Let’s assume one of your milestone is to become a 100M business and go even bigger from there.
To get there, there are various layers of customer profiles that you can aim for.
Who are you marketing to?
Big corporates? SMEs? End users or consumers?
It gets down to you product and service nature to make sense of whom to target to. Let’s say your product is suitable to target SMEs – thus you aim for the “Rabbits” that bring you around 1000USD/year.
Since you’ll need lots of ‘rabbits’ to get to 100M, you need high velocity to acquire and attract the right SMEs effectively and efficiently. How do you achieve that?
Your Marketing Strategy depends on your Business Model
The way you do marketing should be closely aligned with the way you do business and how you charge your customers.
Let’s say you’re a SaaS business and you charge customers on a recurring basis from 40-100USD/month (480-1200USD/year).
That defined how much you can afford and spend to acquire a new customers and how scalable you need to be in the way you do marketing.
3 Key Metrics to Pay Attention to In order to Be Profitable and Grow Healthily
Because the end of the day, you are running a business, not charity.
Bottom line: you’d not spend more $ to acquire a customer than your customer can pay you back in its lifetime.
We need to understand the following 3 core metrics in order to define how you should do YOUR marketing:
i) Average Revenue per Account (ARPA)
= how much a customer pays you per month on average?
ii) Customer Lifetime Value (LTV)
= how much your business makes from a customer throughout its lifetime before it leaves you
= how long they stay with YOU * how much they pay you per month
Eg. it varies across business type / business regions
iii) Cost per Acquisition (CPA)
= how much you spend to acquire a paying customer
Cost per Acquisition <= Lifetime Value/3
The idea is, since you are not and should not be willing to pay $11 to acquire a customer that’s worth <$11, we shall define how much you are willing to spend to acquire a new paying customer.
As a SaaS benchmark, your CPA should be at least 3 times or less than LTV.
Quiz Time for Yourself
A) what is the revenue per account for various plan types in your business?
B) what is the lifetime value of your customers in various business oferring (if you sell more than 1 type of products)?
C) what is your cost per acquisition in average?
D) what is your CPA/LTV ratio?
Back to the Point – How should you do Your Marketing?
You have roughly 3 directions that you can choose to pursue:
A) heavily marketing driven with no sales touch
B) active marketing with reasonable sales support
C) heavily sales driven with little marketing efforts
Based on the fact that:
i) marketing is relatively more scalable, thus more cost effective
ii) sales is human touch driven, thus human cost is high in order to scale (because you need to scale # of people)
You need to decide which direction to go based to your average revenue per account (ARPA).
Say if your ARPA is 40-100USD/month, you may want to go with plan B – ie. building repeatable and scalable marketing assets, with one to many sales activities.
How to Achieves Scalable Marketing with Reasonable Sales Activities in Customer Acquisition?
Essentially, there are 3 major pillars that you can acquire customers:
a) Spears = Outbound Sales = Targeted prospecting by sales workforce
b) Nets = Inbound marketing = pulling in large amount of leads with marketing campaigns
c) Seeds = word of mouth = customer referrals
based on B direction, you’d rely heavily on both inbound marketing (b) and a great customer success team (c).
In summary, your marketing activities will mainly involve the followings: