Attention start-up companies: watch out for the seven communication errors

Citation

Hampton, L. (2001), "Attention start-up companies: watch out for the seven communication errors", Strategy & Leadership, Vol. 29 No. 2. https://doi.org/10.1108/sl.2001.26129bab.002

Attention start-up companies: watch out for the seven communication errors

Attention start-up companies: watch out for the seven communication errors

Lou Hampton

Red Herring predicts that 95 percent of all start-ups will fail; and this year's dot.com cataclysm certainly makes that figure believable. However, blaming the recent demise of so many Internet retailers and content companies on "running out of funds," as the media tend to do, disguises the real reasons behind most failures. For example, when WholePeople.com, a one-stop portal for health-conscious consumers met its early demise, the cause was neither lack of cash nor lack of a good concept.

Typically with conventional and technology start-ups, one characteristic is common for those who reach success: they have communicated persuasively with investors, customers, prospects, their employees, and the media. Unfortunately, the marketing efforts of many start-ups miss the point that marketing is about communication. Assuming good business decisions, it is communication that ultimately drives success or hastens failure. By recognizing seven fatal communication flaws and following a simple blueprint for avoiding them, start-ups can communicate their vision effectively to each of their audiences and position themselves for a profitable future.

Flaw No. 1: no WHAM! factor

A WHAM! factor is the key to tailoring persuasive communication to an audience because it represents the question of most concern in the mind of the listener, namely "what here applies to me?" An audience's WHAM! factor guides the approach to messaging – laying the strategic groundwork of communication – for that particular group. Achieving impact requires knowing the audience and giving them what they need.

Customers, for example, want to know how the new product or service will make their lives easier or their businesses more successful. They want to know how much the product costs, how easy it is to implement, and what kind of support they can expect.

Investors want assurance of the leadership team's management competence. They also want a clear sense that those leaders have a vision supported by a sound business model and strategic plan that will produce results.

The industry trade press wants "good copy" and interesting information that draws in its technical readers. For the business press and the more general press, the message must be broader in appeal and less technical. Readers of the Wall Street Journal, for example, are primarily interested in the company's viability, lessons they can learn, and new ideas and markets they have not considered.

The message for employees must create enthusiasm within the workforce. But it must also make it easy for employees to explain to friends, family, and others why the product or service is a great idea and what problems it is going to solve.

Flaw No. 2: no story

Another fatal flaw is not having a story or being unable to articulate a story. E-tailer Cyberian Outpost demonstrated this flaw by shooting gerbils out of a cannon in a TV commercial, while neglecting to tell viewers what their Web site does.

Any story has two parts. The first part deals with the problem, pain, and frustration facing a publication's readers or a target audience. The second part demonstrates how the company's product or service solves the problem, eases the pain, and ends those frustrations. Often start-ups become so absorbed in the solution, they neglect to remind audiences of why their solution is needed.

Being able to articulate a story also translates to having a user-friendly Web site. The Boston Consulting Group discovered that 28 percent of all attempted purchases on the Web ended in failure because of "poor site design, inadequate information, and incompetent customer service" (Weaver, 2000).

Flaw No. 3: keeping the message among the leaders

Some executives keep the message closely guarded among the company's leadership and do not believe in the importance of communicating it to other levels in the company. An article in Forbes ASAP states, "Ramping companies that figure out how to communicate internally quickly gain ideas on new markets, learn what competitors are doing, and adapt their business models in real time" (Fishburne, 2000). This is a two-way proposition. Allow for orchestrated feedback from employees at different levels, and involve them in messaging so they have input and can buy into the message.

Flaw No. 4: believing the product or service will sell itself

A belief that the product or service will sell itself without the need for communication is particularly common in organizations where engineers or technical experts have created the product and founded the company around it. They do not value communication and/or do not understand its value. In some cases, they even disdain it. They believe customers will flock to the company with the better mousetrap, ignoring the reality that it was not a better mousetrap, but better marketing that made VHS VCRs, IBM computers, and Microsoft operating systems overwhelming market leaders.

Flaw No. 5: focusing solely on venture capitalists

During the start-up phase, founders understandably concentrate on obtaining venture capital to the neglect of other audiences. Some CEOs are so focused on venture capitalists they find it difficult to explain why prospects should buy their product or service.

Often CEOs do not spend enough time creating and communicating a vision that generates excitement among employees. For example, answering the question, 'What business are we in?' was a major challenge for many of the cases analyzed in an audit of Small Business Institute (SBI) case reports and Small Business Development Center (SBDC) client cases. The audit concludes, "Too often owners/managers cannot communicate their vision to customers, employees, and/or bankers, because they don't have a vision"[1].

