Marketing has lost its mojo

The product works as marketing for me when customers get something they want to recommend. I discuss my thinking in 2015 and our experiences of prioritising product development at Dinero.

The video is from November 2015. I discuss my assessment of product development and marketing at the time, and our experiences at Dinero.

Why spend so much on advertising and so little on the product?

I am surprised by how many companies spend incredible amounts on marketing and far too little on product development.

I see ads for something that sounds good. But when you try the product, it is not particularly great.

When I learned marketing myself, people said the best product never won. The best-marketed product did. I could understand that thinking back then.

But I believe the world has changed. When consumers can talk to each other, share their experiences and warn each other, the product itself becomes much more important.

The product as marketing: Customers spread the word

In my view, you could previously get away with a mediocre product and a large advertising budget. Customers had a harder time making their experiences visible to others.

Now they can write on Facebook, share on Twitter, blog and recommend solutions in their networks. In my view, that makes it crazy to cut back on the product to spend the money on more ads.

A really good product can get customers to do a large part of the marketing. Of course, that does not mean you should never market yourself. You also need to think about how the product can be shared and recommended.

But I think it is old-fashioned to sell a mediocre product with lots of TV ads or by simply hammering away with Google AdWords.

My experience at Dinero

In the video, I mention Dropbox, where I had not seen ads myself, and Apple, which I thought spent relatively little on marketing compared with revenue.

I also say that, in my assessment, Dinero perhaps spent a tenth of what some competitors spent on marketing while we grew very quickly.

At the time, more than a hundred new businesses signed up each day. And according to what I say in the video, around eighty per cent of our users came through word of mouth rather than ads on Google and Facebook.

When someone in an entrepreneur group asked which accounting program to use, I found a large proportion pointed to Dinero.

That was not free growth. We spent a lot on product development. But it gave us a product customers wanted to tell others about.

The infrastructure also needed to leave room for the product

That growth was one reason we had moved to Microsoft Azure. I wanted to avoid the work of adding ordinary servers eating up the money we needed for product development.

With the solution we had at the time, we could turn capacity up and down as needed.

In the video, I give examples of three or four servers at night and weekends, six during the day and twelve around VAT deadlines. The point was that capacity could follow demand.

It was another way to make resources work for the product customers needed.

What if you moved part of the advertising budget?

Imagine spending a hundred thousand kroner a month on product development and a hundred thousand on marketing.

What would happen if you instead spent twenty thousand on marketing and a hundred and eighty thousand on the product?

That is the question I ask in the video. My expectation is that a better product can get more customers to recommend it, as I experienced at Dinero.

One customer tells a friend who is starting a business about the solution. Another writes about it in a group or on a blog. Together, the many small recommendations can have a large effect.

It is also more fun to stand behind something good

There is a special satisfaction in making a product people are happy with.

When I said I was from Dinero, I often met someone who used it or knew a user. They said it had made their bookkeeping easier and that they could now handle things themselves that had previously been difficult.

That put me in a good mood. And those good experiences also helped bring in more users.

So my message is to build something really good. When customers want to recommend it, you get help with marketing. And when you also spend money on ads, I believe they work better because the product lives up to what you promise.

Also read Iværksætter til jeg dør for more of my experiences with products, customers and marketing.