Category: marketing

Posts

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18 November / marketing
Last week's post on The Most Frequent Mishire in Startups generated the most comments on a post this year. In particular, it was this section. Though the startup may have achieved product market fit, the company may not understand the fit. Who is using the product and why? How does the buyer journey evolve with time? How do buyers describe the product amongst each other? Few early stage companies can answer those questions accurately.
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There's a new debate about marketing efficiency recently, and it's an important one in the era of product-led growth. If a startup has great net dollar retention (NDR), should it be willing to increase its customer acquisition spend proportionately? I remain a believer that months-to-repay is the best metric for measuring customer acquisition efficiency for a single reason. You know the answer immediately and accurately. With the annual contract you have in your hand and the amount of money you spent in sales and marketing to acquire a set number of customers in a period, you know exactly your MTR.
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28 February / sales / marketing / product
A founder posed me a question earlier this week: Do you have any data/perspective on whether it's worth keeping the unassisted free trial flow vs. providing only one path which leads to a demo and an assisted free trial? This is a complex question. Let's break it down. The unassisted free trial has benefits. There's a deeper discussion in this post: Confessions of a Perpetual Freeloader. You capture the buyer at the point of maximum intent and reduces the activation energy of the sale.
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11 February / data analysis / marketing
After publishing the survey last week, I received many questions. I've answered a few here. I'm happy the data has garnered so much interest and I hope it's helping with our two goals of sharing benchmarks and sparking conversations about how to optimize trial. If you have stories or data that buttresses or contradicts any of these findings, please share them. I'd love to publish them here. Also, if you have ideas for future surveys like this, send them my way.
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06 February / data analysis / sales / marketing / saas
At Saastr yesterday, I presented thetop 10 learnings from the Redpoint Free Trial Survey that we distributed in October. The data confirmed many rules of thumb but also raised some interesting new questions about the best way to use trials. When we distributed the survey, we never would have expected the response. About 600 companies submitted data. They span single digit ARR businesses to publicly traded SaaS companies. These businesses sell at every price point and sell to every operational buyer.
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04 February / marketing / sales / saas
As you start to go to market, there are two things to prioritize from early customers that matter more than cash. Feedback and marketing rights. The feedback matters for obvious reasons. The product is early; customer feedback will help you hew the raw granite of your initial product into shape. The second may not be so obvious. Every prospect championing a software purchase will be asked by the opponents of the sale and decision-makers: “Who else is using the software?
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The Ideal Customer Profile. The perfect customer. Can you describe it for your startup? The more precisely you can describe it, the better. That will simplify disqualification. But articulating the ICP well isn't enough. Vague ICPs are problematic. The company will focus on too broad a customer base, waste time and effort with unqualified prospects, and blunt their sales pitch with irrelevant value propositions. Clear ICPs can also be problematic. To describe the ideal customer well is not enough.
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02 March / marketing / saas / startups
Recently, I met an exceptional marketer. She described the purpose, strategy and tactics of a marketing department remarkably succinctly. Marketing's methods can seem intangible. But she explained them simply and elegantly. I drew the chart above based on her vision of marketing's roadmap. At the highest level, marketing articulates a compelling narrative. This is step 1.The narrative brings the market forward by contrasting the current state of affairs with a persuasive view of the future.
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01 November / sales / marketing / financials / saas
One of the major trends facing SaaS companies today is the rising cost of customer acquisition. Data on this trend has been difficult to find. Fortunately, Patrick at ProfitWell sent me his survey results across about 800 companies. The chart above shows the increasing cost of customer acquisition on a per company basis. Those surveyed have observed a ~65% increase in cost of customer acquisition over the last five years.
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08 August / sales / marketing / saas / strategy
At some point in the life of most SaaS companies, the business will be faced with the question, when should we move up market? The strategic question might be catalyzed by increasing cost of customer acquisition in the core SMB segment. Alternatively, a surge of large customers paying for the product might trigger the question. Or account executives might raise it. Whatever the reason, this is a key strategic question.
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24 April / saas / exits / marketing / sales
There are approximately 22 million trucks in the US. Many of these trucks run software to track the location of the vehicle, manage inventory, and comply with regulation. There are two SaaS companies operating at greater than $100M in ARR in the space and they illustrate one of the mantras on this blog: there are many different ways to build a SaaS company. After last week's post, Is There a No Man's Land in SaaS ACVs, a founder asked me to highlight some of the go to market strategies in different segments.
