Where MBAs Can Actually Help With Growth Marketing
Would you rather hire a growth marketer with two years of experience or a newly minted MBA grad?
If you’re like most startup folks, you’ll take the experienced person any day of the week.
I get it. I would too. The growth marketer’s bias towards action trumps pondering the nuances of business theory.
But, believe it or not, there are actually helpful skills MBAs bring to the table that growth marketers can learn from.
Here are three I picked up during my time at business school.
1. The importance of brand awareness
Michelin Stars are awarded to the top restaurants in the world.
One to three stars are divvied up based on excellence and evaluations from trained, anonymous staff members.
Even a single star is a huge accomplishment.
For example, in 2014, 500 Chicago restaurants were eligible, and only 25 received any stars at all.
Alinea, one of the two restaurants awarded three stars, has an average ticket price of $500 per person. We’re talking the crème de la crème both literally and figuratively.
The Michelin Guide (which awards these stars) was first published in 1900, a few years after brothers Edouard and Andrew Michelin, came up with the idea to give people a reason to travel (and therefore, a need to buy their new air-filled tire).
Even the description next to each star is worded with travel-inducing language like, “Stop on your journey,” “take a detour,” or “worth a special trip.”
The first guide was 399 pages, with the first 33 focused on Michelin tires.
The cost to produce this thing was, and still is, a massive undertaking. The New Yorker opined in ‘54:
“The Michelin Guide is unique among commercial guidebooks, in that it makes a virtue of losing money, and by doing so at the rate of some tens of thousands of dollars a year, it has achieved a reputation for thoroughness, discrimination, and incorruptibility that is also unique.”
We’re talking a massive investment, in hopes of maybe, possibly influencing the market and building a recognizable brand.
For all the good growth hacking does (and there’s a lot), it’s data-driven obsession threatens to jeopardize brand-building endeavors (like the Michelin guide) that don’t immediately result in more signups or daily active users.
There’s no spreadsheet line-item or flashy metrics dashboard that shows “brand equity” trending up.
But if there’s no foundation of awareness and trust, nobody’s going to buy anything from you. MBAs get this since they’re groomed to step into roles with well-established brands, like a Coca-Cola or General Electric.
The best of both worlds is combining growth hacking scrappiness to excel at customer acquisition, while also investing in the under-the-surface brand equity that influences every new signup.
2. A working knowledge of accounting and finance
If a restaurant priced its meals based solely on food cost alone, they’d go broke.
For example, if they paid $1.00 for an item, that item should be priced at a minimum of $3.34, or 30-35% more than the purchase cost.
The reason is because they also have to factor in rent, electricity, supplies, and all the people required to take orders, prepare the food, and clean up afterwards.
This is managerial cost accounting 101. (Not that GAAP-style, financial accounting for public companies.)
It’s the basis for running break-even analyses, inventory and production audits, and deciding whether or not business investments will pay their money back.
An investment in ad spend is no different.
You put down $X first, knowing $Y will show up.
How do you know? Because you’ve already run a basic sensitivity analyses based on changes in cost per click and conversion rates.
Bookkeepers are accountants by definition. But they’re often one-dimensional; primarily focused on data-entry to run reports at the end of a week, month, or year.
Similarly, marketers (and growth hackers) can get tunnel vision. Our bosses or clients say the budget is $1000. And we charge ahead into the abyss without always factoring in what the break-even point on a sale should be, or focusing on tactics that puff up vanity metrics (like new traffic) rather than those that speak to revenue (like lifetime value).
And many times, tactics that puff up one number depress another. That’s why in one study, 70%+ of free trials are often useless—because we do things like get rid of that extra qualifying step prior to signup to bump up the new signups number.
It’s only when you look at the entire funnel that things become more clear. Moz found that people who converted on their first or second visit (which sounds awesome in theory) were actually terrible customers because they churned just as quickly.
The most profitable customers, instead, had visited the website at least eight times. “Many, many visits often correlated with high purchase prices”, according to Rand.
MBAs spot these trends that impact our balance sheets. Because they understand how a business should be run (at a super high theoretical level, no doubt). They’re able to have an educated conversation with a client or boss about their business mechanics—from e-commerce to personal injury attorneys to SaaS startups to industrial warehouse real estate people.
And that gives the ability to quickly diagnose a business and understand which marketing efforts are going to (a) make the business more money and (b) drastically decrease costs. It’s the same data-driven mindset growth marketers are known for, but with a bent toward understanding the higher-level finances behind growing a profitable business.
Which at the end of the day, is what investors and execs care about most.
3. Old school marketing fundamentals
In about a year, Dropbox scaled from 100,000 to 4 million users.
They tried tons of tactics before that point, like advertising and PR, but none of them gained much traction.
The now-infamous refer-a-friend hack:
Hotmail was doing the free account thing over a decade before, where “Get Your Free Email at Hotmail” was popping up in the bottom of each email being sent.
What about other famous growth hacks?
From Airbnb piggybacking on the Craigslist platform to YouTube taking over MySpace, these tactics aren’t all that clever if you’ve taken one formal marketing course.
In fact, you probably learned it on your first day of school: distribution (or placement) is one of the 4-Ps.
Product, pricing, placement, and promotion are all classic marketing principles from the 1960s.
With this broader context, a lot of today’s growth hacks are just good, old-fashioned marketing.
MBAs know these foundational (and oftentimes boring) marketing frameworks. As a result, they’re less swayed by the latest hacktic, and can help startups focus on the fundamentals—a big need in a world where some believe everything the tech world says about marketing is wrong.
The whole package
For a startup, choosing a growth marketer over an MBA makes sense. Data-informed action is what moves the needle after all. But the whole package, the dream, is to combine the north-star metric driven scrappy as all get out growth marketing mindset and the focus on the fundamentals to build a lasting brand MBA mindset. The whole package is the best package.
What are your thoughts on the intersection of growth marketing and an MBA? Any insights from your own experience? Let us know in the comments.