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Houston expert weighs in on marketing from an investor’s perspective

What should Houston startups know about marketing? Photo via Getty Images

Just what do investors want to see from a startup with regards to the company’s marketing? I recently spoke on this topic to a cohort of early-stage technology startup entrepreneurs at Softeq Venture Studio, an accelerator program that helps founders build investable technologies and businesses.

Here are some of the highlights of our discussion.

Building the base for marketing efforts

It’s important for company founders to think about the bigger picture. When we’re talking to clients at Craig Group, we talk about market growth and revenue growth, not just marketing. Because that’s what the investors are thinking about.

Things like the EBITDA margin and recurring revenue are important to investors. They prefer predictable revenue growth rather than uneven or project based fluctuations . Investors also expect the founders to have a plan for the scalability of their business.

Entrepreneurs need to consider how they are going to scale and where they are going to scale. What markets are they going to address and what’s the plan for that — what’s the timeframe?

An exit plan is also a must because even if the founder is planning on staying in the business, investors are seeking a return on investment with another transaction after the successful growth, and profitability, of a company. Founders have to begin with the end in mind.

A marketing strategy that appeals to investors

There are hundreds of private equity firms interested in lower middle-market companies, defined by having between $2 million and $20 million in EBITDA, or earnings before interest, taxes, depreciation, and amortization. It’s competitive but there’s a lot of money to be put to work.

Startup founders need to focus on the basics first when setting the expectations for marketing investment. And they need to know who their customers are and where their ideal target audience is.

Considerations include the serviceable obtainable market (SOM) which is what the company thinks that they can logically support today. That is separate from the serviceable addressable market (SAM) and the total addressable market, which is what a company will work towards penetrating.

You want to know how many of these potential customers exist, and to do that, you need data. If you don’t have it, you can look at adjacent markets. Build the customer acquisition cost that you can afford. It’s not as important what the number starts out with but how it trends, as it should become more efficient over time.

The marketing investment will grow top-line revenue, target the most profitable customers, be able to reach potential customers in more scale and more quickly than sales efforts alone, and elevate the perception of the company prior to the investor’s exit.

Key parts of a strategic marketing plan

The most expensive customer is a new customer.

In the marketing cycle, "pre-awareness" requires the biggest marketing investment. If potential customers don’t understand what a product or service is, it is going to cost the company a lot to educate them on a new category, so that is best left to those with more resources than a middle-market startup.

A more cost-effective way to reach customers is during the research or comparison part of the marketing cycle. You can demonstrate what differentiates you from your competitors. Are you selling on price? Are you selling on service? Think about a side by side comparison.

Once the buyer has reached the decision and loyalty part of the sales funnel and purchased from the company, then the marketing has been effective, and customer retention becomes a key focus.

In complicated business to business sales cycles, there might be a number of people involved in making the decision to buy your product or service. What is important to the IT decision maker might not be important to the potential customer in finance or purchasing. You need to have compelling messaging for all of them, which means you need your marketing to be like your customer, and meet their needs directly.

Sales and marketing 101

Many middle market companies don’t pay enough attention to their front door, which is a company’s website.

Your potential customer is going to be on your website often but certainly 20 to 30 minutes before a sales meeting. And if they don’t find something compelling, they probably won’t be inclined to move forward with your product or service.

Digital strategy and content geared toward both awareness and lead generation can help with the ultimate goal of profitability.

Entrepreneurs shouldn’t spend on marketing tactics until they have a solid strategy, but once they do start investing in advertising or other marketing tactics, they should be able to get metrics and ROI on their campaigns from their marketing partners.

It is important to focus on efficient top line revenue growth as a business grows and scales. Digital marketing is an important part of the overall growth plan, and should not be overlooked. The clock starts ticking on profitability growth once a business owner partners with investors. Make sure your business has an effective plan to meet the goals set out.

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Libby Covington is partner at Houston-based The Craig Group, a strategic digital marketing solutions consulting firm. Her specialty is in understanding how sales and marketing work together effectively.

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The University of Houston has tips for doing your due diligence when it comes to avoiding unintentional plagiarism. Graphic byMiguel Tovar/University of Houston

Plagiarism is the use of someone else’s words, ideas, or visuals as if they were your original work. Unintentional plagiarism is plagiarism that results from the disregard for proper scholarly procedures. It’s much easier to commit than one would think, and it has toppled giants in the research enterprise.

