How To Succeed In Upstream Marketing

Author: 
Anand Srinivasan

The traditional approach to marketing involves brand building, advertising, participating in trade shows, launching mailers, and so on. This approach is also known as “downstream marketing” since they look ‘downstream’ at the customers in the targeted segment and optimize the ways to communicate with them.

An alternate to this has been emerging in recent times and is becoming increasingly popular among B2B organizations. Called ‘upstream marketing’, this strategy involves expanding the scope of your product or offering to cater to what your customers want in addition to what you already serve them. Upstream marketers typically look at the long-term vision of the business and work closely with the engineers or research scientists to identify what’s next for your business.

Truth be told, these two strategies are not disjointed and a successful organization must establish a balance between both the marketing strategies. In this article, we will take a look at a few ways a business could succeed with upstream marketing.

Understand Customer Behavior

The most effective way to execute your upstream marketing campaign is by understanding customer behavior. For instance, a CRM software maker may work with customers who may also pay for other business tools like VoIP and enterprise text messaging. By understanding your customer profile and what they pay for, you could identify new opportunities for your own business.

A good example of this strategy is the eCommerce software company Shopify. As a leader in the space, Shopify already enjoys great brand equity and trust among customers. Studies however show that over a third of eCommerce businesses hire third party suppliers to handle logistics for them. The company has now acquired a service called Oberlo that connects eCommerce business owners with suppliers who can ship products on their behalf. This way, Shopify has expanded their product vision by moving beyond just making eCommerce software and instead fulfilling the other needs that their customers have.

Chart Out Upstream Strategy

Once you have identified an upstream strategy, the next step is to plan its execution. To begin with, look at the current ecosystem that exists for your customers. This gives you an idea of the competitors, the pain points that your customers go through, and how their needs are being fulfilled.

The next step is to prepare a launch strategy. In a lot of cases, upstream marketing involves building features that are incrementally better than what you currently offer. But for cases where your strategy involves venturing into a whole new product segment, you must consider the two alternatives - Should you build a product from the ground up, or is it a better idea to acquire an existing service provider?

Launching from the ground up is cheaper, but could also take a lot more time and resources to get it right. On the other hand, acquiring a service provider can be a little more expensive but can help you hit the ground running. It’s a good idea to build your own product if the existing service providers do not enjoy a great reputation or have poor execution.

Minimize Distraction

One of the biggest disadvantages with an upstream marketing campaign is that it could distract you from your core business objectives. Businesses typically expand in two ways - by launching their core offering in new markets, or by diversifying their offering to their existing market. Upstream marketing is usually a strategy in the case of the latter.

But innovation as a marketing strategy is always a gamble that may or may not pay off. Apple is a company that is a good example here (albeit in the consumer segment). Their marketing has always relied on innovations through launch of products such as the iPod, iPhone and iPad. While these innovations have paid off, it is also worth remembering their failure in the launch of other products like the Hockey Puck mouse in the late 90s or the Apple TV in recent times (although the jury is still out on this one).

In other words, although upstream marketing has paid a company like Apple heavy dividends thanks to their entry into the music player, smartphone and tablet industry while it has failed in the case of other product launches. With upstream marketing, it is easy to get distracted with new launches but it is also worth noting the risks and hence minimize your distractions and focus your resources on a few innovations at a time.

Upstream marketing relies heavily on the resources at hand. As a result, this may not always be for all businesses. Also, unlike downstream marketing that is predictable and less risky, upstream marketing needs your organization to be able to afford failures. However, the potential dividends are high and for this reason, it is important for organizations of all sizes to allocate at least a small part of their marketing budget on upstream campaigns.

Anand Srinivasan is the founder of Hubbion, a suite of free business apps and resources.