Thursday, 10 April 2014

Marketing & sales without a budget; 4 cases



This sound like hype but it is being used.

Going viral is much-talked about but it requires a huge dose of luck and mostly it comes unexpectedly.  There are more reliable ways to use the internet for marketing.

We already know about Craiglist, YouTube, Pinterest. And social media has oft been discussed so they won’t be included here.  Instead the four cases show uncommon methods.

To reach the crowd, use the crowd. 

Threadless use the crowd extremely effectively in its business model.  It started by inviting online submission of T-shirt designs which are then voted by everyone.  The most popular designs are manufactured and sold.  No marketing or sales budget, it is carried out by word-of-mouth and the internet.  No middleman so margins are high, prices lower.  No design cost.  No market research cost.  It is also precise, capturing market trends innately.

     Crowdsourcing; why it works

Nakedwines.com is another.  According to the CEO, most winemakers make very little with 90% of the cost of wines going into marketing and the middlemen in an interview on Bloomberg West in April 2014.  It uses crowdfunding to finance winemakers who in turn supply the wines, typically at 25% to 50% off retail prices directly to consumers.  Marketing and sales is through the funders and word-of-mouth removing layers of middlemen.  The winemakers make more, the consumers pays less.

A small-ish local software house (Asia) I know that used to serve mainly clients in its home market started using the open source model to reach a global market.  It previously burnt millions on a US office.  The CEO tells me he gets 1% conversion from the thousands of downloads of his free software but that’s good enough for sales in the millions.  He pays nothing for global marketing and sales, no overseas office.  The open source model is not limited to software firms and has been used by
‘Liter of light’, a social enterprise to spread adoption and even car makers.

TED created a free license for others to host local conferences, called TEDx.  Now TEDx events are held every day somewhere in the world.  These events add lustre to the main conference rather than dilute them.  This made the TED name a global brand at no cost.  It attracts as speakers tech’s top founders.

All of them rely on the crowd.  Obviously, the use of the crowd (and its various methods) depends on the type of business.  And it takes effort to conceptualise and build the mechanism, business processes and engagement platforms to do that.

But it’s worth the effort, it can be used on many aspects of a business; branding, logistics, market surveys, R&D, logistics, etc.  Somehow, a very small portion of the crowd, perhaps 0.001% is willing to do things gratis or for social currency instead of cash.  Tap them.

I’ll end with an example to illustrate even simple methods.  Messaging apps like WeChat and WhatsApp have a short message in the profile that is really used to introduce oneself but one can use it to advertise.  I see it used mostly by agents selling property, cars and insurance.  But it must be specific eg. selling Peugeot cars.  With WeChat which has a proximity-based function (‘People Nearby’ list users within the vicinity of the phone user), eatery or retail shops within a mall could use it, say with discounts to try to pull them in.

There are other examples.  I’ll start working on a fuller treatment of this ‘commentary’.  I hope to hear of cases from you that I could use in that future post...tommi.chen@yahoo.com.


See also the-value-of-free, a generic treatment of ‘free’ in the internet economy: