We are closer to this situation than most business leaders realize. This new reality applies to everything we buy: consumer products, business software, tech gadgets, services, shoes at retail stories, meals at restaurants, or employees we hire. This brutal scenario is especially important for startups that are trying to create new markets or break into existing ones.

When you are creating a new product (or service) in the early stages of your company, your first priority should be to make a great freaking product. Make an outstanding product your customers says, “This is freaking great!” Beauty is in the eye of the beholder; it’s only great when customers says it’s great. If you don’t hear that from your early customers, you had better keep improving your products or lower your lofty growth expectations.

Your product has to be great to somebody

If your product isn’t great for somebody – really remarkable – no amount of marketing effort or price reductions or sales flogging will help you get really big and bring new buyers to your door without effort. Seth Godin reminds us that products that aren’t remarkably great won’t get talked about. And if it isn’t talked about in the new world, people won’t hear about it, let alone perceive it as the obvious choice.

I’ve been pretty grumpy about the state of many early startups and the perceptions of many entrepreneurs and big company innovators who don’t get it. You can’t market your way to the top without a great freaking product that somebody thinks is incredible and wants to talk about. I have been using the less politically correct version of “great freaking product” in frustration when I see a company that doesn’t get it.

Greatness is relative

Not every new product that takes off is perfect. Twitter has had its fail wail problems, but Twitter is still valuable and noteworthy and far better than the alternatives despite the problems. Guy Kawasaki calls this the 10X rule. Your new product doesn’t need to be perfect (bug free, feature complete, etc.), it just needs to be 10X better than the alternative for people to switch and buy your new new thing.  Great freaking products create change in the world.

Do people line up for the new iPhone just because of Apple’s snazzy TV ads? Nope. Apple makes great freaking products first — then they market them like crazy. Does the team at TechCrunch want to write about mediocre products that don’t have raving customer fans or remarkable news? Never — TechCrunch readers wouldn’t think it’s such a great news source any more if they lowered their high standards.

Yes, there are many ways to sell mediocre products to certain parts of the market where buyers buy for some other reason — your product is cheapest or you have built a personal relationship with the buyer. Just don’t expect your business to be well known and attract customers easily. Companies with mediocre products almost never grow to be big companies, and most won’t last very long.

Still trying to be great to everyone? I call this the Target Market Trap. Remember, single men and women only have to be perceived as great by one other person to find Mr. or Ms. Right and get married.  Narrowing your target market focus helps you get to “great” faster for somebody, which means you’re going to grow and can attack larger markets later.

I’m not saying you can just “build it and they will come” or “product is everything.” Having a great freaking product is just the first thing. You can do great marketing to help spread the word — but only after there is a remarkable story that can be spread.

Your product or service has to be remarkably valuable and feel like the best in class for your business to take off. There really is no other way to make company that will grow fast and be very valuable.

Do you have a great freaking product?

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Click here to see the video on the Vertical Measures website.

In the video, I share some answers to these questions:

1. What are your predictions for the internet marketing in general for the year ahead?
2. How about investments and startups — where do you see that heading?
3. What one critical issue should those in the Internet entrepreneurial space be concerned about or focused on in 2010?

Hope you enjoy it.

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These are two of Peter Drucker’s “Five Most Important Questions” for your organization. I often find myself returning to Drucker’s questions  in strategic discussions about a business or business idea.

Having clear answers to Drucker’s five questions doesn’t guarantee your success, but you can’t run a successful organization without answering them:

1. What is our mission as an enterprise?
2. Who exactly is our customer?
3. What does this customer value?
4. What is our plan?
5. What are our results?

I have not found a better way to describe the core management responsibilities of leaders and entrepreneurs.

Three of the elements  — your mission, your plan and your results — are required to lead and manage any organization. But your mission, plan and results depend on who your customers are and what unique value you bring to them. As Drucker says, the customer is the most important thing in a business: without customers, you have no business.

“Who are your customers?” and “What unique value to you bring them?” are the two most important questions for leaders and entrepreneurs to answer.

Drucker wisely differentiates between primary and secondary customers. Yes, there are many groups your business serves, but your primary customers are those “whose lives are changed by your product.” Everyone else your organization serves is a secondary customer. Your top priority should be delivering value to your primary customers.

For example, a school serves students, teachers, communities, school districts, and others — but only students’ lives are changed by the product of the school. A business serves investors, employees, partners, suppliers and others, but their customers pay them because they expect their lives to be positively changed in some way by the business’ product.

So when you see a struggling organization, of any size, it’s likely the problem can be traced back to Drucker’s two questions about the customer. Sometimes the company has lost focus and tried to serve too many customers, serving no one well enough. A startup organization with big dreams of creating a large market may need to focus on one target segment in the short term to survive.

Which of Drucker’s five questions presents the biggest challenge for your business? When you know the answer, you have defined your top priority as its leader.

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Why? Because there are more communications channels than ever. Each channel you use requires time, effort and some expense. And it’s not easy to be proficient with so many communications tools and tactics.

As an example, last year President Obama’s campaign team (marketing team) was praised for their successful use of popular social media tools to communicate in the presidential campaign. These new marketing tools included Facebook, Twitter, texting on mobile phones, YouTube videos, and schmoozing with popular bloggers.

That wasn’t all they did, though. They also used all of the traditional marketing communications channels in sizes and levels that haven’t been seen before – TV advertising, campaign events, direct mail, phone canvassing, public relations, TV and radio appearances, celebrity endorsements, email marketing, and an impressive Website.

They used ALL the marketing tools and channels available, which is much harder to do than using just a few.

What if your business is not as large as a presidential campaign or a Fortune 500 company?

Startups and growing companies without big (or any) marketing budgets can still communicate effectively on a low budget, but don’t underestimate the challenge.  Here are few ideas to help you make the most of marketing communications efforts.

Make the Most of Your Communications Efforts

• Realize that marketing requires work. The good news is many new marketing communications tactics don’t require big bucks. The bad news is that they require real work – creating content, interacting with people, and building relationships. This requires time and effort, which aren’t free or even cheap. (See the previous post on the cost to create a Website.)
• Focus your message. The proliferation of communication channels complicates things, so your message needs to be simple and strong. A clear strategy and a laser focus can help you develop a message that makes an impact with a smaller budget. Strategic focus is harder than it looks, but you can’t develop powerful story without it.
• Have a great product. The expansion of new Web-enabled social media tools allows customers to talk to each other in many new ways. Your future customers find out about new things and get recommendations from each other. If your product or service isn’t making your customers very happy, no amount of marketing effort or spending will overcome this.
• Leverage social media tools. Existing businesses have to deal with the new “social media” world where your customers and market influencers are talking to each other online — in blogs, forums and online communities. At least one of your key tactics should be a new Web approach that engages with people in your market. The new Web-powered world is real and very important, so do not procrastinate if you haven’t jumped in yet. (I did – you’re reading it.)
• Don’t expect a silver bullet. Finding and converting new business doesn’t come easily (or quickly) when you start ramping up marketing efforts to fuel your growth. There isn’t just one idea or tactic that is going to save you. Marketing communications execution takes time, trial and error, and persistence.

This year, many companies started use social media tools like Twitter and Facebook. Last year, corporate blogs and viral videos went mainstream. In the future, we will have new ways to reach people on their mobile phones. The ways we communicate will continue to expand and fragment.

The marketing communications challenge is getting harder, but you can succeed if you approach it wisely and take a long term view.

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