I take great solace in the fact that businesses are essentially math equations. Beneath the complexities of interpersonal dynamics, OKRs, competitive positioning, and total addressable markets…you have a simple formula of money coming in, money going out, money being retained.
More than ever before, marketing is an integral part of this growth equation. It’s one of the largest expenses that startups have (money going out), and also a core chunk of the other side when done correctly (money coming in).
Also more than ever before, the weight of responsibility rests on the shoulders of marketing to drive sustainable growth for their businesses. Uncertain times economically and the growth-at-all-costs habits of the previous generation have put us in the position of correcting the course.
Sustainability in marketing is, above all things, a balancing act. A mix of expensive and cheap, long-term and short-term, linear and compounding, known and unknown. Let’s dive in.
Harvesting existing demand, vs interruption-based tactics
How do you get in front of prospects who are actively in-market?
First, you can show up where they’re looking for answers. Second, you can pop up into their lives where they may not necessarily be looking for answers, but you might get lucky and catch them at the right time.
Marketing is most sustainable when we consider both options, and make sure we’re showing up in both places.
Channels like cold outbound, and display advertising jump in front of people as they’re going about their days. They capture the interest of people who happen to be in-market at that time. The problem is, it’s a small percentage of the folks you have to target. For this reason, it can cost more.
Things like organic and PPC can be cheaper methods of acquisition. You don’t have to target 100 people to get 5 hand raisers. You go straight to the source, helping the 5 hand raisers when they need you most.
SEO is especially helpful here, since you stop paying per engagement, and organic success compounds over time. See our thoughts below on linearly scaling vs compounding channels.
Search represents a limitless well of existing demand that you can tap into whenever you’re ready to take the plunge. It’s the digital equivalent of putting a brick-and-mortar store in a bustling downtown area, vs not investing, and ending up in a back alley where no one can find you.
Linear and compounding channels
Some channels require continual investment of time or money to keep producing results. An hour, or a dollar invested produces a reliable outcome that can increase over time, but when you stop investing, the results stop entirely.
Others build on themselves as you go, and over time a dollar or an hour creates increasingly large results. And, if you ever need to take a break from investing in these channels for a big rebrand or event, they keep producing results.
Brand, organic, and community come to mind. They take upfront effort and continual investment over time. But the rewards outweigh the costs in downward trending CACs, high ROIs, and reliability of results.
Short term and long term channels/results
Because B2B marketing holds the critical responsibility of driving revenue for the business every day, we don’t have unlimited time to build up our flywheels in order to start driving revenue.
Focusing too much on things that are successful in the short term can get very expensive over time. These are often the linearly scaling channels that require constant inputs to drive results.
The ideal state is when we can set up programs that drive immediate results while we build up success on longer-term projects.
We see people using PPC or outbound as a way to fill the pipeline, while they build up their organic presence.
Even within SEO, there are short game and long game tactics that can be approached in this way.
We recommend starting with high intent, low search volume keywords. These can sometimes be easier to rank for because there’s lower search volume, but they help you tap into the highest intent pool of existing demand in search. Then, turn your sights toward the more competitive ToFu terms.
High and low ROI/CAC
Everything that we’re talking about here will result in a balancing of your ROIs and CACs. It’s okay to lose money on some channels if others are working overtime.
Especially as you launch new channels, you might initially lose money on them as you’re “figuring them out.” And this is okay if you have a strong foundation.
There’s another layer here that goes beyond just CAC and ROI.
- Lifetime value: Channels that better retain customers
- Path to close: SaaS is a game of upfront payments. The value of cash in the bank now, cannot be emphasized enough. If some channels close more quickly than others, you can invest more heavily in them as well. Higher intent channels (catching people when they’re looking for solutions) do heaving lifting here.
Throw your investments at channels that retain customers well, or have a faster path to close. CAC can be higher in these channels. Organic is great because it’s often all of these things: high ROI, swift sales cycle, and good retention.
Strong foundations act as a failsafe for experimentation
None of this matters without a strong experimentation process. Here are a few reasons it’s important:
- You don’t always know what will work, until you try it!
- At some point, every channel/campaign/audience/message will start to have diminishing returns.
- Everything shifted dramatically due to Covid 19 – but even without a world-changing pandemic, the market is constantly changing.
- As you expand your product, you’ll need to tap into new audiences to sell to. What works for one audience does not work for all.
A lot of times, to find the thing that works, you need to spend a lot of money— and waste a lot of money. You have to be taking risks all the time. Some things will just hit, and you know you’ll be repeating that tactic. Other times the market may not react like you thought it would, and a bunch of time and energy is down the drain.
Don’t despair – just make sure you’re positioned to take these types of losses—some marketers we know bake a certain amount of spend into their budgets just for experiments. It’s small enough so that they know they don’t need it, but large enough to run a good test.
If you have channels like SEO working for you – creating a baseline of repeatable opportunities and pipeline that closes quickly, you can take more risks in your experimentation.
In this scenario experiments are additive, and you don’t rely on them working to be successful.
Sustainability is a balancing act
The math of business makes me feel like I have more control. I can easily see when the math doesn’t work. Similarly, when it does work, I know I’m on the right path and I can exhale.
When it’s just math, you can find the balance between expensive channels and cheap channels, and figure out how much you need to spend now to save later.
True sustainability comes when we consider the big picture, and the small. It’s when we balance long-term impact with quick wins.
Marketing sustainability is so closely related to business sustainability that it’s hard to separate the two now.
Sustainability is a balancing act. It’s nuanced, it’s a moving target, and if you put in the work, you’ll pave the way for long-term growth.