When you think of my name, Neil Patel, what comes to mind? You probably see me as a marketing guru or as an expert who is good at driving traffic to websites.
Although that’s true these days, I’ve made a lot of marketing blunders over the years. Luckily, most of these blunders affected my own business, so it was me who lost money, and not my clients.
Nonetheless, I’ve made 10 huge mistakes that have cost me a lot of money – in fact, the cumulative loss from these marketing blunders is so great that it runs well into the hundreds of millions of dollars.
Here are my most costly marketing blunders:
As a marketer, I tend to look for niches to get into. Why? Because it is less competitive from a marketing standpoint.
That way you don’t have to spend much energy trying to rank high or dominate the social web within your space.
But do you know what’s wrong with this thinking? Picking small niches means you are limited to the amount of traffic you can generate to your website. Dominating a small 10-million-dollar niche isn’t as good as owning 1% of a billion-dollar market.
When you are picking a niche to dabble in, as a marketer you should try to pick one that is big enough.
For example, with Crazy Egg, we dominate the heat map market, which is a niche in the analytics space. But there is very little traffic in that space… So, now we have to expand our product to create new marketing opportunities.
There is nothing wrong with this, but we should have done this years ago… and the company would have been a lot bigger by now.
Growing year over year is fine, but it’s not where you should focus your attention. You should ideally be trying to grow week over week, if not day over day.
For example, would you rather have your company grow at a pace of 8% month over month for a year or by 100% over a year?
One hundred percent might seem like the right answer, but considering that 8% growth month over month is compounded, it will result in 151% growth after 12 months.
Growth is good and a good place to put your focus, but what’s even better is having a dedicated full-time employee just focused on growth — it makes a huge difference.
For example, we have a full-time growth hacker at Crazy Egg who runs A/B tests, works on invite flows, and modifies the product so that it helps market itself. This has allowed us to grow at a faster pace.
I wish I did this years ago because the faster a company is growing, the more it is worth. These days, when companies acquire you or investors put money into your business, one of the main things they look at is your growth rate. So, focus on it!
If I did this years ago with Crazy Egg, and we had the resources to do so, I could have made myself an extra 10 to 25 million dollars.
I made the mistake of not offering a free plan with both Crazy Egg and KISSmetrics products. Having a free plan allows you to grow at a much faster pace.
Even if your product isn’t perfect, people will be more likely to forgive you if you have a free plan. Plus, when you have a free plan, more sites link to you and mention you within their blog posts.
Crazy Egg had a free plan early on, and from a user acquisition standpoint, our growth was five times higher than our current rate of growth. Later, we ended the free plan because we didn’t know how to convert free users into paid users, but that was a mistake. Instead, we should have learned about conversion rate optimization.
If you are creating a software company, freemium is the way to go. This is probably the largest marketing mistake I’ve made. If KISSmetrics had leveraged freemium, I expect that the company would currently be worth an extra 200 to 400 million dollars.
A lot of times people build companies based on problems in the world. And although that’s fine, you should always incorporate marketing within your product.
For example, Hello Bar allows people to place bars at the top of their websites. The beautiful part about every bar that is placed on the web is that it helps drive more signups for our business.
If you look at the image above, you’ll notice that there is an “H” within the bar. People click on it, come back to our website, and then sign up for the product. If you pay for the product, you can remove the “H,” but the free version has it and helps us drive more signups.
I wish we took marketing into account when building KISSmetrics and Crazy Egg. This would have helped my companies grow at a much faster pace.
Early on in my career, I really got into design – so much so that everything had to look perfect before it was launched or released. The issue with this approach is that it causes you to spend too much money testing things, and it also wastes a lot of time.
From product releases to marketing collateral, just get it out there (even if it doesn’t look great). If it works, then go back and tweak it. But there’s no sense wasting time and money on marketing-related collateral if you don’t even know whether it will work.
Just look at the Quick Sprout Analyzer: it’s nowhere near perfect, but the product was a success from a usage and marketing standpoint. Now we are investing hundreds of thousands of dollars to improve it and build a business around it, but there would have been no point if we didn’t already know that the concept was going to work.
Actually, there were no plans to turn it into a business… It started as a marketing strategy that I used to bring in new visitors. But because it worked, I can now invest more resources into it.
When testing out new marketing campaigns, don’t worry about perfection. Once they work, go back and fix them then.
With KISSmetrics, we struggled for years to get our marketing message right, but I feel like we’ve nailed it now based on our conversion rates.
By tweaking the headline over the years, we were eventually able to nail the messaging. The one that converts the best compares our product to Google Analytics.
For example, our original headline was:
KISSmetrics helps you get actionable metrics for your business.
We eventually changed the headline to:
Google Analytics tells you what happened, KISSmetrics tells you who did it.
Nailing the messaging increased our signups by 40%.
This means that for roughly 3 years, we could have had 40% more signups if we focused on messaging. After we fine-tuned things a bit more, we got the numbers up by over 60%.
As a marketer, I tend to focus my energy marketing to companies who can afford my services or products – meaning that in most cases, I tend to ignore startups.
Some startups have money, but most are very cost-sensitive and try to avoid spending lots of money.
While KISSmetrics was ignoring startups, others came into the space and offered their products to these entrepreneurs for free. Although that doesn’t seem like a big deal, it is.
It’s not because these startups will eventually pay, but rather because these startups are very vocal. If you can get a lot of them to use your products or services, they will tell thousands – if not millions – of other people and companies. This will cause your business to grow at a faster pace.
Within an organization, sales and marketing should work closely together. At KISSmetrics, I spent millions of dollars and thousands of man-hours focused on driving leads.
Once someone became a lead, marketing handed off their file to sales and did not touch the lead again. What we eventually learned is that the sales team didn’t close enough leads and were also focusing on certain leads that were a waste of time.
Marketing should have qualified the leads, helped sales create PowerPoint presentations and marketing materials, and worked together with the sales team to close more leads.
Once we started this approach, the sales team became more efficient and started to close more deals. If we had done this earlier, we would have made the company an extra 3 to 4 million dollars.
My skill set has always been driving people to a website. For that reason, I tend to focus solely on that and ignore most other marketing activities.
In the software world, retention is as important as acquisition of customers (if not more important). Simply put, if you can keep customers longer, your business will be worth a lot more.
Nowadays, our marketing team creates email sequences to get customers who have canceled their memberships to come back and pay again. They also run promotions, focus on up-sells, and create training materials to help companies use our products better. This all helps with retaining customers.
This approach means customers stay longer, which in turn means they are worth more money. Most importantly, however, marketing can then spend more money on acquiring new customers. This has allowed us to open up a lot of new channels that we couldn’t touch before.
Think about the lifetime value of your customer. If you can up-sell to them or get them to come back, why not try?
What’s even worse is that I still don’t have a blog at Hello Bar. I know it works, but I haven’t spent any energy creating one.
Don’t make this mistake I keep repeating. Start a blog right away – it can’t hurt. It helps drive more visitors, and a portion of those visitors will eventually convert into customers.
Heck, I would even say: start a blog before you start your company. Once you launch your business, you can then instantly drive customers to it from your blog.
My marketing blunders may not seem like a big deal to you, but they have cost me over 100 million dollars. I hope you can learn from me and avoid some of my simple mistakes.
What marketing blunders have you made?