Updated: Apr 30, 2019
B2B companies, big and small, often think about marketing this way. Oh wait. A more accurate statement would be “forced to think about marketing this way”, as I have not met many B2B founders who think a lot about marketing unless they really have to. The trigger is often lower-than-expected growth from new customer acquisition or not enough traction to get to the next investment round.
Founder: We need to do more marketing
Trusted employee: But we don’t really know much about marketing, do we? What shall we do?
Founder: We either hire a Marketing Director to take care of it or we can outsource it. I’ve heard about this PR agency and I know there are many SMM agencies around, perhaps I can ask around for recommendations
Trusted employee: Let’s discuss hiring first. Do you know someone? Can we ask somebody for a referral? Actually, hiring is expensive and may not work out. In the meantime, why don’t we first try with an agency
[calls the agency]
Agency: of course, we will take care of all your marketing! We will do SEO, SMM (Instagram, Facebook, LinkedIn, Twitter), paid advertising, PR, will write content and “fill in” your blog!
Founder: Ok, let’s try an agency and see if it works out! We can always stop! And we should ask for metrics, think of something or ask them what they normally use
This is an illustrative dialogue I hear across many B2B startups. Actually, I’ve heard very similar dialogues from dozens of established B2B companies. Just change “founder” to an “executive” and “do some marketing” to “improve marketing”. The story is very often the same.
You have probably guessed that this approach almost never works. The discussion above typically results in several attempts working with agencies, contractors, and freelancers. Unless the founders are lucky to find someone exceptionally good and thoughtful (rare), these attempts result in lost time and money. After seeing some of these attempts fail, the founders start to desperately look for a person to hire in-house asking around “Could you recommend me someone?”. Similar to asking for a sales director referral at early stages, I am not a fan of this approach. To get a good referral you need to be very clear about what you are looking for.
Questions like “Which agency should we hire?” or “Could you recommend me someone to take care of our marketing?” are almost never the right question to start with. The right questions could be:
Given the main goals of our business at this stage:
- What role should marketing play in our pursuit of these goals?
- What exactly do we want our marketing function to achieve?
- What are the top three things marketing should do first and foremost?
- What needs to happen for marketing to be able to do these things successfully?
- Who would be the best person to do this job?
Below, I give you just enough practical marketing knowledge to be able to answer the questions above. If you read this carefully till the end, you’ll save quite some time and money on making the typical marketing mistakes. I promise.
The role of marketing in a B2B organization
The importance of marketing (vs. sales and product) in your B2B business depends on:
- Business model: if you pursue some sort of freemium or self-serve model, most likely you’ll need to focus on marketing to drive customer acquisition. If you have a "land-and-expand” model you may use marketing to help you land (sell the first, usually easiest and cheapest products), and then add sales people to help you expand (e.g., sell new products, increase ticket size). If your your model requires setting up POCs, customers integrating with your systems, or signing longer-term contracts with sophisticated buyers, you’d better prioritize sales.
- Average contract value: if your average contract value is less than $X, you likely cannot afford sales people and you should acquire customers with marketing tools. “$X” will depend on many factors, but if you’d like a number, I’ve seen that in enterprise software it is hard to sell +$50K contracts with marketing only, but it may also be unprofitable to have sales people sell <$50K annual contracts.
- Your target customers: the larger your target customers are and the more stakeholders you need to convince, the higher the importance of sales vs marketing. Enterprise sales are still mostly done with outside sales people who go out and meet decision makers in these large corporates. If you have a lower-priced product that a middle manager has the authority to purchase, you can sometimes get away with marketing only (especially at early stages).
- Product complexity: the more complex your product is, the more likely you are to need sales people to explain the product to the users, decision makers, and influencers; a simple and easy-to-use product can be “sold” by marketing heavy – sales light organization.
As I mentioned in my prior post, a16z publishes some of the best content on B2B sales. In the video “Engaging Sales: How Much to Spend on Marketing vs. Sales?” Peter Levine is taking about one of the cases above: the closer you are to the enterprise model, the more important sales is. You can watch a 3-minute video on the topic here, or just look at the main screenshot:
David Skok, another great SaaS guru, has estimated that adding sales people increases the costs of sales exponentially, not linearly. Thinking about these trade-offs holistically is very important for B2B founders.
Now going back to our example, imagine what happens if you are a B2B founder who sells enterprise software to department heads or advanced IT infrastructure products to system architects. Your recommended agency comes to you and offers to do SMM, PR, and some content marketing. And, of course, they promise to measure results, “We’ll measure metrics such as impressions, so you know where you spend your money!”. But wait, are you sure that PR or SMM is what you need? Would it be one of the top three things your marketing should do? And are impressions the right way to measure success? Don’t get me wrong. I am not against the agencies - there are some very good ones out there. What I mean is: if you don’t know what you are looking for, you are unlikely to find it. And agencies, like most economic agents, have incentives and sales targets.
Let's see what B2B founders really need in terms of marketing.
