21 May How to Uplevel Marketing When Your SaaS Startup Hits Series B
Getting your great technology idea into the initial startup phase is difficult. Early on, you’re forced to learn how to do a lot more with a lot less capital than your competitors. But what happens when you’re finally flush with cash? When your startup closes that coveted, high-capital Series B round, how can you ensure you are able to leverage that cash infusion for exponential growth? Specifically, now that you can hire a true marketing team and build out your brand and message, what are the best ways to turn VC cash into profitable revenue and not just a slow burn, or worse?
Let’s go over some tried and true methods of quickly scaling your marketing efforts, to get the best effect with the most efficient level of effort.
. . .
Welcome to Series B
To have made it here, you should by now have developed sound fundamentals. If you haven’t, you’ll realize it soon enough when you ramp up your spending but fail to achieve your growth targets. Some call this premature scaling or the “Series B Trap” — where the company cycles quarter-over-quarter, missing targets, lowering expectations and wasting valuable time and money.
According to the Startup Genome Project, 70% of startups scale prematurely and 74% of high-growth Internet startups *fail* due to premature scaling.
Fundamentals typically consist of the following:
- A clear definition of your target customer
- Knowing your market and where you’re going (if you don’t know where you’re going, any road will do)
- Knowing exactly where you are (if you don’t know where you are, a map won’t help)
- Validated messaging (market and customer tested)
- Knowing that there’s a need for your product (people want to buy it)
- Knowing how to sell your product (you firmly understand your benefits, positioning, USP, and your competition)
- Having a solid Minimum Viable Product (MVP)
- Knowing your most effective channels (at least to some degree)
- Early revenue (some)
- A baseline of early adopters (even a few advocates)
You’ve most likely de-risked to some degree by solidifying your team, technology, and product-market fit. As well you’ve probably reached your key milestone of MVP with a baseline of early adopters. And even though you’ve relied heavily on relationships and networks to acquire those early adopters, you’ve probably generated some early revenue. You may have even expanded (or validated the expansion) into other markets and verticals, developed some great content around your product and even developed engagement metrics. You realize, however, that what guided you to your first few customers will be vastly different from what will get you to your next hundred — or thousand.
In Series-B, you’re expected to become a real company, moving ever closer to scalable execution while continuing to develop your product and technology, repeatable processes and recurring revenue. It’s here where you have to demonstrate that you can execute like a real company with process, staff, and milestones. It’s also here where you need to start making decisions based on data, and where founders need to be focused on growth. If you fail, you’re either looking at a down-round during your next financing, replacement of key players, or worst case, closing the doors altogether. Sadly far too many companies in the B round don’t entirely grasp the critical role marketing plays at this juncture or how to properly organize and use marketing until they’ve burned through far too much of that valuable cash.
Fred Destin wrote back in 2015: “Series B is hard for a simple reason: suspension of disbelief fades and is replaced by an increasingly cold, hard look at milestones and progress. Series B is the round where the rubber meets the road, where the promise has to be met with numbers and projections.”
. . .
The Series B Entry and Exit Criteria
What you should have going into this stage:
- A new infusion of cash (a lot of cash)
- A defensible brand play
- Some marketing resources
- A clear definition of the target customer, org, persona
- The ability to close deals consistently — know the market, validated messaging, etc.
- Some customers, some advocates, and some recognition
- An understanding of acquisition costs by channel
- An MVP
- Some semblance of demand generation
- Product marketing and product-related content
- A solid understanding of your company’s product/market fit, positioning and defensibility
- Some understanding of the numbers behind your marketing funnel and pipeline realize your growth potential.
What you should have achieved by the time you exit this stage:
- Your next 100 (or more) customers
- Repeatable processes
- A repeatable and scalable model
- An expanded leadership team and your first head of marketing
- A solid product marketing strategy
- Sales and marketing alignment with common goals and a tight partnership
- An analytics infrastructure
- A marketing tech stack including marketing and sales automation
- Customer success stories
- A great understanding of what works for customer acquisition — channels, tactics, hacks, verticals — and pump it up!
- An expanded sales and marketing technology stack
- A process to streamline operations and facilitate growth
- A revenue generation strategy and machine that goes beyond relationship and networks (using demand gen, account-based marketing, branding, and product marketing)
- Repeatable revenue that you can scale
. . .
Marketing in Series B
The only thing that ultimately matters at the end of the day is delivering on promises made (especially the ones you made to the board), closing deals, and generating revenue. Keep the main thing, the main thing.
The most effective way to make this work begins with marketing and sales operating as partners with open communications channels. MQL goals don’t matter if sales aren’t hitting their pipeline goals. Marketing and sales must be fully vested in each other’s success and prioritize accordingly. The mantra should be, “whatever it takes to close the deal.”
Lackluster revenue figures are usually the result of not having enough of the right skills, tools or experience on your sales and marketing teams — or possibly sales and marketing are not aligned. Possibly your marketers or even your business leaders are volume-driven rather than revenue-driven.
According to research conducted by Spiceworks:
- The vast majority of marketers view total site visits and click-through rates as indicators of success.
- Most marketers claim that their business leaders prioritize conversion metrics (e.g., total deals closed/won, lead-to-close ratio) and revenue metrics (e.g., influenced pipeline opportunity, influenced revenue) when measuring the success of their organization’s marketing program.
- Less than half of marketing departments are measuring influenced revenue or pipeline opportunities.
- CMOs have identified organizational alignment as an area that would provide them with tremendous help in being more effective, but some complain that CEOs don’t understand the connection between marketing and revenue generation.
