Is Now the Best Time to Ramp Up Your Startup's Marketing Budget? Key insights and fail-safes that will prevent owners from blowing through too much cash, too soon.
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Many startup leaders think that the more money they feed into their marketing budgets, the faster they'll gain traction. For B2B companies, however, nothing could be further from the truth.
A 2021 CB Insights study found that nearly 4 in 10 organizations hit rock bottom because they either outran their fiscal runway or couldn't raise new funding. Spending too much too soon on marketing can lead to both of those problems.
B2B marketing differs from that of B2C because it's typically more involved, requiring a dedicated sales team to close deals. You can't just throw a bunch of marketing on the wall to see what sticks, you have to work closely with your sales team to listen and learn from customers.
Related: How to succeed in the world of entrepreneurship and not die trying?
The consequences of overzealous spending
It can be tempting to scale your business from the get-go with flashy brand awareness campaigns. But until you've done the work to find out what your sales team needs, fully understand your customers, perfect your product and craft your messaging? Marketing can be a losing proposition in B2B.
For starters, you could end up saying the wrong thing to the wrong people because you haven't been listening to consumers long enough. It doesn't make sense to get on a megaphone with the wrong message.
Even if you say some right things, your product might not be ready to deliver the results you're promising. Customers will be unhappy and share their experiences with others. You'll end up spinning your wheels trying to regain a solid brand reputation.
Premature marketing can also present issues with raising capital. Let's say you put tons of cash into marketing and get only 10 customers out of it. Your customer acquisition cost will be sky-high, which investors won't appreciate.
Spending your marketing budget in the early stages
My company, a B2B SaaS provider, spent a lot of time strategizing before we really started putting fuel on the marketing fire. We aligned sales and marketing from the get-go to hone our core audience and find out what customers needed. Then, we expanded our verticals, developed industry partnerships to boost our credibility and even merged with another company to expand our product's capabilities. Now, both our product and our team are ready to successfully handle the outcome of our marketing.
Assess your readiness with the following questions:
Have you honed your message?
Focus on customer pain points and how your product or services solve them. You'll need to spend some time and money on audience research, but that's better than wasting dollars on messaging that doesn't resonate.
My company saw the opportunity to fill a gap for our target market and focused messaging around it. Our social media management software serves regulated industries, such as financial services and insurance, that must abide by regulatory guidelines for electronic communications. A primary pain point for these industries is that most social media management software companies design their products for consumer brands or small businesses. Regulated industries can't rely on those tools to help them stay compliant, so we built compliance controls into our platform and highlighted our purpose-built strategy in our messaging.
Remember, you may have to deliver your message as many as a dozen times for it to resonate. Sales will be critical to establishing the core group of satisfied customers you'll need to build your credibility and reputation for future growth.
Is your product ready?
For many B2B startups, like those in SaaS, data can give you an exact picture of how clients are using your product and where you can improve. Ensure that your offering can effectively solve clients' pain points before you put out marketing messaging promising how it will help.
Team-based work management tool Asana identifies "engagement" as one of its key benefits to customers. To back up that message in its product, the company focuses on product research to measure how clients engage with the tool. One way Asana gathers feedback is through its "Voice of the Customer" program, which involves client surveys about their satisfaction with the tool over time.
Ask, listen and then improve over time.
Is your team prepared?
Clients are increasingly demanding that their vendors have the in-house resources and framework to chart a path for success. It's no wonder LinkedIn's 2020 Emerging Jobs report found that customer success specialists are one of the fastest-growing positions.
Your first job as a startup leader is to build a solid product and scaleable company, not to develop a marketing agency. Play it safe with your startup's budget until you can check off all-of-the-above boxes. Work closely with your sales team as you research, listen, test and improve---THEN ramp up your marketing efforts.
Related: Today, reputation is online: 4 simple tips to maintain a good digital image of your business