From 2007-2020, the National Science Foundation made 200 research misconduct findings, of which 78 percent were related to plagiarism. Here are some do’s and don’ts that will help you avoid unintended plagiarism, a potentially career-killing misstep.

The dos and don'ts

Don’t paraphrase without citing

According to a study of 63,700 students, Rutgers University Business School found that 36% of undergraduates admit to “paraphrasing/copying few sentences from Internet source without footnoting it.”

Don’t forget to add the quotation marks

And don’t forget to properly cite your sources at the end of the paper even if you used any in-text or footnote citations to give proper credit to the primary author.

Don’t copy and paste placeholders

You mean to go back and rewrite it in your own words but are liable to forget or run out of time. (More on this later.) If you copy and paste from a previously published paper of your own, it’s not research misconduct, but it is considered bad practice if you don’t cite it. This is called self-plagiarism.

Do make sure your hypothesis or subject is your own

Plagiarism of ideas occurs when a researcher appropriates an idea, such as a theory or conclusion — whole or in part — without giving credit to its originator. Acknowledge all sources!

Peer review is supposed to be confidential, and colleagues put their trust in each other during this process, assuming there will be no theft of ideas. Once the paper is published in a peer-reviewed journal, it should be cited.

Do use direct quotes

But quoted material should not make up more than 10 percent of the entire article.

Failure to use your own “voice” or “tone” is also considered plagiarism, or could be construed as plagiarizing, depending on how unique the author’s voice is. When there is an excessively unique turn of phrase, use quotation marks and cite (if in doubt.)

When paraphrasing, the syntax should be different enough to be considered your own words. This is tricky because you need to understand the primary work in its original language in order to reword it without just moving words around. In other words, no shuffling words!

Do cite facts widely acknowledged to be true (just in case!)

If it’s something that is generally held within your discipline to be true, or it’s a fact that can be easily looked up – like the year a state passed a certain law – there’s no need to cite “Google” or any generic platform, but it’s better to be safe than sorry. Someone reading your work might not have a background in your discipline.

Do run your paper through a plagiarism-detecting tool

Some options are www.turnitin.com or http://www.ithenticate.com.

Sanctions

There are consequences for plagiarizing another’s work. If you’re a faculty member, the sanctions could affect your career. For instance, according to retractionwatch.com, a prominent researcher and university leader was recently found to have engaged in misconduct. Terry Magnuson was accused, and later admitted to, plagiarizing unintentionally.

In an open letter to his university colleagues, Magnuson wrote a startlingly candid statement: “You cannot write a grant spending 30 minutes writing and then shifting to deal with the daily crises and responsibilities of a senior leadership position in the university, only to get back to the grant when you find another 30 minutes free.”

He goes on to say: “I made a mistake in the course of fleshing out some technical details of the proposed methodology. I used pieces of text from two equipment vendor websites and a publicly available online article. I inserted them into my document as placeholders with the intention of reworking the two areas where the techniques —which are routine work in our lab — were discussed. While switching between tasks and coming back to the proposal, I lost track of my editing and failed to rework the text or cite the sources.” Taking responsibility for this oversight, he resigned.

And that brings us to the Big Idea…

The Big Idea

The one thing that trips up even the most seasoned writers is having enough time to properly cite all one’s sources. Give yourself a few extra days (weeks?) to finish your paper and have a peer read it over with any questionable facts or quotes that might need to be cited more appropriately.

Funding agencies take plagiarism very seriously. For instance, the NSF provides prevention strategies by implementing a pre-submission process, and is also attempting to make plagiarism detection software available.

You also may want to take advantage of resources in your university’s library or writing center. There are also several tools to help you organize your citations; one called RefWorks will keep track of your sources as you write in-text citations or footnotes.

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This article originally appeared on the University of Houston's The Big Idea. Sarah Hill, the author of this piece, is the communications manager for the UH Division of Research. It's based on a workshop given by Penny Maher and Laura Gutierrez at the University of Houston; Senior Research Compliance Specialists at the University of Houston.

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