Alex Judd 07 Jul 2022 // 4:44PM GMT
Only one in 200 startups attain scaleup status, according to research by Deloitte and THNK. While that’s a great achievement, even reaching this point is no guarantee of future success. In fact, 70% of scaleups fail.
Why? Various reasons. Every business is different, after all. But from a comms and marketing standpoint, the most fundamental change that occurs when scaling is the nature of your audience.
Growth is initially driven by an audience of early adopters. However, taking a business to the next level means tapping into a larger demographic, known as the early majority. The problem is, this audience doesn’t respond in the same way as those attracted to a business in the startup phase.
They don’t pay as much attention and are less inclined to act on your messages. To be blunt, they are less likely to care about you at all.
This “apathy gap” is found in both B2B and B2C markets, and CMOs have been aware of its existence for a while. Geoffrey A. Moore wrote his influential book ‘Crossing the Chasm’ 30 years ago, and, while the underlying truth is unchanged, it’s high time for present-day insights into the challenges of finding success with a more mainstream audience.
Clarity recently published Scaling at the edge: Being fearless in breaking into the mainstream, a report which combines proprietary research with evidence-based thinking to define the apathy gap and explain why it occurs. Given that businesses need solutions if they are to keep growing, the report also explores how scaleups can use the characteristics of the early majority audience to their advantage.
The study had a sample size of over 16,000 people and uses YouGov Profiles’ database of consumer survey data, taking an average of UK and US findings. Headline findings included:
- 54% of early adopters “prefer a meaningful connection with brands over a short-term connection that will fade away” compared to just 10% of early majority
- 49% of early adopters want brands to have a clear view on wider societal issues, compared to 17% for early majority
- 62% of early adopters are willing to pay more for products that improve their lives, compared to 16% early majority.
A significant point to note is that these statistics specifically refer to “definitely agree” responses and therefore provide a clear indication of the gap in conviction between the two groups, underlining the scale of the marcomms challenge. Without question, the early majority audience is a tougher nut to crack. Our research shows they are more ambivalent, more passive, more likely to keep their wallets closed. All ‘mores’ that marketers would doubtless like to see less of.
Why brand marketing is the answer
In these circumstances, brand marketing provides the answer. Although it may sound counterintuitive, when brand matters less to an audience, brand marketing matters all the more.
That’s because apathy is the enemy of rational thinking. The more apathetic your audience, the more likely they will rely on emotional, subconscious cues to make their decision quickly. To show that your brand is for them you need to develop marketing activity that builds an emotional connection, and you need to repeat and reinforce your key messages to become top of mind.
On average, at any one time 95% of your audience is not in the market for your product or service. Instead of doubling down on performance marketing that people only see when considering a purchase, a more powerful strategy is to increase investment in brand activation, infused with the emotional aspect mentioned above. Your marcomms should make people feel good about the choices they make. And once emotion and familiarity are in the mix, you avoid the potential commoditisation of your offer. In this way it’s possible to build a brand with meaning, relevance, relatability and, dare I say it, emotional warmth. One that melts the ice of indifference.
Investing in brand marketing smooths the path to purchase by heightening what is known as mental availability. Professor Byron Sharp, director of the Ehrenberg-Bass Institute – the world’s largest centre for research into marketing – defines this as “the probability that a buyer will notice, recognise and/or think of a brand in buying situations.”
So how should that investment in mental availability fit within a marcomms strategy? ‘The Long and the Short of It’, a major piece of IPA research on balancing short- and long-term marketing strategies, provides some compelling empirical evidence. It shows that, for maximum effectiveness, you should spend 60% of your marketing budget on brand activation (building mental availability) and 40% on sales activation/performance marketing. These figures can vary slightly for different sectors and life cycles, but broadly speaking 60:40 is the ideal ratio.
In short, as brands exit the startup stage and forge into scaleup territory, a higher proportion of marketing spend must go into brand marketing. Scaleups should embrace rather than fear this change.