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  • Writer's pictureLucas Bergmans

11 ways to screw up your scale-up

Updated: Jan 4

One of the many things I learned from the super-talented and smart people in the Cazoo Product Team, is the idea of a ‘pre-mortem’.


This is like a healthy, positive version of ‘blame-storming’ that doesn’t involve anyone being made to cry or getting fired. Or at least if they do, they’ll have the satisfaction of saying ‘I told you so’. This is because the ‘pre-mortem’ is a process of thinking of all the possible ways that a project could fail (end up dead?) before it starts and then thinking of ways to mitigate the risk of it happening.


I’ve done a pre-mortem for our imaginary start-up (which I talked about in my first article here). I’ve come up with 10 different ways a foray into Brand Marketing might end in failure and what you need to consider to give yourself the best chance of success.


And just to reassure you before you start…. almost all of these are common mistakes in very large, very established businesses. Not just scale-ups.


Picture the scene…

The leadership of our scale-up read my previous article and were utterly convinced that investing in Brand Marketing was the key to future growth (smart people). They spent six months and millions of pounds on a Brand Marketing campaign and it ‘didn’t work’.


Red faces all round. A plethora of P45s dished out. Angry investors. A bad outcome in every way.


What happened? All kinds of blunders. Here are the top 11.


1.    We couldn’t agree if it worked or not. In the end we decided it didn’t work. Not sure why.

Having an agreed set of realistic expectations at the most senior level is critically important. More important than anything is having a clear view on the timeframe you’re looking at. Investment in Brand is about generating future demand and cashflow. Done well, it will have a short-term impact, but success should be judged equally or mostly on the long-term impact (e.g. awareness & consideration or ‘future demand’)

 

2.    We didn’t have the backing of the CFO/CEO and they pulled the plug after 2 weeks.

Just like any other significant investment, it’s crucial that the senior team is fully behind a push into Brand Marketing - especially the CEO and CFO. If either feel that they’ve been badgered into investing in Brand and aren’t either fully supportive or has ‘disagreed and committed’, they might be looking for a reason to pull it at the first opportunity.

 

3.    We weren’t clear which audience we were going after and how to convince them to consider our product.

By this stage, you’ve got a good understanding of your product-market fit and what makes your most loyal customers tick. That doesn’t mean you understand the broader market, where your future customers are to be found and what’s going to get them to come and check out what you have to offer. By definition, what you’ve done to date hasn’t reached them or won them over. You’re now spending in new areas to build a bigger audience so you’ll need a good understanding of where to invest, what to say and even how to evolve your proposition to bring more people in. Most likely, this means crucial new data and insights that you don’t already have, like full customer segmentation of your market.

 

4.    We didn’t have time to test the ads before they went live.

Generating effective advertising is not easy and not usually a linear process with a predictable end date. If you’re setting an unnecessary or unreasonable timeframe to get it right (e.g., booking media before you’re ready), you risk wasting a huge amount of media spend on creative that doesn’t work. On the other hand, you can’t afford to waste months and months going round in circles. A key part of the solution is pre-testing (whether qualitative, quantitative or both) which these days can be quick and inexpensive and is entirely worth the investment.

 

5.    The campaign worked too well, and we couldn’t cope with demand.

There’s nothing worse than having to pull back on a campaign because it has worked TOO well. I can’t say this has happened too often to me, but it is critical that all functions of the business that could be affected by a sudden growth in interest and demand, know what’s coming and has thought about how to respond. As a scale-up doing this for the first time, you don’t have the luxury of precedent to tell you what to expect. Work with the relevant teams on a range of possible outcomes and responses well before you need to.


6.    We made the ad campaign in-house on a tiny budget. OR, we spent far too much on agency fees and production.

How much is too much to spend on agency fees and production? Can’t we just do it all in house? How much is too little? All really important questions, and it’s possible to both under-invest and over-invest in generating creative ideas and producing them to a high standard. If you do use an external agency (and in future articles I will explain why it is almost always worth doing this) rest assured, it doesn’t have to break the bank. There are smart ways to save money on both agency fees and production without compromising on quality and effectiveness. And you want to keep as much of your budget as possible for media (aka, ‘working spend’).

 

7.    The ad agency wouldn’t let us test their idea or make any changes. We trusted them to get it right but it flopped.

There is only one person who is responsible for how well your ad performs once it’s live. It’s you, the client. Not the agency. While you need to build a trusting relationship with your creative agency and you’re hiring them to come up with ideas that will stand out and be remembered, ultimately the buck stops with you. Don’t let any silver-tongued account type sweet-talk you into something you feel (or even better, can prove with data) won’t work. If they insist that they won’t let you test (highly unlikely), find another agency.

 

8.    We spent all our money on a 3-year sponsorship deal and now we can’t get out of it.

As a scale-up you will probably not have the luxury of making large multi-year commitments that tie up a high proportion of your budget. Even if you’re offered the deal of the century for a big partnership, you should think twice about anything that limits your ability to be flexible when you need to be. This could be because you learn more about where to invest for a better return, or because you need to make cuts in future and don’t want to be tied in to certain long term commitments.

 

9.    We cut our spend on Performance Marketing to pay for it.

I’m pretty sure this has never happened, but if it did, it would be a terrible idea. As much as underspending or not investing in Brand is ill-advised, the opposite is also true. You need a balance between both Brand and Performance spend. You’ll find a huge number of suggestions of the right split (in particular, 60%+ on brand according to Les Binet & Peter Field) but you’ll need to work out precisely what works for your business over time.

 

10. The CEO wrote the script for the TV ad. She made sure it included at least 5 reasons why people should buy our awesome product.

Anyone can dream up an idea for an advert, right? Especially the CEO. She’s extremely smart and driven and came up with the idea for the whole business, you know? Technically, that’s true. But only if you’re happy to spend millions on advertising that has a high chance of failure. For most (all?) businesses, the only kind of advertising you should be interested in is advertising that works (aka, effective advertising).  Very few people can do this and statistically, most adverts have minimal effect on revenue growth. The good news is, that if you recognise this as a challenge and understand the expertise and hard work required to deliver it, you’re already way ahead of most advertisers out there!

 

11. We had a good idea. But once all the many stakeholders (and the chairman’s wife) had given their feedback, it was a bit dull and no-one noticed.

Some things improve the more feedback you get from key people. Advertising is not one of them. For any advert to stand a chance of working, it needs to be noticed and remembered, among the thousands of other adverts that your customers are bombarded with every day. Any idea that has been watered down to please a wide range of internal stakeholders (who are unlikely to have much in common with your customers) will be dull, predictable and a huge waste of money. Keep the number of key stakeholders very low. Ideally just one person. Probably the Founder/CEO. And absolutely no one who’s a lawyer.



I could have made a much longer list but I don’t want to scare you. And I’m told on good authority, that social media listicles must at all costs go to 11, no more, no less.


If it makes you feel better, even very big established multi-national brands have made these mistakes. Every one of them. Multiple times. Plus, plenty of other kinds of avoidable mistakes. I’ve seen it happen with my own eyes. Luckily for big established businesses, they can just about get away with it. They’re big and financially stable (usually). You’re not big (yet!) and you can’t afford to make loads of mistakes, spend millions of pounds and have nothing to show for it. Luckily for you, all of these mistakes are more avoidable if you spot them before they happen.

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