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17 April / saas / marketing / sales
After a startup establishes product market fit, scaling demand generation becomes the the next major challenge. Doubling or tripling ARR each year for several consecutive years is not easy. The best marketers create a demand generation portfolio. There are four axes to measure this portfolio: scale of investment, sophistication, breadth and potential. At the outset, a startup may rely on a single channel of customer acquisition. But over time, in order to achieve larger and larger bookings, the company must diversify.
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13 April / strategy / sales / marketing / saas
A friend recently asked, “Which path is better for SaaS startups? SMB to mid-market to enterprise or straight to enterprise?” It's a key strategic question for many founders building software companies. Startups that initially target small to medium businesses benefit from several key advantages. First, these businesses are faster to revenue. Simpler products satisfy SMBs, so startups can begin to charge smaller customers much sooner than enterprise customers in a product development lifecycle.
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Over the last year in particular, Revenue Ops is a term that's gaining some mindshare in the SaaS world. Revenue operations teams combine marketing operations and sales operations into one team. Yesterday, I heard time a further refinement of this idea: Customer Operations. As one SaaS executive described to me, marketing operations teams are the engines of the marketing team. The creative marketing functions produce the fuel – the campaigns, the positioning, the art.
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27 March / marketing / saas
When I first met Jen Grant, Looker's CMO, she told me a story from early days of Box, where she was SVP of Marketing. Jen spoke about the importance of creating tension in the marketing message. Aaron Levie, Box's CEO and founder, spoke at conferences about the future of collaboration. His message: Box will transform the way employees work. But if you had visited www.box.net, you would have found another positioning for the company.
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15 March / marketing
I once asked a VP of Marketing at a top SaaS company how she thought of content programming. What is the right type of content to create? I asked her. She replied with a brilliant little insight, “I look at way the best content marketers in the world do it. The TV networks.” News dominates the early morning. Then, daytime television takes over targeting those who stay at home. At noon, news for those who power lunch.
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18 January / content marketing / marketing
I've been struggling with the right way to enable commenting on this blog for a long time. In 2013, I wrote a post called Letter to the Editor about my challenges with comments. Most notably, comments meaningfully changed readers’ perceptions of the content they read, even if the comments are not sound. In addition, I haven't found a way to effectively moderate comments at scale. Several months ago, I deployed a chat widget at the bottom off this page as an experiment.
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26 October / marketing / saas
Demand generation is a critical limiting factor to the growth of many startups. I had the opportunity to moderate a panel of demand generation experts recently at Heavybit, an incubator in San Francisco. I asked the panelists, how well understood is demand generation, considering it is one of the core elements of business needs to sustain its growth? Unanimously, the panel concluded it's not very well understood. At the outset of every startup that attains product market fit, a collection of innovators adopt the product.
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29 August / marketing / saas
Jeff Wiss has managed demand generation and corporate marketing for some iconic software companies. MySQL, the most valuable open-source acquisition; Zendesk*, the $3B leader in customer support software; DataStax, The business commercializing Cassandra; and most recently Duo Security*, an Ann Arbor-based trusted access company that has some of the most sensational SaaS metrics I’ve ever seen. Recently, I had a chance to talk to Jeff and learn about the unique strategies they employ to drive one of the fastest growing and most efficient SaaS companies in the market today.
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20 June / marketing
What is the optimal pricing strategy for a start up? That depends. It depends on at least three other variables: the product, the placement, the positioning. Combined with price, these are the four 4Ps of marketing created by Dr. E. Jerome McCarthy, former professor of marketing at Michigan State and Notre Dame. Also called the marketing mix, these four variables need to be aligned when determining pricing for your startup.
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16 June / marketing
As a SaaS startup scales from finding initial product market fit to building its go to market organization, one of the most important goals in building that go to market organization is developing a multifaceted marketing team. Marketing’s role in SaaS sales has expanded to the success of SaaS companies as customers prefer to educate themselves more than they have in the past. Many early-stage management teams perceive marketing to be limited to two functions: demand generation and brand building.
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18 March / marketing
Clay Christensen, a Harvard Business School professor, asserted in a recent interview that we understand only half of the marketing puzzle: the marketing science involved in a competitive ecosystem, when consumers are buying millions of products. In these markets, concepts like Westendorp Price Sensitivity and conjoint analyses work. But to incite disruption requires a different set of marketing skills. In the Innovator's Solution, Christensen proposes the idea of competing against non-consumption.
