Tesla is one of the most expensive brands in the US as well as in the world. In less than two decades, it has become the most valuable automotive company with an astonishing fan base and mind-blowing customer loyalty of over 80%. What’s more, until very recently, they managed to achieve this impressive result with a zero marketing budget. How can you leverage a marketing strategy for small businesses based on this success story?
If you’re a little jealous, I hear you.
When I decided to explore Tesla’s marketing strategy, I couldn’t help but think over and over how can a small business owner benefit from the Tesla story. Marketing tricks that work well when you’re an established brand, don’t reap any benefits to a smaller company.
However, I believe Tesla’s story tells an ultimate dream for millions of entrepreneurs, that is, having a $0 marketing budget. Or at least as low as you can get to this ballpark. Thus, there are several takeaways from Tesla you can use from the very outset of your business.
Here’s how you can leverage Tesla’s $0 marketing strategy for small businesses and scale without investing a single dollar in paid advertising.
What’s Tesla’s Marketing Strategy?
What was the last time you saw an ad from Tesla? Don’t even try to remember because it’s highly likely that this never happened. Unlike many car manufacturers, Tesla is known for spending virtually nothing on marketing.
Due to the striking increase in Tesla’s popularity in the 2020s, many have forgotten that the brand was founded in 2003. From 2003 to 2015 Tesla’s marketing budget was $0. Currently, they have some marketing costs
How Many Cars Tesla Has Sold?
Since 2016, the amont of produced cars has skyrocketed. However, it wouldn’t have ever happened without them having chosen the right marketing approach years back. We’ll break it down into valuable takeaways in a few minutes.
Consequently, as small business owners, we could take lessons learned from how Tesla has laid a solid ground for its excellent products and customer service, raving fan base, and worldwide buzz.
Does Tesla Have a Marketing Department?
Rumor has it that Tesla has no marketing department. There’s no Chief Marketing Officer or Senior Marketing Manager whose goal is to promote the company. That doesn’t mean though that Tesla does no marketing at all.
In 2015 their average marketing budget was still way below competitors: Tesla used a $58.3 million marketing budget while Audi and BMW spent $195 million and $196.6 million respectively.
Lessons Learned from the Tesla Marketing
Both as individuals and businesses, we have much yet to learn from Tesla. Let’s take a look in a rearview mirror and see what made the tech/automotive giant who they have become.
1. Identify your inspiration and learn from the best
One of the obvious inspirations for Tesla was Apple. “Tesla is not an automotive company, it’s a tech company that builds cars,” says a former employee who developed products in both companies.
The two iconic companies have too much in common in terms of leadership and innovation. Both integrated hardware and software in a way that makes it accessible for non-tech-savvy users, meanwhile developing an ecosystem of their products and accelerating the use of this multiverse.
Tesla’s passion for Apple’s approach is far more than just inspiration. Knowing that the most expensive and valuable resource in the 21st century is people, Tesla takes pleasure in hiring people from Apple. It was much more than mere inspiration. Elon has publicly approved Apple’s employees, enabling an employee swap between the two companies.
‘It’s no accident the companies have a lot in common, according to a half-dozen former employees who worked for both Tesla and Apple. Tesla hired managers who brought members of their teams from Apple, importing its design language and culture.’Washington Post
- Define who inspires you and what exactly is unique about them.
- Think about whether hiring staff who worked for your competitor could bring you
2. Allow yourself to be expensive
When Tesla was designing its first product, it took a unique approach to gain its market share. Although their initial intent was to build an affordable electric car with the goal of selling millions of them around the world, Tesla decided to go for the opposite slice of the market in the beginning.
They decided to build a luxury car.
They were struggling with the overwhelming costs of new product development. In a need of funds, they created a luxury sports car that was compelling, absorbed the costs, and generated the demand for electric vehicles among the general public.
On the Tesla’s official website, CEO Elon Musk describes the company’s mission.
‘If we could have [mass marketed] our first product, we would have, but that was simply impossible to achieve for a startup company that had never built a car and that had one technology iteration and no economies of scale. Our first product was going to be expensive no matter what it looked like, so we decided to build a sports car, as that seemed like it had the best chance of being competitive with its gasoline alternatives.’Elon Musk, Tesla’s official website
Tesla needed the wow factor.
So the first Tesla car released in 2008 was expensive. It was a Tesla Roadster. And it was from $109,000 to $170,000 back in 2011 (it’s currently from $200,000).
From 2008 to 2011 Telsa sold about 2,500 Roadsters, which may seem not much, but for Tesla at that point, it was a huge success. Their competitors have been struggling for dozens of years with selling their respective sports cars and Tesla in just a few years was able to build strong hype and acceptance of their products on the market.
Creating exciting products is exactly what allows them to be expensive.
- Create a wow product, and make your customers go crazy with it
- Allow exclusive products to be expensive
3. Allow yourself to be different from competitors
One of the plainest and most self-explanatory strategies is often overlooked when you’re trying to build your business.
