue back into marketing in the first three to five years of business. Even when well established, that figure hovers around the 50% mark, showing how important marketing remains to the continuous growth of tech companies.

So why do many tech startups try to manage their own marketing or hire “cheap” marketing solutions that don’t deliver measurable results? It's primarily because cost-cutting is a major part of any new business’s endeavors, especially in the current economic climate, which sees venture capital investment slowing down more than ever compared to recent years. To say the stock market is fluctuating is putting it mildly — even some unicorns are flailing, with shares dropping in value by as much as 44%.

It's tempting, then, to drive all available funds into R&D, striving to produce the best tech offering to stand out in the market. But without experts to get that product or service in front of the right buyers or investors, it’s a one-way ticket to business failure. Marketing must be a priority for tech startups,

Undervaluing the Marketing Team

Whether you have a full-time, dedicated marketing team or a fractional CMO who manages your marketing strategy part-time, you need to understand the impact and value of these employees. Dedicated marketers understand how businesses engage with their vendors and the best media for specific purposes. They know how to create a long-term plan that’s completely in line with your company's goals and vision, and they can advise you on how to periodically audit your marketing efforts to ensure that’s still the case.

Around half of all small businesses spend less than two hours each week on their marketing strategy, with many spending less than an hour. In an ever more crowded market, this is unsustainable and highlights a lack of understanding of the deep value that dedicated marketers bring to a business. Digital marketing is always evolving, with B2B marketing trends shifting to include video, chatbots, and more social media engagement. Without an expert who keeps their finger on the pulse of these changes, even the most tech-savvy companies can get left behind.

Believing in Shortcuts

There’s a saying that there are no shortcuts in business. Like all generalizations, there will be exceptions that disprove the rule, but we’re here to tell you that marketing is not one of them. If you want to cut through the noise and make a serious impact in the tech industry, you need to skip the idea that you can save a few cents by either doing the marketing yourself or hiring the cheapest possible option.

Shaving money off your marketing budget is not, in fact, any sort of shortcut — if anything, you’ll end up tripping over dollars to pick up pennies. In other words, the big money, success, and brand recognition all tech startups aim for comes from investing in high-quality, professional marketing experts who can guide your organization towards consistent, continuous growth.

Final Word

Thankfully, even early-stage tech companies can get help with their marketing strategy. There’s no need to invest in a full-time, salaried marketing executive. Consider, instead, a freelancer who helps manage important campaigns, create marketing plans, and advise on managing or training your existing marketing employees.

Freelancers are entirely objective and results-driven, and they make your success their absolute top priority. If you want to learn more about making your products or services visible to the right people, book a 15-minute introductory call with our tech-focused marketing team, who will connect you to the right freelancer for your proposition.

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