Know Thy Customer: 3 Tips for Success From a $285M Company

For entrepreneurs, few issues are as important — or as challenging — as connecting with the proper customers. Reaching target consumers is paramount to gaining traction for just about any business, but startup companies face a distinctive hurdle: They need to go head-to-head with large, established organizations for customer attention.

Just over ten years ago, internet marketing company Constant Contact was one particular startup, servicing just 5,000 customers while vying for new ones in a crowded tech-startup market.

Just what exactly transformed the fledging Constant Contact right into a company with 600,000 customers and $285.4 million in revenue this past year? A recently available sit-down interview with CEO Gail Goodman revealed three parts to the answer: understanding customers, defining a clear business purpose and building the proper team. The conversation also offered up some expert marketing advice for aspiring entrepreneurs.

Understanding customers. Goodman, who took the helm at Waltham, Mass.-based Constant Contact in 1999 when it comprised just seven people, explained that understanding customers has been central to the business’s success, as well concerning her own career. Indeed, Goodman — formerly an IBM employee in mainframe subsystem design — left the tech world to get her MBA because she wished to narrow the divide between technology and consumers.

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"My essays to business school said, ‘I want to greatly help bridge the gap from the technology side to the client needs [side],’" says Goodman, who ultimately attended the Tuck School of Business at Dartmouth College. "My career has followed that path."

But because so many entrepreneurs quickly realize, that’s easier in theory. For Constant Contact — that provides e-mail marketing and other digital tools to smaller businesses — learning how exactly to effectively market its services to the proper customers required three important steps: experiment, experiment, and experiment.

"We knocked our heads against a couple of things," Goodman explains.

When something finally worked, it worked very well.

"We began to really understand the energy of education," Goodman says. "If we’re able to sit next to someone for 5 minutes, we could encourage them to understand [online marketing]."

This realization resulted in the roll-out of free seminars headed by regional development directors to teach smaller businesses about marketing. The results were soon clear: Customers were connecting the dots and calling Constant Contact for internet marketing services. The business now has 23 regional development directors who led seminars for 200,000 smaller businesses in 2013 alone.

The takeaway is that entrepreneurs must experiment to see what is most effective for reaching their unique customers. While experimentation could be costly — for instance, Constant Contact doled out 25 % of a million dollars to check radio-marketing campaigns that ultimately proved successful — the reward is a tried-and-true online marketing strategy customized to attain target consumers.

Defining a clear business purpose. Even the very best advertising campaign will fall on deaf ears if one key ingredient is missing: a clear business purpose. Which means that startups must be in a position to pinpoint just what they do.

"It starts with knowing who your customer is and what problem you’re solving for them," Goodman notes. "I meet a whole lot of entrepreneurs that want to do way too many things for way too many people."

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Many entrepreneurs believe that attracting customers will in actuality help them define a business purpose. They surmise that if indeed they get customers up to speed first, they can find out what’s needed and shape the business enterprise around that. However the opposite holds true.

"[Customers] can’t let you know what your product must do — they can let you know what their business problems are," Goodman says. "If you believe your customers will have the answers, they don’t."

Constant Contact’s clear business purpose drove the success of its marketing campaigns in early stages. As Goodman described it, that purpose is to greatly help smaller businesses create and grow customer relationships by picking the most effective of what’s designed for digital marketing, and simplifying it.

This kind of clear purpose is very important to all companies, but it’s especially crucial for startups.

"If you are little, you’d better be excellent at a very important factor," Goodman says. "Unless you master a very important factor that gets visitors to use, stay, share and repeat, you should have trouble getting traction."

Building the proper team. The 3rd piece to the marketing puzzle may seem obvious: have the proper business team set up at all times. Because of the fast-changing nature of startups, business needs and problems shift frequently. But sometimes these shifts should be reflected by changes to management in order that each the main company remains in the hands of the proper person.

"The individual I had running marketing was a [business-to-business] software marketer," Goodman explains. "It began to become really clear that direct-response marketing would turn into a core competence [at the company]. [But the top of marketing] knew nothing about direct-response marketing. So suddenly we’d a core competence that people knew nothing about."

The answer? Find expertise.

"As your business evolves, there will be things you need to be good at you had no idea you were have to to be proficient at," she says.

The successful entrepreneur will recognize when business needs have changed — and make changes to the business enterprise team accordingly. Failure to take action may blur the business enterprise purpose, weaken knowledge of customers and undermine the organization’s online marketing strategy all together.

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