Marketing table stakes
The framework above should give you enough guidance to decide the role of marketing in your company. One possible outcome of this exercise is that you decide that marketing isn’t very important for you at this stage. But - and this is a very important “but” - even if you find yourself on the right-hand side of the B2B spectrum, it does not mean that you can afford to ignore marketing altogether. The absolute minimum requirement (“table stakes”) for a B2B startup is a professional web-site with high-value content. What I mean by a professional and valuable web-site:
It communicates the value proposition of your product very clearly (hint: “our revolutionary cloud-based platform uses AI to solve your most important business needs” is not a clear value proposition; you can read more about Value Proposition in my Guide)
It offers truly valuable information to the people you wish to attract to your web-site (your Ideal Customer Profiles). At earlier stages, the content could be just several pages with very thoughtful description of the problem you are solving and the solution you are offering. You should complement it with a couple of very thoughtful blogposts written by the founders. Solve for quality, not quantity.
It has clear structure and clean design. The design shouldn’t be fancy, but it has to look professional.
Clear and loud calls-to-action: it should be super obvious what you want your visitors to do on every page of your web-site, e.g. fill in a contact form, download a material, sign up trial
You can hire designers to design your web-site (= make it look pretty), you can hire writers to edit your copy but you cannot outsource what you really want to say on your web-site, especially in the early stages of startup life. The story that goes on the web-site is the story that you as a founder define and tell. If your product is rather technical and somebody tells you that they have specialists to “populate” your website/any other channel with copy and content, run away!
What should our marketing function achieve?
Should you go beyond “table stakes” if your business is very much to the right? There is no “one size fits all here” but generally speaking “Yes”. Marketing budget will have a lower % of sales in this case, but you should most likely still need a marketing function. The recommendations below will work for most B2B organizations.
All right, what should your marketing team do then?
In the modern high-performing B2B organizations the most important marketing function is to generate high-quality leads (=Marketing Qualified Leads). You can argue that branding is another important objective, but let’s leave this discussion for another time. If lead generation is done right, branding will inevitable be part of it. If you don't remember anything from this post, remember this. The best B2B marketers know who to bring in high-quality leads. If a marketer you are hiring is talking about branding, brand awareness, creatives, specific marketing channels or tactics, but not about the numbers and quality of leads, this is a red flag.
How should marketing generate high-quality leads?
In B2B marketing, lead generation starts with high quality content. The web-site is usually the place where the content lives and all other channels drive people to the web-site. All marketing channels and tactics should be tested and measured with the objective to find the best ways to generate high-quality leads.
That’s it. You know enough to decide what to do with marketing. If you’ve read the post till here, you should now be able to have a conversation like this:
Trusted employee: What should we do with marketing?
Founder: Our biggest goal now is new enterprise customer acquisition, especially larger companies outside of Europe. Given this, what do we want our marketing function to achieve?
Trusted employee: We would like marketing to source (= provide MQLs for) at least 30% of our sales pipeline. We would also need to position ourselves as global, not just European, player.
Founder: This is a great target but it’s a long journey from where we are today. What do you think are the top three things marketing should do first and foremost?
Trusted employee: Since our current marketing efforts are rather scattered and we don’t measure them properly, we should focus on setting up a structured marketing function. I think marketing should start with the following:
Own and drive the creation of high-quality content which we can use on the web-site and other channels. Coordinate the collection of insights from founders, executives, product managers and engineers. Package these insights in marketing tools that are valuable and easy to digest for our customers
Agree on the definition of Ideal Customer Profile companies and MQL with sales
Start doing things hands-on: be able to draft the materials, create web-site structure, find and brief designer/editor for the web-site, start testing the most appropriate marketing channels, start list building
Be able to scale and hire people or agencies as we understand what works based on the tests
Founder: Sounds good. What needs to happen for marketing to be able to do these things successfully?
Trusted employee: I think the biggest bottleneck at the moment is product content. It is all in the founders’ heads. Our Product Manager is still learning and engineers won’t be able to explain the product in a customer friendly way to the marketer. To make it work, you and I have to make the first stab at it. Let’s just block half day Saturday and get it all down on paper.
Founder: Who would be the best person to do the marketing job?
Trusted employee: We need someone to really own this, so it has to be an in-house person. It should be a capable and hands-on person but probably not too senior. Senior people are used to work with big budgets and outsource everything to agencies, while we are still testing things. I am looking for someone who can get things done and would also be able to grow into the role. Ideally, the person has worked with our customer profiles before. Let’s write a job description, publish it in the right channels and start asking around for recommendations. I think an ambitious marketeer from a late stage startup (the type that is becoming almost corporate) may be interested, as we can offer more scope, more responsibility, a better title, potentially people management in future, and equity upside. Funnily enough, I just randomly came across a 2010 blogpost of Travis Kalanick advertising a marketing position for a portfolio company. Despite what we think of him, he did a really amazing job explaining what the company is looking for. Here is another example of a video reachout to Marketing Directors from the CEO of Close.
System2Labs is a full-stack growth consulting firm for B2B startups. We take a holistic approach to growth: from high-level growth strategy, to going deep on any specific sales and marketing topic. We help companies get things done: the result of our work is a working sales engine, not a tool or PowerPoint deck. If you have any questions about choosing or implementing your sales ideas and would like to avoid common mistakes, get in touch!
Founder and CEO, System2Labs