Consider this: Despite being the oldest auto maker in America, in 2013, Ford Motors spent $2.14 Billion on advertising; giving Ford the 7th highest marketing budget on Earth. Now, take a second and try to estimate what one of 2013’s hottest companies, Tesla Motor’s must have spent. Keep in mind they’ve only been around for ten years, yet currently have a market cap of $24 Billion (yes with a ‘B’). Finished? Believe it or not, if you’re guess had anything more than a single zero in it, you’re way off. Tesla Motors invested exactly $0.00 into it’s marketing budget in 2013. Despite this, last year they sold over 30,000 luxury sedans and saw a 500% rise in their share price. Clearly, they’re flipping a lot of conventional marketing logic on its head; here are a few things other companies can learn from this Silicon Valley innovator.
1. Don’t underestimate word of mouth- Tesla sells a premium sedan which costs over $70k, and yet can’t currently build the car fast enough to match its orders. How do they maintain such strong demand without ads or commercials? By believing that happy customers are the best markers money can buy (And the only ones who don’t demand a salary!) Nielsen found in a recent survey that consumers value recommendations from people they know 15% more than the next closest form of marketing (Branded websites)! Tesla fosters brand loyalty with customers; and they repay the company with a cult like passion which directly influences future sales.
2. If you build it, they will come- Tesla’s primary focus has always been building the best products possible, and trusting that their target market will find them. As a result, while Tesla rarely reaches out to speak directly with its consumers, the media has done a great job paraphrasing what they might say. Between winning “2013 Motor Trend Car of the Year”, “2013 Automobile Magazine Car of the Year”, and “Time Magazine’s Best 25 Inventions of the Year 2012”, the Tesla Model S somehow found time to become the highest rated automobile in Consumer Reports history. Beyond taking up all the room on Elon Musk’s living room mantel, these awards, combined with the companies success, prove something. Even in our fast paced, media dominated society, consumers will still reward the “Product before Profit” approach with high demand, even if they aren’t compelled to buy said product every commercial break.