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How much should you invest into your SaaS sales and marketing

How much should SaaS companies invest into sales and marketing?

There is not a clear-cut answer that will apply and fit to every single SaaS business out there. Each business has it’s own unique problems and nuances. However, by looking at data and behaviour of other SaaS companies, we can derive to some interesting insights.

After working with companies finishing their MVP and needing a growth strategy, established companies experiencing sales decline, or even clients close to $100m in ARR, I noticed that the attitude and sales strategies vastly differ (we’ll highlight some outliers later in the article).

What companies will we talk about?

I will focus on segmenting companies by their growth and investment stage – all the way from ideation to Series A.

The impact of sales & marketing spending on growth

Perhaps as expected, greater investment into sales and marketing leads to greater growth.

Looking at the 2017 SaaS survey conducted by KBCM Technology Group (excluding companies below $5mm in ARR), we see that the companies who spend the highest percentage amount of their revenue grow the fastest.

Does this apply to you, at all times? Probably not.

Let’s look at different stages of early companies, and where you fit in.

Stage 1: Building your MVP / Pre-seed funding

How much should you spend on sales and marketing at this stage? It’s likely that you don’t even have a functioning MVP and many crucial questions related to your product and market are not answered yet.

My answer is as little as possible – close to $0.

Focus on leveraging your network, building your product, networking with investors, and gathering initial market feedback from potential customers, network and advisors. 

The pre-seed capital should be used to achieve the keys milestones to push your product forward, such as hiring new new technical talent.

Stage 2: Seed funding 

It’s likely that at this stage you have a functioning MVP which you can show to your friends, family or early stage investors to back up your pitch slides. The size of a seed fund deal can range from few thousand dollars to approximately $1.5mm.

Companies at this stage try to find their product-market fit and align their product with their ideal customer profiles, and to create a scalable, repeatable and predictable sales process. The amount of capital raised at this stage will also play a significant role in your sales strategy, just as the complexity, iterations and investment required for product development.

However, once you recognize the signs of product-market fit, such as:

  • Shorter sales cycles
  • Increased direct traffic
  • Predictable and growing sales
  • High net promoter score

It’s time to shift from founder sales, to professional sales.

Once you understand how to serve your customers and you know they want your product, it’s time to invest into a “real” sales process. You need to invest into in-house sales reps (1-3 reps) or temporarily outsource sales and lead generation to accelerate growth. It’s time to shift away founder sales and relying on network and referrals.

The data from 2012 to the current SaaS 2017 report indicates that greater investment (as a percentage of revenue) into sales and marketing does contribute to higher growth.

Therefore once you identify your primary acquisition channel, and establish your channel-product fit, being resourceful and not overly conservative (10-50% of revenue invested back to sales) is likely to contribute to greater growth.

Learn more about resourceful marketing through repurposing content. Download a copy of our Content Distribution Checklist and maximize your content marketing investment.

SaaS Content marketing tools

Stage 3: Series A

At this stage, product-market fit should be achieved. Your customer base, sales force and ARR are showing clear signs of growth.

The primary channel is unlikely to be enough to fuel the growth however, and new sales approaches, strategies and talent needs to be used. As the chart from earlier suggests, greater sales and marketing investment leads to higher growth rate. The study found that the median percentage of revenue spent on sales and marketing was 37%, but the fastest growing companies invested 50% to 51%.

If we look at the industry leaders, we can clearly see that the biggest players also lead the way in their investment into sales. Just how much they spend on sales and marketing?

Salesforce – 53% of their sales revenue

Marketo – 66% of their sales revenue

Constant Contact – 38% of their sales revenue

Bonus: Modeling sales and marketing investment

Tom Tunguz shared very interesting data on sales investment of publicly traded software companies.

(sales and marketing spend as a percentage of revenue of companies with different sales volume, white lines represent medians)

For instance a publicly traded company with revenue between $5m and $10m spends around 90% of their revenue on sales and marketing, whereas companies with sales up to $5m, around 180%. Take a note of some of the outliers however, some companies at the $100m mark still spend about 160% of their revenue on sales.

Tom also created and shared a simple model to forecast your own sales investment, you can access it here.

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How to get started with SaaS content marketing

How to get started with SaaS content marketing

Content marketing is something you hear a lot about nowadays, but do actually know what it is and why you need it?


Don’t underestimate it as a new fad – as it turns out, this kind of marketing is pretty valuable, so if you haven’t already begun using it, read on for how to get started with SaaS content marketing.


What is content marketing and how can it help your SaaS marketing strategy?

Content marketing is simply a particular type of marketing that involves the creation and sharing of online content. This content can include videos, blogs, social media posts and more. In fact, Content Marketing Institute put together a helpful infographic on its history:

Content Marketing History Content Marketing Institute

Great. Now you know what content marketing is. But what’s the point? Well, the purpose of content marketing is to use content to spread awareness of and generate interest in a brand’s products or services.


But why do people turn to content marketing? The reasons are pretty simple, actually.