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22 October / marketing / saas / startups / office hours
Last night, at our inaugural event, SaaS Office Hours welcomed Bill Macaitis, CMO of Slack, former CMO of Zendesk and former SVP of Online Marketing and Operations at Salesforce. Having worked in three hypergrowth companies, Bill is an expert in building massively successful marketing teams. These are the five kernels of wisdom I learned last night. When is the right time to hire a head of marketing? The right time to hire a head of marketing for your startup is when the company has found product market fit.
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19 October / marketing / product
In 1964, IBM announced a mainframe computer family called the System 360. The mainframe wouldn't ship for another three years, but the announcement reduced the mainframe sales of their competitor, Control Data Corporation, sufficiently to warrant an FBI investigation. And so a new marketing technique was born. To be clear, there are many different forms of vaporware. Coined in the early 80s by Esther Dyson to describe software companies preannouncing a product, the term vaporware can refer to three different types of these announcements.
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21 September / saas / financials / sales / marketing
One of the most powerful levers for SaaS companies to master is payback period. Payback period is the number of months a company requires to payback its cost of customer acquisition. The median SaaS startup has a payback period of 15 months on a gross margin basis. A short payback period confers two massive advantage to a startups: smaller working capital requirements and a consequent ability to grow much faster.
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“People don't buy what you do, they buy why you do it.” This line from Simon Sinek's TED talk captures the power of a values based marketing campaign. Simon contrasts feature-based marketing - start with what the company is selling continue to how they do it and finishes with why - to value based campaigns which reverse the story-telling order. Values campaigns start with the why. Starting with why is a simple but powerful framework for startups to develop a unique marketing message, particularly in a competitive marketplace.
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16 June / saas / marketing
Open Source Software started the movement in the late 1990s. Since then, open source software has transformed the software industry. Today, many infrastructure software startups employ open source strategies to market their software and win dominant market share. Open source is a disruptive distribution strategy. It allows potential users and buyers of a software to try it, evaluate it, and understand exactly how it works because the source code is freely available.
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08 June / marketing / saas
The role of the marketing team within SaaS has stretched from simply engendering awareness and creating interest, to guiding customers much deeper into the funnel. Steve Patrizi created the schematic above that illustrates the idea beautifully. In traditional go-to-market models, marketing teams fill the very top part of the funnel. When a potential customer enters the consideration phase of the buyer journey, the marketing team transitions the lead to his sales account executive, who educates the customer from the consideration stage through purchase.
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19 April / saas / marketing / sales
In the Innovator's Dilemma for SaaS Startups, I outlined the path of many software companies, which disrupt incumbents by first serving the small-to-medium business and then move up-market by transitioning to serve larger enterprises with outbound sales teams. I argued this transition is largely due to the more attractive characteristics of larger customers, namely higher sales efficiency and reduced churn rates. This is the “traditional” way of disrupting. But, as Kenny van Zant of Asana and Mike Cannon-Brookes of Atlassian told me, there's another way, a novel way of building companies that still isn't very well understood: the Flywheel SaaS Company.
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18 March / saas / marketing / channel
Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team's mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these generate inbound leads, who often convert at 2-3x the rate of outbound leads.
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A few weeks ago, I joined Mike Volpe, CMO of Hubspot, on the Growth Show where we had a great time talking about a few SaaS topics. A few listeners to the podcast picked a line from that podcast that I think is a really important point for content marketing. I said, “Content is one of the few forms of marketing that has a compounding return.” Like a bank account that starts out small and earns incremental gains, but over time becomes quite large, content marketing efforts require consistent investment but ultimately can yield enormous results.
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12 January / marketing / saas / sales
After writing about B2C2B companies last week, I received a lot of great comments about the differences between the B2C2B models, particularly the sales models after a company has acquired the initial Consumers. These are three sales models I've observed B2C2B companies use to convert the initial momentum with consumers into dollars. The first sales model is the 2 Phase Sell. LinkedIn and Duolingo employ this. LinkedIn attracts large number of consumers with a place to find jobs and post resumes.
