In case you missed it, our CEO, Mike, wrote about Natural Rate of Growth in his weekly newsletter last week. In short, OpenView Labs recently featured a new SaaS metric…
I’m Giving You $50k
That might have been the most click bait subject line I’ve ever written. My intentions were positive though, I wanted to understand how the best marketers (and friends) in my network would spend $50,000 if…
That might have been the most click bait subject line I’ve ever written. My intentions were positive though, I wanted to understand how the best marketers (and friends) in my network would spend $50,000 if it were in their hands.
My recent intrigue with marketing and customer acquisition stems from a couple key areas:
- I believe the outbound BDR (business development representative or sales development representative) channel will only get noisier and more crowded as the defacto go-to-market strategy. The market has responded to this by creating more tools for BDRs that will only exacerbate the problem. The cost to hire a couple new graduates and have them hit the ground is pretty low. Obviously, BDR teams work well for a lot of organizations and certain business models but my guess is most companies across the board are seeing the channel yield less.
- Marketing is currently the lifeblood of our business and I pretty much don’t know anything about it. We convert our trials around 12% to paid customers and that comes from search, content, word of mouth and starting to scale paid channels. My goal is to ramp our awareness, get more trialers and improve conversions throughout the funnel. I figure my trusted friends and network would know best.
I chose the $50k number because it is roughly what a new hire BDR would cost the company in burn. Out of respect for the folks that helped out, I anonymized the individual and any personal data but the overall concepts are very real. Below are some quotes & examples. If you wish to have your company included just email email@example.com!
Company Profile: SMB Marketing SaaS
If given $50k and tasked with acquiring new customers, I wouldn’t start with BDRs unless the product and price point were such that NO inbound tactics would work. Inbound marketing is typically more cost effective and the effort put in has more longevity than BDR activity.
$5k – Software/Tools
Before investing in channels to generate leads & trials, I would make sure necessary tools are in place and analytics/reporting is set up to quickly and easily track effectiveness of the spend.
$35k – Promotion
With the right content and tools in place, I would test different channels quickly and cheaply to find traction. Anywhere that is effectively generating leads/trials I would continue to scale and any channel that isn’t producing, I would cut spend and reallocate to channels that are producing. After a couple quick iterations on this, I would be efficiently scaling leads and trials at a rate that a BDR couldn’t even when fully ramped.
$10k – Content Development
This would be a large list of blog posts written targeting pain points and optimized to rank for keywords with decent search volume. It would also include a couple larger pieces of content that could be gated to generate leads. All of this content would be key to ranking organically and creating multiple evergreen sources for both leads and trials. These will be working 24/7/365, which is guaranteed to outwork a small team of BDRs.
Final thoughts: There are a lot of variables at play, but I would guess that in this scenario I could generate 10x the opportunities through marketing than I could with BDRs.
Company Profile: Healthcare Enterprise SaaS
Our top metric is Sales Qualified Leads and Marketing Qualified Leads is a close second. Other interesting metrics being Content Downloads and Attendees to Field Events.
$50k would get you 20 Sales Qualified Leads. My comment: Wow! You must have an incredibly high ACV and long sales cycle 😉
Company Profile: Buffer (via a public post)
Buffer has a public post on their Key SaaS metrics from a year ago. They break down their CAC above. Once you start to scale like Buffer you’ll include items like product teams dedicated to lead gen and onboarding into your Blended CAC.
Their Avg. MRR per Customer from September 2015 is $14.33. That equates to a payback period of ~3.2 months ($37 CAC /$14.33 Avg MRR /80% Gross Profit Margin), not bad!
Company Profile: Visible
At Visible we track our Customer Acquisition Cost per new dollar of ARR (annual recurring revenue). So for every new dollar of ARR we book it costs us roughly 46 cents currently. This is a time when your chart going down to the right is a good thing 😉
$50k towards marketing would theoretically net us $108k in new ARR. I say theoretically because you would need to have channels to allocate the budget to as well as assume that your CAC stays constant as your investment increases.
Search engine land also has a great benchmark resource for Adwords Cost Per Acquisition across 20 industries. I hope you enjoyed! As mentioned, If you wish to have your company included just email firstname.lastname@example.org!