Why you need a product marketing star to crack the US market

The first marketing hire that startups should make is a product marketer, whether as a consultant or an employee, says Alice Chan, an experienced marketing leader who has spent the past two decades in Silicon Valley helping companies like Xero, Zippin and Habit disrupt the US market. 

The first Kiwi company she worked with was wireless charging technology company PowerbyProxi, which was sold to Apple in 2017 for an undisclosed sum (but over the $100 million threshold that triggers the need for Overseas Investment Office approval).

Chan started her marketing career in London in the late 1990s before moving to Silicon Valley during the dotcom boom and says she can relate to an outsider perspective on trying to break into the US market.

Product marketing – the process of bringing a product to market, promoting it and selling it to a customer – is often not well understood outside of the US, she tells Caffeine, ahead of a fireside chat she’s doing with VC firm Blackbird in Auckland on Tuesday night.

But having a product marketer is crucial when a startup is ready for full commercialisation and wants to tackle a big market like the US, she says.

“At the heart of the job of that person is to really understand the customer, to understand what the customer problems are and how they buy.”

In a recent LinkedIn post Chan posed the question ‘why do nine out of 10 startups fail?’ Research from Exploding Topics shows poor product-market fit tops the list of reasons, with the wrong marketing strategies coming second. 

Among her tips from working with numerous startups over the years, Chan says marketing is often the last leg of the product/sales/marketing stool to be brought to the table even when launch is only days away. “Ideally, bring a marketing brain on board early in the product dev cycle; an advisor can be invaluable.” 

A startup’s marketing messages should also not simply be a list of the product’s features. “Put your customer, and the problems they are trying to solve, front and centre in your narrative. This will create resonance and encourage your prospects to lean in,” she advises.

Blackbird partner James Palmer has just returned from a trip with a number of portfolio companies to San Francisco. Like Chan, he observes that product-market fit is one of the major things Kiwi and Australian startups need to think about in a US context. Our startups should expose themselves to the market to make the right product decisions that translate on a global basis and can be scaled  more easily, he says.

“At the earliest stages it’s important to broaden that customer discovery motion into those larger markets and ensure you’re not designing a product only relevant to and that only solves a problem for Australian and Kiwi customers.”

The art of negotiation

Product marketing also covers what kind of pricing the market will bear.

The New Zealand startups Chan has talked to often underprice for the US, where budgets tend to be much bigger. But getting that right can make a significant difference to a startup’s financial projections when entering a new market, she says.

Kiwi startups also need to better understand negotiation.

“Companies here expect to negotiate, they want a negotiation. It’s not so much about haggling but they want to do that, and enjoy that process,” she says. “One of the golden rules of sales that I’ve learned here is that if you don’t get pushed back on your pricing, you are not pricing it high enough if someone just goes ‘that’s great’. “

If a product is priced too low, it can sometimes also cheapen the perception of its credibility and the startup’s offering, she says.

Some entrepreneurs she’s talked to have said US customers have responded to their pitch by saying ‘this is how it’s going to be’, and they want to play nice, rather than push back, to avoid losing the sale.

“I’m like ‘no, you get to go back in there and say ‘this is how we’d like it to be now’.’ You may not win every point but nobody marks you down here for saying what you want or saying what you’re looking for.”

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Cultural differences

Chan recently talked with a Scandinavian company about to launch in the US and she struggled to even pronounce its name. 

“You need to have a name that has meaning that doesn’t offend one country versus another because it has a different meaning and that is easy to pronounce as customers never want to feel stupid. If they can’t even pronounce your company name, then you’re on to a non-starter.”

US customers also expect a certain level of sophistication in a startup’s pitch, and content that is polished – whether that is white papers or third-party testing on your product, she says.

The US is an enormous market with 50 states and a population of nearly 332 million people.

“Frankly, even northern California feels very different to southern California. If you’re selling to consumers you’re probably going to find different things resonate with different parts of the country.”

Patriotism also runs high, so having a Made in New Zealand-branded product may not carry weight with some consumers, she says.

Some sectors, such as natural beauty or health products, are doing well because of the clean, green image attached to the New Zealand name, but that won’t be relevant for other products.

Having boots on the ground is also important in the US, as is taking time to understand the customer mindset. 

The New Zealand way of dealing with customers doesn’t always translate in the US, Palmer says, as it can be hard to internalise the market’s scale from here.

“The competitive structures in the US are distinct from New Zealand and that product marketing piece may look and feel very different. It’s probably most effective to set up sales organisations locally so that you have US folks selling to US folks. It just reduces the likelihood of the ways you sell getting in the way. “

Approaching potential customers well before you’re ready to launch can also be a good tactic, says Chan.

Knocking on relevant doors and saying you’d value their input on something you’re working on, rather than immediately selling to them, can help when you do want to pitch to them.

“Then when that interaction is over you come back in five or six months’ time and say ‘hey remember we spoke? We really heard what you said’.”

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The fireside chat is sold out but anyone wanting to join the waitlist can email ibigio@blackbird.vc