The tendency to focus almost solely on selling to venture capitalists may have been a primary cause for failure among the many dot-coms that went under last year. Online retailer Value America, for example, although backed by Federal Express founder Frederick Smith and Microsoft co-founder Paul Allen, announced in August 2000 that it was closing its e-tail operations and filing for bankruptcy. The idea of being able to buy computer hardware, software, office supplies, and entertainment products online may have sounded great to investors, but apparently the company's message failed to convince America's consumers of its value.

A clearly communicated vision is vital because it provides leaders with the necessary focus and direction for the start-up. Venture capitalists provide the money. It is the public, the customers and prospects, the employees, and the media who create the success.

Flaw No. 6: lack of a strong communicator

Start-ups that lack a strong senior executive who is also a strong communicator can be fatal. Leaders who succeed have the competitive advantage of highly developed communication skills. They must be either naturally charismatic or have learned what it takes to be charismatic. They understand the structuring of messages and how to make them memorable. People who created a vision and then became competent corporate spokespersons started most of today's well-known, profitable companies. Sun Microsystems' CEO Scott McNealy and Oracle founder Larry Ellison are clearly visionaries who do not hesitate to capture the spotlight. Microsoft's Bill Gates, although not an exceptional speaker, has been positioned and portrayed by public relations in a unique and powerful light. Even companies struggling for funds survive because of their ability to communicate. In the case of Amazon.com, for example, CEO Jeff Bezos continues to communicate the vision and inspire people, even though profits are still not in sight.

Flaw No. 7: premature media coverage

Many start-ups rush out for media coverage before they are ready for attention. A recent example in the real estate business was tenantmix.com, a company that launched an advertising campaign and press announcements before it even had a product. The company realized no results from this exposure and went from 13 employees to two. For companies that already have their products or services, getting attention too soon can be fatal, if they are not yet securely established in their space. Larger, competitive firms are alerted, and launch a related product or service and drive the new company out of business.

It is also a mistake to rush to the media before the message is clearly formulated and a good messenger selected. It tends to result in negative or indifferent coverage, which must be corrected later at great expense. Getting attention by launching an IPO too soon can be equally dangerous. Drkoop.com, the health content site of former surgeon general Dr Everett Koop, for example, went public with a brand name and a business plan, yet there were internal disagreements and inability to decide on its messages. The company's external public relations counsel resigned the account in frustration. Not long after its entry into the public markets, its stock dropped by over 90 percent. AltaVista dropped plans for an IPO earlier this year and is now laying off 25 percent of its workforce to refocus its business with a clearer message.

Aggressively seeking attention before excited customers exist is a waste of resources. Testimonials from prominent individuals or organizations who are willing to vouch for the product or service and help tell its story provide a huge credibility factor that far outweighs the value of an expensive advertising campaign. Internet start-ups – some without sales revenue – spent $3 million for 30-second commercial spots during last January's SuperBowl. While these ads generated some click traffic initially, not many people returned to the site[1].

A bueprint for effective messaging

The seven fatal flaws can be avoided using the Message ProduXon Blueprint™ to keep everyone in your organization focused on the bull's eye – the result you want from the communication (see Figure 1).

Figure 1 The Message ProduXon Blueprint™

What do you want listeners to do or remember? While basic, this point is often overlooked. Keeping the focus on results is even more difficult when many people are involved, and the message-shaping takes part in different locations and over an extended time frame. Demand that everyone work from the blueprint graphic with the desired result written in the bull's eye.

1. 1.

   Write two to four messages with supporting points in the quadrants defined by the X.

2. 2.

   Constantly test each message against the hit list:

   • •

     Does it have WHAM!? Remember, no WHAM!, no message.

   • •

     Will my audience understand it, or is it too complex?

   • •

     Does each message strengthen the result, or does it expose vulnerabilities?

   • •

     What are the negative questions the company will be forced to deal with? Are the messages sufficient to deal with the toughest questions, or is a specific answer needed to move off the negative issues? Without this step, credulity will be lost.

Adopting the Message ProduXon Blueprint™ will ensure that spokespersons and decision-makers will stay focused on result-producing communication and away from the seven fatal flaws.

Giving the audience content

Messaging is the key to successful communication with a start-up company's different audiences – investors, customers and prospects, the media, and employees. This means fleshing out the concept of what the company is all about in a way to make it connect with and appeal to each target audience. It means developing and delivering a relevant communication. By following the prescribed blueprint, leaders can produce persuasive messages that capture the attention of each specific audience and provide the impetus for the unique objectives they wish to achieve.

Note

1. For the Audit Checklist for the Growing Business, see www.sba.gov.

References

Fishburne, R. (2000), "More survival advice, communicate", Forbes ASAP, 3 April.

Weaver, J. (2000), "New economy lies", Ziff Davis Smart Business for the New Economy, 1 August.