Startups · Entrepreneurs

How much should I spend on marketing for a SaaS platform?

Marian Melnychuk Senior .Net Developer – Upwork

September 25th, 2016

Currently structuring the marketing plan for a Series A startup. The company has raised $2M and is not profitable yet. How much should marketing spend to acquire new customers and what would be the best channels to do so?
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Peter Bray CEO at Bray & Co

September 25th, 2016

Marian the answer is "depends" and tends to be why you may need a marketing person involved where you pay for their expertise. If anyone gives you a simple answer, they are wrong .

James Bailey President at ABC LED Inc.

September 25th, 2016

It would require us knowing the product type and the targeted market to answer that question.

Arthur Lipper Chairman of British Far East Holdings Ltd.

September 25th, 2016

Not enough information about the company for anyone to give good advice.

Dane Madsen Organizational and Operational Strategy Consultant

September 25th, 2016

As others have mentioned, we need more information - starting with the revenue per customer expectation, LTV of the customer, what the platform is, how many competitors you have, industry focus, and barriers to replacement. You can spend more to get customers if you have a predictable defensible revenue source. If you are in a highly competitive space with high customer turn over, then you have to be on the other end of the spectrum . 

Ian Shearer Executive Chairman at Parakeetplay

September 26th, 2016

Well unlike everyone else I will try to give you an answer. 
In a SaaS company it's all about your customer acquisition costs (CAC). In general the aim is to bring your CAC down to about one year's revenues. If you can achieve that then you are probably doing pretty well. If a VC sees your CAC at one year then they know what results they will get from an Investment in your business. Of course this assumes that your churn rate is reasonable etc etc. 

Arthur Lipper Chairman of British Far East Holdings Ltd.

September 26th, 2016

The important issue surrounding appropriate marketing cost is measuring accurately the lead procurement cost. The sooner you understand the cost per lead and per converted lead the more effective you will be in allocating assets. Of course, there is also the issue of profit earned her sale as a factor in determine how much to spend to get what kind of lead conversion. What is necessary to be done for the conversion rate to be satisfactory? Try to learn the percentage of sales the competition is spending on marketing. Arthur