Good marketing cannot outrun a bad product
Mental Model #4: If the product is bad, no amount of marketing will help build a sustainable business.
Concepts: Leaky bucket, churn rate, cost of acquisition, repeat consumers
A bad product is like a rock, dragging the helium balloon of great marketing down.
Marketing can create desire for a product or service. It can even get consumers to buy once. But if the product does not meet expectations, no consumer will buy a second time and each marketing campaign will become a frustrating Sisyphean exercise.
Leaky bucket or high churn rate
One way to tell that the product is bad, is when the consumer funnel is leaky. Another way to describe it is to say there is a high churn rate in the consumer base.
When the consumer funnel is leaky, it means consumers use the product once and don’t buy again. So each new purchase comes from a newly acquired consumer
A high churn rate sets off a vicious cycle of inflationary marketing costs. This is how the business spirals out of control and becomes unsustainable.
Leaky Bucket = Poor Retention = High Cost of Acquisition = Unsustainable Business
When the consumer funnel is leaky, it means consumers try the product and leave. So more marketing spends acquire new consumers, who also leave.
Therefore, each new sale comes from new consumers, who are more expensive to acquire.
Lessons for marketers
- Don’t spend on marketing until you are 1000% sure that your product works.
- Instead, use the marketing budget to test the product with a few consumers, get feedback and keep perfecting it, until the same consumers say they will definitely buy the product again
- Only then, market the product.
- Practitioner’s tip: Market the product with the same benefits that consumers who stayed said they liked. That is what’s working for your product. This way, you don’t need to invent benefits that are not true. And most importantly, new consumers will not experience dissonance between what was promised and what the actual product experience was.
Originally published at https://performonks.com on January 19, 2022.
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