Whether you’re a brand new startup or an established business, building a SaaS marketing budget is a time-consuming project. Ask 100 different SaaS companies how they arrive at a figure, and you may get as many answers. Search online, and you’ll find countless different calculations.
So, where to begin?
As we’ll explore, building a SaaS marketing budget is about more than just figures. It’s about understanding the industry, your brand, and your customers. Add to this an in-depth knowledge of the best SaaS marketing strategies, and you’ll be equipped to arrive at the right budget for your own company.
We’ll also take a look at some of the best-known SaaS brands’ budgets and how their approaches can inform your own decisions.
To help you navigate to the parts that interest you most, here’s a quick roundup of what we’ll cover:
If we take an average across all industries in recent times, the answer lies at around 10% of revenue. However, a recent Gartner study shows a big drop in spending for 2021, with an average of 6.4% compared to 11% in 2020.
It’s important to note the varying degree of factors that contribute to marketing spend. For instance, B2C companies often spend more than B2Bs. Startups often spend a greater percentage than established companies to climb the initial rungs of the ladder at a faster pace. SaaS companies generally have more to spend by the very nature of their business model.
In contrast to the overall average, the most successful SaaS companies spend around half their revenue on marketing, as we’ll see below. For startups, this can be considerably more.
Half of their revenue you ask? Let’s remember that SaaS companies don’t have the same outgoings that say, an ecommerce brand, have for instance. There are instant savings to be made on materials, brick and mortar storage facilities and costs associated with the management of all of the stages of the supply chain.
Studies show a direct link between large marketing budgets and success. A survey of B2B companies showed a 40% allocation from the most successful companies. The least successful allocated the lowest amount at 14%. So it pays to invest!
As we’ll see from the figures below, marketing budgets for successful and established SaaS companies sit at an average of around 50%. But this percentage will vary depending on the kind of services you sell, your volume of sales, and your profit.
The brands we’ve covered above have entirely different portfolios, but the one thing that they all have in common is an excellent content strategy. All three have understood the need to explain their product, its uses, and how it stands out from its competitors.
After all, it’s not just about how much you can budget, but how effectively you allocate the money.
At accelerate agency, we understand precisely how a strong content marketing strategy helps to establish your brand as an authority and the financial success that stems from that position.
From creating customer personas to needs-led keyword research and structuring content that targets every layer of the sales funnel, developing strategies for SaaS companies is one of our points of expertise.
Don’t wade in and invest 40% of your marketing budget without having a solid plan in place. Be sure to answer the following questions about your business before you begin to consider a budget percentage:
With all of these questions answered, you’ll have sight of the bigger picture and the kind of investment you can afford to make.
However great your previous marketing experience is, it’s essential to understand that developing a hard-hitting SaaS marketing strategy is a completely different beast from crafting one for the average business. Developing these types of strategies is something that we at accelerate agency do for SaaS brands daily.
We can help market complicated and technical products in an accessible way with high quality, traffic driving SEO content that delivers actual results. Our approach helps to generate greater industry exposure for your business by expanding your digital footprint across relevant industry publications, forums and external review sites such as the G2 Crowd SaaS review website.
These review websites cover a range of related SaaS products and provide a great way of getting your brand out there. Such mentions provide direct links to your site and give an unbiased opinion, supercharging your credibility.
Find out more about how to rapidly scale your SaaS business through targeted marketing approaches by downloading our free eBook.
Redpoint venture capitalist Tomasz Tunguz, studied the marketing budgets of several leading SaaS companies and found an initial marketing allocation of 80-120% of revenue. Once established, the amount gradually decreased to around the 50% mark.
This level of initial investment is understandable, given the competitive nature of the industry and the time it takes for a business to become well-known.
Let’s take a quick look at the inbound vs. outbound marketing debate. Outbound marketing is more direct, covering cold calls, huge advertising campaigns, direct mail, and other traditional methods. Lots of business leaders throw their hat into the outbound ring, given the more immediate rewards.
However, inbound costs an average of $135 per lead, compared to $332 for outbound.
When it comes to inbound, you may be waiting a little longer for those sales to start pouring in but once your strategy has matured, the medium to long term outlook results in a continual source of lead generation while also realizing significant cost savings.
Consider the following inbound marketing strategies:
Most business leaders will know that these strategies are vital to a business, but perhaps not HOW vital. Your starting point is your website. It can take months for a website to start making an impact, but its impact will be felt for a very long time if it’s done well.
Let’s take content creation for example. By developing a robust content strategy that targets search terms relevant to the services you offer, you’ll begin to rank for keywords that you know your target audience are searching for. In the hands of experienced SaaS focused SEO marketers, these pieces of content will continue to rise in Google’s search results.
The closer you get to ranking in position 1 for your target keyword, the more click throughs you’ll receive. This is one of the approaches that has made accelerate agency so successful in demonstrating accelerated returns for our portfolio of SaaS clients. Why not take a look at our client case studies for more on this.
Companies that blog generate 67% more leads than those that don’t. Blogging also plays a pivotal role in growing your brand’s voice, establishing your company as an industry thought leader.
Add to this the likes of eBooks, webinars and other lead magnets, and you begin to build a considerable amount of exposure. Over time, you stand to become a go-to source of information which in turn can lead to approaches from industry news sites, extending the cycle of brand exposure.
It’s a similar story with social media, referrals, and earning forum reviews. Building a social following doesn’t happen overnight, and you need to make sales before earning reviews.
However, a study shows that word-of-mouth marketing is even more successful than paid advertising, resulting in five times more sales. It takes longer for the inbound fire to start burning, but it keeps on burning once alight. Apply a targeted inbound marketing approach and that fire will be roaring before long.
Once you’ve worked out how much you can contribute to your marketing budget, take the time and effort to work out where it’s most needed. Or hand it over to the experts!
Having knowledge and experience on your side counts for a lot when it comes to the highly competitive SaaS industry.
Let’s look at our case study with cloud-based communications provider RingCentral. The brand had established some clear goals when planning strategies and budgets and required the knowledge to execute them.
It’s here where the importance of allocating your budget to the right marketing areas comes in. Following much research, we were able to find new competitors in the market who were consuming RingCentral’s share of voice. We also conducted in-depth keyword research and found that their current content failed to match search intent across the sales funnel.
The result? There was a 1185% increase in non-branded traffic and a 291% increase in traffic value for the website in a short space of time. This case study illustrates the importance of taking on the right content marketing services and truly making the most of your budget.
Building a SaaS marketing budget is no easy task, and there’s no simple calculation that suits every brand. With so many variations within the industry, the right figure is very much a bespoke thing.
Most importantly, understanding what’s at stake will help you reach the right figure for your organization. Establishing clear goals for your business and combining this with true marketing expertise will help you navigate the budget landscape, ensuring the very best bang for your buck.
If you need guidance as to where you should be spending your marketing budget, get in touch with accelerate agency today. Are team of dedicated SaaS specialists are on hand to help supercharge your SaaS marketing strategy.