It’s vital that any organization adopt a revenue-driven mindset and metrics. The customer journey should be designed such that the leads coming into the funnel are the ones who are ready to purchase (rather than every random person who hits the site).
It’s also important to not confuse lead generation with revenue generation. The bottom-line goal is not to create more leads. The goal is to create more revenue while at the same time:
- Lowering the cost of customer acquisition
- Increasing the predictability of new revenue generation efforts
- Shortening the sales cycle
- Sustaining and scaling growth
Leads are necessary, but leads are merely the raw material used to identify your most loyal, high-profit customers. This is what demand generation is all about.
One of the very best things any organization at this stage and beyond can do is to get into a rhythm with demand generation and account-based marketing (ABM) programs that are aligned closely with sales to drive revenue. The goal of demand generation is to build and nurture key prospect and customer relationships for the long term, which requires that your marketing and sales teams be aligned.
The goal of ABM is to attract your biggest, most desired accounts. This begins by first identifying those accounts and then developing rich profiles and insights (even buying signals). Next, highly targeted offers and campaigns are constructed and launched with the intent to pull those key accounts deeper into the funnel and accelerate the sales cycle.
Given the ever-increasing competition in the SaaS space, companies are seeing declining results with inbound marketing when it comes to driving revenue, and ABM provides a revenue-focused opportunity to land quality accounts.
It is vital that all of this demand gen and ABM activity not only be persona-based and highly-targeted, but also spread across your most effective channels using a myriad of strategies and tactics to increase effectiveness:
- Social media
- Email marketing
- Trade shows
- Native advertising (Facebook, Twitter, LinkedIn, and Google AdWords)
- Industry advertising groups
- Influencer marketing (yes, for B2B!)
Your sales team needs to qualify MQLs, identify high-quality prospects, and then nurture them into your sales funnel. Marketers should also help bring in the right audience personas and qualify prospects in order to provide the sales team with higher-quality leads.
In the end, your most effective strategy is always the one that has been designed with a path to revenue.
Photo Credit: leadsmarketer.net via WordStream
. . .
Series B Marketing Rules for Success
1. Move fast, get things done
- Spend more time on execution than strategy. At this stage, you can’t afford to spend 3 months on a marketing plan and budget before tackling any execution. Speed and size are two of your major advantages.
- Don’t make excuses — make things happen. How do schedules slip? Answer: One day at a time. There’s a popular saying in startups: “Just get sh## done.” Make it your mantra. Put it on the wall and on t-shirts if you have to!
- Prioritize your metrics. Put a priority on the metrics that are at the heart of your startup (like ‘revenue’). Don’t sacrifice putting crucial KPIs in place because you’re building the dashboard of your dreams.
- Build scale and effectiveness through automation. Get your systems and integrations up and running, and centralize and automate as much as possible.
2. Accelerate your demand generation
- Focus on demand generation (and ABM) and forecast the future. Marketing and sales pipeline both need to be predictable. It’s all the same funnel.
- Be data-driven. Understand your numbers, especially customer acquisition cost (CAC), MRR growth, churn rate, cohort analysis, and expected qualified leads from various marketing campaigns and channels.
- Embrace persona-based marketing. If you don’t know who you’re marketing to directly and what each audience is looking for, how can you expect to drive any relevance whatsoever in your marketing? Relevance drives interest and moves prospects through the funnel.
- Align your messaging. Create audience-centric messaging that is consistent and aligned across everything — the website, emails, marketing campaigns, all communication, etc. Consistency in messaging reduces confusion and greases the revenue machine.
3. Align Marketing and Sales
- View Sales as Marketing’s partner. The most successful startups have Marketing and Sales working as ‘the revenue team.’ If Sales or Marketing loses, you both lose — the company loses. All for one and one for all. It’s the only way it works.
- Prioritize Sales’ needs. Whether it’s content, sales enablement, events or field support, stop saying no to Sales.
- Quit losing deals to the competition. Create competitive landing pages and promote them. Find in-market target audiences using things like G2Crowd comparisons or in-market display ads that lead to a comparative landing page, etc.
- Get insights from Sales. Gather key insights from sales and leverage them in your marketing messaging, etc.
4. Move from running to optimizing
- Find your sweet spot. After you start executing and running quality marketing campaigns, you’ll have an idea of which channels, methods, and campaigns are most effective. You’ll need to dial-in and optimize your marketing efforts in order to be successful.
- Evaluate your presence in the market. Do you have visibility on review websites? Or is your target audience only seeing your competitors? Get in there! Be everywhere!
- Be the disruptor. You’re not “only a startup” — you’re a market disruptor of legacy solutions (your competition). Create pain for your competition by outpacing them and taking away some of that critical market opportunity.
. . .
I realize that it sounds like a lot of work, but it’s not as hard as it sounds. Just roll up your sleeves and dive in.
Before you know it you’ll have taken your marketing to a whole new level— and you and your company will be moving forward into Series C— or possibly an acquisition!
Is your venture-funded SaaS startup interested in ramping up top-line growth? We’re experienced SaaS growth pros who are here to help. Schedule a consultation and let’s chat about your specific needs.
Randy Hamilton is a Silicon Valley serial entrepreneur who has served in roles that include VP Engineering on the founding team of Match.com, venture partner at Outlook Ventures, senior marketing roles at Basho, Satmetrix, and Flyreel, as well as technology diligence specialist for venture capital firms that include JP Morgan Partners, Chase Capital Partners, Bechtel, Venrock and Warburg Pincus. Today Randy serves as the Managing Partner at Clutchgrowth, a B2B SaaS growth consultancy located in Silicon Valley.