Marketing After the Startup

Just like a child, our business took its first awkward steps and then, suddenly, became an adolescent in need of guidance and discipline

By John Friess

I remember exactly when I knew our company, wired.MD, had entered its second stage. It was at the beginning of August, 2002, nine months after the launch of our marquee offering -- the streaMed Patient Education Solution, a series of streaming videos describing diagnoses, procedures, and treatment plans for airing in doctors' waiting and examining rooms.

As co-founder of the company with my brother, Mark, and as vice-president of marketing, I was personally responsible for the product, overseeing its launch, and the busy first-year marketing efforts.

That August, we were pitching a medical group at a women's health center, when we were directed down the hall to a health-resource center. It featured an Internet-connected computer that patients could use for accessing information. Eureka! With just some slight engineering tweaks, our product would be perfect.

Welcome -- not only to a company's second stage, but also to its year-after-the-launch marketing campaign. That's the time in the life of an entrepreneurial concern when you know you've moved past the startup to another level. You learn quickly that emerging companies and their products age as animals do, with one year being equal to seven in human terms. However, unlike 7-year-old children who get placed in a development refinement system -- aka school -- products don't come with a manual of instruction. That's where I hope this article comes in handy. For entrepreneurs dealing with marketing concerns as their companies grow up, my experience could be a guide.

THE BIG SHIFT.

  The Eureka! moment we experienced nine months after the launch was really us realizing, suddenly and somewhat painfully, that we might have been barking up a more difficult marketing tree with respect to streaMed. Originally, we were aiming solely for doctors' practices. With the interest exhibited in the health-resource center, we considered that a more effective and scalable strategy would be to sell an ASP-based video patient-education software product that patients could access directly in health-resource centers, libraries, even on their home computers.

Of course, by then, we were also getting a handle on our marketing budget, which we determined was too costly. Back when we were aiming to reach doctors, we sold streaMed at trade shows, attending about 14 in the first 9 months. What we found was that doctors are a hard sell, and that the shows were expensive, costing us $110 to $125 for each qualified lead we acquired.

So we immediately shifted gears. We halted all marketing efforts aimed directly at doctors' practices, and we reset our thinking to reach the new health resource-center audience. In doing so, we were taking the first step necessary for marketing during a company's second stage: the need to reassess the identity created during the startup and reaffirm or alter it.

CHANGING GEARS GRACEFULLY.

  Having decided, in our case, to alter our marketing focus, we needed to adjust both the product and our message. Take our product, no longer could we sell specific specialty video packages to doctors whose staffs would, in turn, air them for patients. Instead, we would be selling a single software package that individual patients, like you or I, would be using on their own in a room specifically designed for accessing health-care information at hospitals. The package would have to be as easy to use as, say, an ATM machine. We also figured that we could and should supplement the digital offering with marketing tools that encouraged physicians to send patients to these centers and that promoted usage among patients.

Next, we considered our marketing strategy. We cut back on the expensive trade shows, attending only four of them. and turning instead to telemarketing. We hired two people to make cold calls -- all day, every day -- from free Internet databases. We created direct-mail materials and direct e-mail campaigns. All of these efforts helped bring down our cost-per-qualified lead to $25, from $110 to $125. In addition, the new approach helped generate so-called "viral marketing," in which satisfied customers get the word out. In changing gears, however, we understood that some things don't change. By year two in a company's life, brand identities, color schemes, and corporate culture begin to belong to the entity and come to be identified with it. In shifting our market focus, for example, we briefly considered how our name, wired.MD, might seem to limit us to the physician marketplace. However, because our original name had become so much a part of our corporate and public identity, we decided to stick with it.

BACKROOM MANEUVERING..

  Of course, a major marketing shift after the original plan also involves attending to necessary shifts in other aspects of the enterprise. For example, we quickly realized that our team wasn't appropriately designed for our revised marketing strategy. So we've trimmed the staff to 9 full-time and 5 part-time workers, from the 16 full-timers previously employed.

In addition, we've refined our goals. Under our new marketing model, we now have 63 customers -- 15 medical libraries or health-resource centers and 48 small to large physician groups. What is important, we have determined, is carving out a definitive chunk of the market -- specifically, licensing streaMed in one manner or another to 3,000 physicians, which is equal to one half of one percent of the total marketplace. That amount of market share would place us in the ranks of highly viable healthcare-information software companies, opening up many doors for our future.

SHOW ME THE MONEY.

  I said earlier that the development time frame for new products can be defined in animal years. Now, let me stress that this time line is shrinking even further. It's essential that companies which have moved beyond the startup phase progress quickly from macro to micro thinking. By that I mean making sure the right message is getting to the right prospects through the right channels. Indeed, focus for Year Two must be on marketing and sales of existing product lines.

So define the market (as we did when spotting the enthusiasm in the health-resource center), tailor the product appropriately (as we did when we shifted to the marketing capabilities of our software package), and adjust the marketing strategy so that it is both effective and cost-effective. Run the numbers, and excise the excess.

Finally, keep in mind that an adolescent company still has a key advantage: the entrepreneurial spirit. Founders who are agile, resilient, passionate, and ignorant about the impossible are able to meet the Year Two changes that the market imposes.

John Friess, 27, founded wired.MD with his brother, Mark, in March 2000, and serves as vice president of marketing, overseeing product strategy, market development and industry marketing. Based in Portland, Oregon, the company develops technological solutions for healthcare providers that benefit patients and practices. Its major product line, called the streaMed* Patient Education Solution, is a video patient education software suite. Suitable for airing in doctors' waiting areas, examining rooms, medical libraries and health resource centers, the videos are designed to educate patients about their diagnoses, treatment plans and procedures. The company has completed two financing rounds: $900,000 in July 2001 and $1.1 million in November 2002.

Entrepreneur's Byline comes to BusinessWeek Online readers courtesy of EntreWorld.org, a resource for entrepreneurs that is sponsored by the nonprofit Ewing Marion Kauffman Foundation

Before it's here, it's on the Bloomberg Terminal. LEARN MORE