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22 October / marketing / saas / startups
Bill Macaitis, the former CMO of Zendesk, articulates how a SaaS marketing team should operate better than anybody else I've met. At a recent Point9 conference, Bill outlined the 9 marketing disciplines of great SaaS companies and how they fit together to create a marketing powerhouse. I've copied my notes from Bill's talk below. Ops & Analytics Team The operations and analytics teams is the first marketing team every SaaS company should build because this team erects the experimental infrastructure for determining which marketing tactics are viable.
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01 October / marketing
I met a founder a few days ago who captured the idea of building brand equity really well. He said something along the lines of, “Every time we provide a magical experience to a customer, we invest in our brand equity. Each time we do something that disappoints them or overtly extracts value from our users, we expend brand equity.” This founder prided himself on continuously investing in and increasing his business's brand equity over long periods of time.
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A terrific SaaS VP of Marketing once told me, “If the sales team is focused on hitting this quarter's revenue target, then the marketing team ought to be focused on next quarter and the following quarter.” In SaaS companies, one of the marketing department's primary responsibilities is generating sufficient customer interest to enable the company to achieve their revenue targets. If that's the case, determining how and when to scale a sales team in a SaaS company is contingent upon the marketing team's metrics.
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06 June / startups / marketing
Marketing investments are unlike any other investment a startup. They are the least-tangible, least-measurable investments and that's why they are perceived as the riskiest investments. After raising a round of capital, a startup's management team has a pool of capital to invest. They can choose from different projects: growing the engineering team to build products faster, spending more on infrastructure to speed page load times, moving to a bigger office, adding salespeople to prospect more customers.
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02 June / saas / marketing
In his book Behind the Cloud: The Untold Story of How Salesforce went from Idea to Billion Dollar Company and Revolutionized an Industry, Marc Benioff shares the 111 plays he learned through Salesforce triumphant rise to the most valuable SaaS company in the world. Play 15 is my favorite from the book. Benioff writes “position yourself either as the leader or against the leader in your industry.” Play 15 highilghts the most frequently forgotten of marketing's four Ps, positioning.
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30 May / saas / startups / marketing
At its core, freemium is a novel marketing tactic that entices new users and ultimately potential customers to try a product and educate themselves about its benefits on their own. By shifting the education workload from a sales team to the customer, the cost of sales can decrease dramatically. So, freemium can be a huge strategic advantage in a competitive market because those companies that successfully implement freemium can scale faster and more efficiently than traditional sales-driven companies might.
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At a board meeting last week, one of the VPs of Marketing I'm lucky to work with presented a brilliantly simple way of explaining the evolution of a startup's marketing tactics. I've drawn a diagram of the idea above, which borrows heavily from McKinsey's 3 horizons. Startups have many different marketing options at their disposal: SEO/SEM, print, radio, TV, mail, affiliate, content marketing…The list goes on and on. Faced with this litany of options, how does a startup maximize their marketing effectiveness?
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20 February / saas / startups / marketing
When a startup is confronted with the prospect of hiring a head of marketing, founders heads often spin. What should be the day-to-day tasks for this person? What skill sets are important? Because of the seeming abstract nature of marketing, founders sometimes delay finding a head of marketing until they feel acute pain, at which point they can clearly identify the attributes of the right candidate. But underinvestment in marketing, like underinvestment in infrastructure or software or product, isn’t a good idea.
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07 January / saas / marketing
Tien is the founder and CEO of Zuora [1], and was formerly CMO and CSO at Salesforce. He is a brilliant marketer and created the notion of the three doors to SaaS success. He spoke about this innovation at a recent CMO summit; the video is here. If you visit Zuora's website, you'll see Zuora's three doors along the top of the page: Subscription Economy, Why Zuora & How It Works.
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A key component in a startup's formula for success is educating customers about the product and driving sales. The sales and marketing teams of a startup are responsible for this. There are many ways to structure sales and marketing teams. The diagram above outlines a sales and marketing team structure that I've observed across many startups. It is consistent with the organizational design Salesforce used to drive revenue from $0 to $100M, described Aaron Ross's book, Predictable Revenue.
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The key for startup strategy selection is matching distribution strengths with market segments. It’s possible to build successful businesses serving any of these segments individually or a combination.
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26 April / saas / marketing
On first glance, SMB SaaS companies, those who sell Software-as-a-Service to small to medium businesses, may seem like any other software company. But they are quite a different breed. It’s not just the sales process that differs from traditional software. The entire business has be built differently. So must the product. And typically these products have a 2 step value proposition. SMB SaaS companies sell to a radically different market than enterprise software companies.