It doesn’t matter how big or small your business is; creating a SaaS marketing budget takes a lot of time and effort.
Every company in the SaaS field will have a different way of calculating theirs, and they’ll all arrive at different figures in the end. There are countless resources online offering various calculations as well.
The whole thing can be something of a minefield, so how do you start building yours?
All good SaaS marketing budgets go beyond the numbers alone. You need to have a solid grasp of the industry, your brand, and, perhaps most importantly, your customers.
If you can take this understanding and combine it with an in-depth knowledge of the best SaaS marketing strategies, you’ll have all the tools you need to build a budget that suits your business down to the ground.
Join us as we look at how to build a SaaS marketing budget that’s tailored to you.
We will go through:
If we take an average across all industries since 2018, the answer is around 10% of revenue. There was a sizable drop in spending in 2021 when, according to a Gartner study, the average plummeted to a record low of 6.4% compared to 11% in 2020. But there has been a resurgence over the past year, with this number having recovered to 9.5% as of 2022.
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.
The most successful SaaS companies spend around half their revenue on marketing, and for startups, this can be considerably more.
This is much higher than the overall average, but remember, SaaS companies don’t have the same outgoings as something like an ecommerce brand, for example. You are already saving money on materials, brick-and-mortar storage facilities, and supply chain management costs.
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% of their revenue. But this percentage will vary depending on the kind of services you sell, your volume of sales, and your profit.
The brands we’ve looked at above have entirely different portfolios, but the one thing they all have in common is an excellent content strategy. All three understand 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 budget, but how effectively you use that 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.
So, we know a marketing budget is important but wading in and spending your money without having a solid plan in place would be foolish. Be sure to answer the following questions about your business before you begin to consider creating your SaaS planning budget:
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.
Learn more about how to rapidly scale your SaaS business through targeted marketing approaches by downloading our free eBook.
As we have already mentioned, there are many factors to consider when allocating your marketing budget. One of them is the size of your business and how prudent it has shown to be to invest a large percentage of your revenue in marketing at all levels, from startup to stable growth.
For example, a high-growth startup with a total marketing budget of $800,000 might typically spend $140,000 of that on thought leadership SEO i.e. authentic and genuine content.
A moderate growth B2B SaaS business might spend $130,000 of a $590,000 budget on the same thing, and a company at a stable level of growth might spend $180,000 of a $470,000 budget.
There are, of course, other avenues to explore, such as PR, email marketing, and LinkedIn advertising, but the above examples show how valuable thought leadership SEO is considered at all levels of the industry.
It speaks volumes that the marketing budget percentage allocated to it only increases the more successful the company. Talk to us to see how we can help best utilize yours.
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. This research dates back to 2013 but still holds firm today.
It’s worth taking a breather here to remind ourselves of the crucial benchmarks it’s prudent to observe to ensure the success of your business and its marketing spend. There are a few balls to keep in the air:
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 hats 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 is searching for. In the hands of our experienced SaaS-focused SEO agency, these pieces of content will continue to rise in Google’s search results.
The closer you get to ranking in position one 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. 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 and 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. After extensive 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? A 1,185% 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. Our team of dedicated SaaS specialists is on hand to help supercharge your SaaS marketing strategy.
Nick Brown is the founder & CEO of accelerate agency, a SaaS SEO agency. Nick has launched several successful online businesses, writes for Forbes, published a book and has grown accelerate from a UK agency to a company that now operates across US, APAC and EMEA and employs 160 people. He was also once charged at by a mountain gorilla