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How much should SaaS Start-Ups spend on marketing?
What should recently funded B2B SaaS Companies budget for Marketing? And what is B2B SaaS Marketing? To answer that question, let’s take a step back.
(or click here to go straight to the list of things you need to budget for)
What is Marketing?
Marketing is about influencing behavior. Great Marketing drives someone to learn, understand, believe or do something.
Marketing does this through the commonly used funnel stages from Awareness, Consideration, Conversion, and Loyalty. Your Marketing work needs to answer your audience questions like “Why should I change?”, “Why with you?” and “Why now?”.
What is B2B Marketing?
The main difference between B2B (Business to Business) and B2C (Business to Consumer) Marketing is that in a B2B approach, you have to convince someone to spend someone else’s money.
Other then that, B2B Marketing still needs to convince an individual to act. To change one individual's behavior at a time.
What is B2B SaaS Marketing?
What makes Marketing for a SaaS business unique, is the focus on driving long term value by getting customers in the door who will “Pay and Stay” and ideally will Pay more over time.
It’s about building a Fly Wheel. For Marketing in SaaS, it’s critical to drive Customer Growth from customers that have a high LTV (Lifetime Value) driven by low churn and high ARPU (annual revenue per unit).
Ideally, these customers can be serviced with a low “Cost-to-Service”. If you can pull this off, you can bear relatively high “Customer Acquisition Cost” (CAC) and invest in high-quality Marketing initiatives.
What types of Marketing does a B2B SaaS Start-up need?
Our team has worked with 50+ B2B SaaS Startups and fast-growing ventures in the past years. We have found most need the same things and wanted to list them here for you. If we mention a technology platform it’s the example that we encounter the most (disclaimer, we are Hubspot biased).
Here is our list ordered in a sequence that we have seen to be most effective. The $ cost figures are based on the typical cost using agency/outside resources and are representative of the large VC/PE markets in the US (Seattle, Silicon Valley, San Francisco, Boston, and New York).
Setting your B2B SaaS Marketing Foundation: $115k-$425k
Marketing, Sales and Customer Success Automation
- Integrate Marketing Automation with your Website (Hubspot CMS, WordPress): $5k-$10k
- Implement Marketing Automation (email, landing pages, campaigns) using tools like Hubspot or Pardot: $15k-$30k
- Connect Sales CRM and Marketing Automation to “close” the funnel (Salesforce CRM with Hubspot, Pardot, Marketo, etc.): $5k-$15k
- Optimize your Customer Success Automation (support ticketing, customer nurture, renewal management) by connecting your Services CRM (Hubspot Service Hub or Zendesk) with your Marketing Automation and Sales CRM: $5k-$15k
Positioning and Messaging
- Go-To-Market Strategy (i.e. where to focus, what to sell, how to reach them): $25k-$50k
- 3-6 published Customer Testimonials: $5k-$30k
- 1-2 Customer Videos: $5k-$75k
- 5-10 core sales support materials (i.e. Deck, ROI calculator, BDR Guides): $5k-$50k
- Solid Brand Standards with Visual and Voice Style Guide: $10k-$50k
- A website with all B2B basics (i.e. chat, product pages, content hub): $25k-$50k
- Consistent application of branding and messaging across all online presence: $10k-$50k
B2B SaaS Demand Generation: $130k-$610k
- Weekly fresh Content and a Content Hub: $25k-$100k/year
- On-page & Off-Page SEO Optimization: $10k-$50k
- Search Engine Marketing, PPC and Paid Social Management: $25k-$100k/year
(excludes discretionary media spend)
- Subscriber nurture (awareness and ABM support): $5k-$15k
- Prospect nurture (consideration): $5k-$15k
- (Pre-) Sales sequences (conversion): $2.5k-$5k
- Onboarding nurture (consumption and retention): $5k-$15k
- Upsell campaigns (land and expand): $5k-$15k
- Customer referral campaigns (loyalty): $5k-$15k
- Post-churn campaign: $2.5k-$5k
Outbound Marketing (includes ABM)
- Create Ideal Customer Profile (ICP) and Core Buyer Personas for ABM: $15k-$50k
- High-quality List Creation (buy/rent/build): $5k-$50k
- ABM Content Creation and Outreach Sequences: $10k-$100k
- Get 1-2 Awards or mentions relevant for your ICP: $5k-$50k
- Manage 1 annual trade show presence aligned with your ICP: $5k-$25k
(excludes the cost of booth/sponsorship)
You will likely need more. The above list does not include Channel Marketing, Influencer Marketing and PR, Product Marketing or Analyst Relations, for example.
The list will get you started with the fundamentals however, and hopefully provides a good benchmark to create a plan.
What to spend on SaaS Marketing?
The items on the above list are not all needed by every startup, and not all at the same time. The cost can vary vastly among providers and geographies. Most startups need many of these though.
If you would need most of these you probably would spend between $200k and $1M in your first year, depending on your desired speed and funding status.
Following a popular Marketing Budget “rule of thumb” that says you should spend about 6%-15% of your revenue on marketing, you would have to be $3M to $6M in ARR to be able to afford this (with our Kalungi Marketing as a Service for B2B SaaS startups we've been able to make this affordable for companies with $1M ARR).
Finally, use this to create your first B2B SaaS Marketing Budget.