Growth-stage companies must be willing to invest in marketing to achieve ambitious goals, reach the right target audience and meet stakeholder expectations.

SaaS companies with a high-touch sales process focused on growth could miss out on up to 30% of revenue if they are not investing in marketing—not to mention the chance to significantly impact your business value and interest from future investors or acquirers. Growth-stage companies must be willing to invest in marketing to achieve ambitious goals, reach the right target audience and meet stakeholder expectations.

So how can you design a marketing organization that’s fit for growth and can scale accordingly?

Budgeting: How to budget marketing for scale and impact

When I work with companies, one of the first questions I’m always asked is: How much do you put toward marketing when drawing up your budget?

According to the U.S. Small Business Administration, high-growth organizations who aim to grow by 30% yearly, require about 25% of revenues budgeted into sales and marketing. The lowest point at 10% for lower growth targets, on average.

  • From that, marketing should comprise about a third of that budget. (This percentage aligns with the U.S. Small Business Administration’s report advising small businesses to allocate 7-8% of their revenue to marketing.)
  • Within that 7-8%, 40% should go toward headcount and 60% toward campaign spending.

One-third of your sales and marketing budget going toward marketing should remain constant, even as the percentage of revenue changes.

As a company grows, the percentage of revenue investment declines. In my experience, a rate of 30% year-over-year growth is attainable for a $20M business through just sales and marketing alone. As a company grows, its revenue sources often diversify and require shifts in investment. That said, one-third of your sales and marketing budget going toward marketing should remain constant, even as the percentage of revenue changes.

Finally, you will want to measure the effectiveness of your marketing spend. All the stakeholders in the room must be aware of the impact marketing has on cost of acquisition in combination with their growth plans. As the organization matures, its impact on cost per acquisition will decrease as they become more efficient.

You can budget and plan, but none of that matters if you don’t have the right people to execute.

Hiring the right people

Bringing on suitable candidates is the make-or-break in any situation. You can budget and plan, but none of that matters if you don’t have the right people to execute.

What kind of marketing leader would suit your organization? Do you hire a CMO, CRO, VP of Marketing, or a combination? Depending on their roles, their skill sets will differ by factors such as growth speed; sales, technology and marketing alignment; marketing acumen; product positioning; competitive intel; brand positioning and cost.

Consider a couple of factors:

  • If you require better alignment between sales and marketing teams, a Chief Revenue Officer can help generate strong alignment since they are the de facto decision-maker between the two groups.
  • If you require a deeper level of market insights and understanding, a CMO can bring an added level of proficiency.
  • If you require a more tactical, hands-on approach to executing marketing, focused on integrating lead generation, sales, marketing and technology, consider a VP of Marketing alongside a CRO.

As you think beyond your marketing leader, it is important to hire seasoned marketers across key functions to act as the lead strategists in each function. Roles include Product Marketing, Demand Generation, Brand, Marketing Operations and Customer Marketing.

Hire the critical components of your staff first, and they will help drive accountability internally and externally with outsourced vendors.

Know when to outsource

Don’t make the mistake of outsourcing your marketing talent early on. There is no replacement for an internal resource who is brought into your company’s mission, industry and vision. Hire the critical components of your staff first, and they will help drive accountability internally and externally with outsourced vendors.

Outsourcing can be extremely effective under the right circumstances. If you’re looking to scale a marketing organization that is running smoothly, this is one way to do it without increasing headcount significantly. Alternatively, it can serve as a temporary option in labor markets that are in high demand or if the labor is extremely specialized. Time to fill the role and the vacancy of a role can significantly impact the organization if left unattended.

Marketing Maturity – Where are you starting from?

Before you embark on growing your marketing organization, it’s important to reflect on where it is today. Most marketing organizations begin as sales enablement resources and have little impact on revenue. Improving the capabilities of the marketing department will take time and planning, based on the growth of your business. Depending on the current maturity level of your organization, the chart below will help to act as a guide on the key elements the organization should focus on as they grow.

chart explaining stages of marketing maturity for growth

 

Here’s the bottom line.

A company’s growth rate dramatically influences its value. Marketing plays a significant role in its potential. Marketers who develop strategic content, measure it effectively, budget rationally, and staff appropriately hold the keys to unlocking a growth organization’s expansive goals.

This GrowthBit is featured in LLR’s 2023 Growth Guide, along with other exclusive insights from our portfolio company leaders and Value Creation Team. Download the eBook here.