1. It’s effective, and it’s cheaper than other traditional marketing methods

The Content Marketing Institute found that content marketing costs 62% less than outbound marketing, but also generates three times as many leads!


With the technology that we now have access to, creating original content is easier than ever and relatively inexpensive. Click To Tweet


Considering all that, can you really afford not to create and share original content? Neil Patel quickly discovered that custom content is so effective, it influences a whopping 61% of consumers’ buying decisions!

content marketing consumer stats App Marketing Minds

2. Content marketing creates lasting connections with consumers

You know your content is effective when it is engaging to your followers. Are they commenting? Are they interested in the products and services?


Great content generates recall – the content has made an impression in the mind of the consumer, allowing them to remember that interesting post they saw earlier – and most importantly, to remember your brand and products.


That kind of recall fosters a lasting connection with consumers, and effective content prompts followers to visit websites, check out other products and services from your company, etc. In fact, if you want more customers, you need to have a content marketing strategy in place.

SaaS Content marketing tools

The Content Marketing Institute has found that those companies who use content marketing have much higher conversion rates than those who don’t – up to six times higher!

Creating this kind of content does take a good deal of skill and time, but the higher conversion rates make it a better choice for the modern brand than traditional marketing methods.


Content marketing for SaaS

Now that we’ve covered the basics of content marketing and why you need it, let’s talk specifically about content marketing for SaaS.


We can’t discuss how to get started with SaaS content marketing without discussing one important thing first: price points.


Your content marketing for SaaS will depend on your budget. Yes, content marketing is less expensive compared to traditional marketing and advertising methods, but there is still some money involved.


Generally, the LTV of SaaS companies allows for less than $1000 of their annual contract value to be spent on content marketing, so less than $1000 per user per year. It’s not a huge budget by any means, but can go a long way to creating great content, thanks to resources like Photoshop and Canva, that will help your sales and the bottom line.

Not only does contract value influence your marketing and sales goals, but it’s generally easier (and expected) to convert visitors via low-touch web sales (without human intervention) if the price is around $100 and less.



SMART Goals and Content Marketing

Now, what are your goals? Hootsuite are masters at creating and sharing great content, and have many excellent tools to help. According to Hootsuite, your goals need to be SMART. Specific, measurable, attainable, relevant and time-based.

content marketing SMART goals App Marketing Minds


For example, gaining 100 followers on your brand’s Twitter account in 30 days is a SMART goal.


With your SMART goals in mind, create your content marketing strategy. Your strategy can be as simple as a list of bulleted points, or more detailed with custom charts and infographics. The most important thing is that your strategy needs to be very clear and well-thought out.


Creating your SaaS content marketing strategy

Customer personas – First, you need to identify your target audience. What kind of person uses your software? What is the average user’s age and technical background?


Channels – Next, choose which platforms or social media networks this audience is most likely to use. Does your audience use YouTube often? Make sure you have an active YouTube presence, with your own YouTube channel that you post to on a regular basis. Does your audience read blogs? If so, you definitely need a blog on your website.


Do you see the pattern? Think about your audience and the average user of your software as you consider Facebook, Twitter, Instagram, and other platforms before you choose a few to make them a part of your greater marketing strategy.


Some companies choose to have accounts on every possible platform, but don’t spread yourself too thin! It’s best to maintain active accounts only on the top few.

SEO – do keyword research. What kind of keywords are your audience using to search for what they need? What kind of topics are they searching for? Discover what those keywords are, and incorporate them into your content marketing strategy with hashtags on social media and keywords on your blog and website.

Decide on content topics – now, identify the kind of content you’re going to be posting. Create and share blog posts – and don’t forget to promote them on social media, as well! Get creative and share videos, GIFs, and quotes.

Premium content – majority of SaaS companies offer a variety in pricing, ranging from offers related to very small businesses (VSB) all the way up to enterprise level clients. An important aspect of your strategy needs to be premium content, whether that is a demo, free trial (freemium model) or value-giving piece of information hidden behind an 0pt-in.

Keep a content marketing plan – finally, create a schedule. How often do you want to share content? At least three times a week is necessary to appear engaged, but be consistent – you need to be creating, posting and sharing content every week.

SaaS inbound marketing

If there is a certain piece of content that your audience responds well to, don’t shy away from recycling that content. Share it again, when it’s relevant.


Primarily, your content is supposed to help convert leads, so always keep that in mind. Keep your content interesting and useful, and always with the intention to drive more traffic to your website. Share blogs, product offers, and more. When it comes to creating content, there’s so much you can do!

Once you’ve created and shared your content, keep an eye on it. Track its performance using tools like Google Analytics and Kissmetrics, so you can easily identify the kinds of content that perform best. Your strategy needs to be ever-evolving, and the analytics will help with that.


Final thoughts

As you can see, content marketing is a great, cost effective way to promote your brand and generate interest.

This article showed you how to get started with SaaS content marketing. For more information, check out our 4 beginner tips for selling SaaS.

Do you have any tips we left out? Share your comment below!

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