So times aren’t tougher for everyone in B2B and SaaS, but they’re tougher for many. And the playbook has mostly been as follows for those with tougher times:
- Cut the burn
- Freeze hiring
- If growth is really slow, look at layoffs if necessary
and
- Cut marketing to almost zero
To some extent, this makes sense. Marketing is a variable cost with generally medium-term benefits in SaaS and B2B. Most marketing spend builds pipeline that you are lucky to close in 4-12 months. So cutting that spend may limit future growth, but it rarely impacts the current month.
So marketing gets cut.
Now, I’m never a fan of cutting anything in marketing that works. That works at all. Because the reality in SaaS, most things won’t “perform” at all. They won’t get you any customers, not really. The wrong channels, a third-tier event, a misguided PR or TikTok strategy may literally have zero ROI.
But the goal in B2B marketing isn’t to find channels with epic performance. No, the goal is to acquire customers with even a 1 year marketing CAC. Keep investing there. Because, first, those customers hopefully will last a decade or longer. And second, importantly, you’ll get a lot of customers for free in SaaS as you scale. Word of mouth and your mini-brand will kick in, referrals will ramp up, and you’ll get 20%-80% of your leads for basically free, or close to free.
So you can’t that much pressure on the rest. You have to look at a blended CAC across all channels, including free, in SaaS and B2B.
But recently, I’ve seen the opposite. We have about 200 sponsors at SaaStr. Some are doing better than ever. Others are really struggling.
I just talked to one in the middle. Growing 60% this year, but way down from 100%+ last year.
“We’ve already gotten profitable off last year’s SaaStr Annual … but we aren’t coming back this year.”
Ok. So be it, but since I was on the call, I asked — why not? If SaaStr Annual was profitbale for you?
“Well, we’re now looking for a proven 10x return on anything we deploy marketing dollars into now. It’s got to be 10x right now.”
Aha. I get the thought. But — it’s wrong. 10x makes sense on a spreadsheet, and maybe even in a low-margin B2C world. But in 110% NRR, 80% gross margin SaaS? It really doesn’t.
That’s a unicorn that doesn’t exist.
And if you look for that unicorn in marketing, that magical 10x+ channel, your competitors may be more practical. And scoop up the customers that are a bit more expensive to acquire. But still — profitable. And that stay for years and years.
A related post here:
And a really great session on the overall topic with Datadog’s CMO here:
