Dear SaaStr: What Are Some Signs That Your B2B Marketing Programs Won’t Scale Well?
The #1 flag your marketing efforts aren’t working is that you are spending too much — but importantly, in the aggregate. Don’t overindex on any individual campaign or initiative.
Let me dig in a bit. Most B2B companies, once they have a mini-brand, start to get some amount of organic, “free” leads. People hear about you. They come to you. Not a ton, at first, but some. The CPA here is basically $0. And that’s the boost that all marketing teams get. It flatters marketing. It makes it look more cost-effective, and effective overall, than it really is.
All paid marketing is expensive. All of it. You’ll wince and cry. A sponsored webinar for $35,000? A trade show for $80,000? An ad in a top newsletter for $20k?
But if things are going well, on a blended basis, at least, it should all work out. Your marketing costs should be averaged across all sources of customers, including free. Ultimately, all the best software companies get the majority of their new customers from word-of-mouth and referrals. You need to invest there, too. But even once you put real $$ there, the CAC will be low.
So my rule from all of this is basically, invest in any marketing program that even returns $1 for $1 spent. Yes, that’s expensive. But if your brand is strong and your customers are happy, and second-order revenue kicks in, that should blend to a decent CAC when you add in the free-ish leads. And if those customers are happy, that $1 will beget $5 and $10 over time. So it’s worth it. More on that here:
CLTV Isn’t The Whole Story. Don’t Shortchange Second-Order Revenue.
If your head of marketing can’t even do that — if your total marketing spend / total new customer (paid + free) revenue doesn’t make sense — it’s a sign to find someone new. That may sound harsh. But they’ll just spend all the money.