How much money should B2B startups be spending on marketing?

Runners at the starting line

I always answer this question with another question: “What do you want to achieve?”

HMMM…easy enough, right? This sounds like a no brainer, but it’s actually one of the most difficult questions for B2B startups to answer. The typical answer I get is “MORE”

More customers. More brand recognition. More profits per deal. More users.

And of course, my all-time favorite,  “Lower spend.”


Marketing starts with goals

PPC, SEO, tradeshows, webinars, PR, and content are some fundamental elements of a successful comprehensive marketing approach, but they are just tools. In order to use your budget wisely, you need to start with goals and KPIs.


Key Performance Indicators (KPIs) –  the best-kept marketing secret

KPI’s help CEOs measure marketing resources and marketing efforts invested in various activities.

KPI’s should reflect the short-term business strategy as well as the long-term strategy. They should be specific, realistic and perhaps most importantly, measurable.

KPIs are all about what marketing attempts to accomplish, how it should be measured, what impact it will have on the business and when.

Once KPI’s are achieved it will be easier to show ROI to the board and explain the correlation between marketing spend and success.


Revenue Goals vs Brand Goals

B2B startup marketing goals should always include two tracks:

The Short-Term – revenue goals
The Long-Term – brand goals
The Short-Term: Revenue Goals

Revenue is easy to measure. In a SaaS company, for example, the goal might be to increase software subscription by 15% or convert 20% of free users to paying users.


The Long-Term: Brand Goals

Brand goals are harder to measure, but extremely important. We always assume that even if your company is the most innovative startup in its field, there’s competition out there and your potential customers must be able to trust your brand and eventually choose it. Therefore it is essential that you become the go-to expert in your industry. Your goals can be press coverage in relevant magazines, building a qualified database of potential prospects, increased social media engagement, receiving industry awards, getting speaking opportunities at conferences relevant to your industry etc. The list goes on and on.

Working both tracks in parallel will set your business up for success.


How to measure your results

Once you’ve got both tracks covered, the next step will be to establish what you consider a positive outcome to be, and to then measure the results of these efforts.

Revenue goals are fairly straightforward:

How much is a marketing qualified lead (MQL) worth? How much money are you willing to spend assuming 30% of MQL’s will convert into sales opportunities (SQL)?

For example:

A yearly software subscription in a software company is $20,000.

Are you willing to invest 10% i.e. $2,000 in marketing in order to bring MQLs knowing that approximately 1 out of 3 MQLs will convert into a sales opportunity?

When it comes to brand awareness and trust, sample goals to measure might be:

  • %  increase in social media engagement
  • Decrease in website bounce rate
  • Amount of press coverage in relevant publications


Are you focusing your marketing efforts in the right places?

One company’s MQLs are not going to be the same as another company’s MQLs and therefore it is critical to define what an MQL is for your business.

In order to set the right measurements for marketing, you need to intimately know your buyer persona. Who are your prospects? Who are the people marketing should be targeting?

  • What are the relevant job titles?
  • Which organizations are relevant?
  • Which verticals are relevant?
  • In which countries?

The more specific your MQL definition, the more focused marketing can be in its targeting, which of course could translate to less budget, more impact.

Time is money

True. We all want our efforts to show results ASAP. This is perhaps most obvious in the startup world where there’s often an aggressive need for time-to-market. Startups must raise funds in order to do so, they must be able to show business results. However, at the end of the day, you have to be smart about it. If you instruct your marketing team to spend money on campaigns before understanding the essentials and making sure all your marketing foundations are in place, you are just wasting time and money.

Think about it this scenario, for example: You started a Google AdWords campaign to drive traffic to your website, but the website messages are not aligned with the campaign messages and the Call To Action (CTA) buttons do not lead to an actionable activity to allow capturing the prospects’ contact details. This is poor planning and a perfect example of why it’s important to lay the groundwork before dashing ahead.

Another great example is marketing without having proper sales tools for the sales team. If your marketing team is bringing leads, and you have no references, testimonials or success stories to send when they ask, you may just lose a potential buyer. It’s like fishing without bait.


A B2B marketing timeline

Every startup should design the marketing timeline according to the level of its marketing fundamentals maturity. Sometimes it is necessary to spend the first 30-60 days conducting market research and building a unique, appealing company story based on the technology and pain points in order to create an inspiring value proposition. Sometimes it is also important to take time to analyze the company’s CRM, optimize assets and set the foundation for development of sales tools.

It is always recommended that while doing all of the above, the marketing team work in parallel to prioritize small short term victories too. These are victories that can be achieved right away in the short-term – successes that will help the marketing team work towards accomplishing the larger, longer-term goals.


Getting set up for success

The startup world is dynamic, and therefore we recommend evaluating KPIs on a quarterly basis. What does this mean? Analyze the results achieved so far. Look at what is working and what needs to be tweaked. There’s always going to be a need to learn from the actions taken, make adjustments and refine. There’s always a need to work on new challenges.

As long as the CEO communicates with the marketing team, keeps them involved in the business challenges, and aligns goals and KPIs accordingly, the company and the marketing team is set up for success.

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