When you are launching a new product or a new business, your natural behavior is to analyze your competitors, find out what worked for them, and just do the same. The thought behind it is that if something worked for your competitor, it’ll most probably work for you too.
While this approach brings its benefits, it also most certainly will make you look even more like your competitor, instead of putting your uniqueness forward. There’s a grain of self-dought in us that always tells us others should know better.
If Tesla took this way, they would have analyzed all their big competitors like GM, Toyota, or Ford that have been on the market for centuries. They would have thought about investing in marketing like other car manufacturers do. They would have thought about implementing more features into their cars rather than working on better service or ecosystem.
It takes a lot of guts to be different and to change the conventional approach. The world wants you to be typical because it’s just simpler. Harsh as it sounds, it’s a ‘make it or break it’ strategy, but still sometimes it’s better than doing the same boring deeply rooted stuff for years.
- Identify the areas where you can be different from your competitors.
- How the conventional in your industry can be changed?
4. Creating an outstanding customer experience is a winning strategy for small businesses
One of the key elements of Tesla’s success is its focus on outstanding customer experience.
Tesla started by eliminating the things we hate most about buying cars. Remember a frustrating visit to a dealership when you need to negotiate with pushy salesmen?
Tesla deliberately designed a buying process that was very different from the ordinary. In fact, you can conveniently make a purchase online without being upsold on a few things you don’t even need. It’s easy and straightforward.
Yet again, Tesla’s approach to selling cars with its sleek showrooms in the malls mimics Apple’s experience-focused store model. It’s a far cry from traditional car dealerships and it’s much closer to tech than to the automotive industry.
By focusing on the customer’s online experience, Tesla sets itself apart from the competitors that are still overwhelmed by opening new car dealerships.
Starting a business is overwhelming and you often focus a lot on the product, forgetting that the customer experience starts long before they have purchased from you. Focusing on the customer experience is a winning marketing strategy for small businesses.
- Identify things in customer experience in your industry that may be frustrating or infuriating.
- Think about how you can change them.
5. Build your community of raving fans
Tesla’s marketing strategy relies on two pillars: word of mouth and referrals.
Word-of-mouth is basically the primary marketing tactic that existed long before even the word ‘marketing’ emerged. So if consumers tend to trust recommendations from people they know and trust — friends, co-workers, and family members — more than brand-owned channels, why reinvent the wheel, making marketing more difficult and cumbersome?
Tesla’s referral program is very simple yet exciting. It rewards those who share their amazing experiences with others. Some of the most exciting bonuses you could get in a referral program were
- priority access to newly released vehicles
- software updates
- early access to product unveilings
- watching a SpaceX rocket launch
- launching a time capsule into space
And of course, you could get a new car.
YouTuber Ben Sullins referred 115 people to Tesla and facilitated $12 million in sales. In exchange, he has received the biggest prize: two free Founder’s Series Next Gen Roadsters. And here comes another YouTuber, Andy Slye, who has also scored two Roadsters after referring several buyers.
Instead of paying eight figures sums to marketing agencies, Tesla instead converts their users into brand raving fans that will promote the product for them. Referral rewards got Tesla tons of press coverage and encouraged a lot of promotion from Tesla owners.
Regardless of your company’s size, word of mouth still will work all the same. While direct advertising undoubtedly brings in tons of traffic to your site, word of mouth is a cost-effective channel that breeds customer loyalty.
- How can you build that wow experience for your customers?
- Which type of referral program can you design?
Align your mission with something bigger than you
Tesla’s referral program says:
‘Thank you for supporting the world’s transition to sustainable energy.’Tesla’s website
Not only is Tesla committed to producing high-quality cars, they also stick to the mission of building a zero-emission future.
As the focus on the damage that human beings have done to Earth grows, there’s a demand for countries, businesses, and individuals to address their footprints. The faster we stop relying on fossil fuels and move towards a zero-emission future, the better.
Tesla is addressing the vision of a sustainable future not only by creating electric cars but also by developing a huge ‘sustainable energy ecosystem’. They facilitate a transition to electric cars for other manufacturers by lending them charging stations for free. The company helps the world to achieve sustainability.
So whenever you purchase a Tesla and pay more than you planned to spend on a car, it’s all going for the greater good.
The product that gives you the feeling that you make a difference and appeals to the greater good will always be successful.
- Whenever you’re building your brand’s strategy, search for a goal that is aligned with a vision of a better future. After all, the goal of every company is to make the world a better place.
In this article, I shared key takeaways from Tesla’s $0 marketing strategy from small business that might help grow your business too.
Despite being perceived as an innovative company, Tesla did not invent the electric car, or the luxury electric car. Yet they did invent a successful business model that implied keeping control over sales and service and expanding the number of charging stations.
I’m interested to know what was the most exciting part of Tesla’s marketing strategy for you. Let me know in the comments below!