Not getting results from a marketing agency is a very common occurrence for new start-ups. But the situation is avoidable. The primary problem is that start-ups are far too anxious to get started, and there are far too many marketing agencies ready to take on ANY new client. And spending $60k, $70k, or even $90k plus without seeing a meaningful difference in sales is a familiar story. However, to avoid that trap, you simply need to do one thing first. If you do it properly, you will be well on your way to your first $500k or $1 million year without any external help.

Don't hire a marketing agency until ...

When you're launching a new business or product, the thrill of bringing your vision to life can be both exhilarating and overwhelming. As an entrepreneur, it's natural to want to spread the word about your company as quickly as possible, often recruiting a marketing agency to help. However, before incurring agency fees, there is a critical milestone to achieve: proving your concept by securing sales to at least 100 arms-length customers on your own. This approach ensures that your business foundation is solid by demonstrating that people genuinely like your products and are willing to make a purchase.

What is Proof of Concept?

Proof of concept (POC) involves demonstrating that your product or service is viable and that there is a market of willing buyers for it. It means demonstrating that your idea is not only theoretically sound but also practically desirable. Achieving POC typically involves selling your product to customers who are not just your immediate circle of family and friends, but to impartial consumers who validate your product purely on its merits and their needs.

Why 100 Arms-Length Customers?

The number 100 isn’t just symbolic; it represents a significant enough sample size to indicate market trends and customer approval without being so large that it becomes unattainable for a startup. Arms-length customers, those who have no personal or emotional connection to you, are crucial because their purchasing decisions are unbiased. They represent a more accurate cross-section of your target market, whose feedback can provide critical insights to inform your strategy.

The Risks of Premature Marketing

1. Diluting Focus: Early in a business's life, the primary focus should be on refining the product and business model. Hiring a marketing agency too soon can divert essential resources and attention away from these foundational tasks.

2. Misdirected Spending: Marketing agencies are an investment. Without a proven product, you risk not only ineffective marketing but also significant financial losses that could have been allocated to product development or market research.

3. Lacking Core Messaging: Effective marketing strategies rely heavily on clear and concise messaging that resonates with the target audience. Without understanding who truly buys your product and why, it is difficult to craft accurate messaging.

The Benefits of Waiting

Waiting to hire a marketing agency until after reaching the 100-customer milestone offers several advantages:

1. Refined Product Offering: Interaction with initial customers provides critical feedback that can be used to tweak your product to better meet market needs. This iterative process leads to a more polished offering.

2. Established Customer Base: Having an existing customer base not only validates your business idea but also creates a group of potential advocates who can provide testimonials and word-of-mouth referrals.

3. Clearer Marketing Direction: With real-world data on customer demographics, preferences, and purchasing behaviour, you can provide a marketing agency with the insights needed to develop an effective, targeted strategy.

4. Cost Efficiency: Your marketing budget will be spent more judiciously when there's a clear strategy based on proven customer interactions rather than assumptions.

Steps to Achieve Proof of Concept

1. Market Research: Before selling your product, understand your potential customers and their needs through surveys, interviews, and competitor analysis.

2. Minimum Viable Product (MVP): Develop an MVP to introduce to the market. This version should have enough features to attract buyers, but not so many that it drains your resources prematurely.

3. Sales Strategy: Begin selling through direct channels where you can communicate directly with consumers, such as online platforms, local markets, or pop-up stores.

4. Collect and Analyze Feedback: Use customer feedback to refine your product. Pay attention not only to what they enjoy but also to their criticisms.

5. Iterate Quickly: Implement changes and improvements rapidly to meet customer expectations and enhance product appeal.

Hiring a marketing agency is a significant step that signifies your readiness to scale up your business operations. However, in Merchant Mastery's sister agency, Social Lite Communications, we regularly advise new start-ups to wait until they achieve their first $500,000 to $1 million in sales before hiring an agency. Once this sales level is achieved, you will have the critical customer data and revenue to afford an agency-led marketing campaign.

So, ready to develop your marketing strategy skills? Start here.