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What Is a Standard Marketing Budget Allocation of a B2B SaaS Startup?

When allocating your marketing budget, you want to split it in a way that puts resources to the channels and tactics that drive the biggest results for your company.

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You also leave some budget to experiment with emerging channels that can turn into your best ways to acquire customers and grow your revenue.

I suggest something like an 80:20 split between the two — put 80% of your resources in the channels that are currently driving proven ROI for your product. In B2B, this is usually content and SEO (especially, if you’ve started at least 3-4 years ago), events, inbound sales.

And don’t skim over the proven ROI part — you need to understand where your customers are coming from, even if it’s fuzzy and hard to measure sometimes. Use a tool like ChartMogul (Full disclosure: I work for the company) to attribute marketing channels to customers and compare how they are performing.

Find your CAC (cost of customer acquisition) and LTV (customer lifetime value) per channel. Look for the golden quota LTV = 3x CAC.

Looking at CAC and LTV is a useful way to figure out how to spend the 80% — what channels to prioritize and give more resources to and where to cut and re-assign resources.

The 20% that should be left to experimenting and seeking new channels is slightly more challenging. Of course, you should still rely on the data-based insight metrics such as CAC and LTV can provide, but you cannot measure experimental channels the same way you do with established channels.

Finally, here’s how to think about adding and managing your channels, especially when you have a few that are already working. I am a big proponent of thinking about growth through loops (Brian Balfour from Reforge and Rand Fishkin have written on the topic extensively).

Loops become even more powerful when they feed off of each other. A classic example is content feeding a sales loop through lead nurturing and sales enablement — your sales team uses your content to educate and nurture potential customers, thus closing them more easily.

So, when you’re looking for a new channel, look for ways to either use a loop that’s already working for you to jumpstart another one (for example, hire a sales team to work leads generated from your content loop) or add a new loop to improve an existing one (for example, start using account-based marketing (ABM) to generate pipeline for your sales team).

Further reading:

Originally posted on Quora.

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