Startup Marketing: When Should You Invest?

If you’re an early-stage startup leader, and especially a first-time founder, determining when and how much to invest in kicking off your marketing department can be a dizzying experience. How much should I budget? When should I hire a marketing executive? How do I measure the program? What do I market first? Someone said I need thought leadership, what IS that?

The answer to all of those questions is simple: pause. It does not have to be a complicated decision or process, but it must be an informed one. Before you can answer who you should hire and what you should spend, there are four critical questions you must ask, and you need to have as much clarity on the answers as possible.

1. What are the required outcomes?

The way you structure your marketing investment is going to largely depend on the immediate business needs that marketing should address. Often times when leaders are told they need marketing, they think about public relations, branding, hiring an executive, and so on. Do not first think about the activities or the people; think first about the outcomes.

For example, if your board tells you that you need to get on the radar, develop a story or message, build the brand or potentially rebrand, then you want to start your marketing investment with the talent and resources to support that. If your board tells you that you need a 5x future pipeline developed, then you need to kick off strong demand generation that is going to create a marketing-sourced pipeline. Once you know the desired outcomes, then you can determine the activities that will help your company drive to those outcomes.

At the end of the day, you are going to need and want both, and much more, but knowing where to start and steering yourself away from the myth of one-size-fits-all marketing is a great first step. Once you get closer to your initial milestones, then you build out your long term goals, which are going to help you further determine what to spend and who to hire.

2. How will you measure it?

Never invest in a marketing program before considering how you will measure it. Once you determine your outcomes, you need to think about how to measure progress toward those outcomes. Good metrics and key performance indicators (KPIs) or going to give you an ongoing analysis of what is working, where to make changes in flight, and what to stop.

Some sample metrics to start tracking in an early stage marketing effort are as follows:

• Number of net-new leads in the top of the marketing funnel

• Quality of those leads according to your preferred buyer persona

• Cost of acquiring those leads to determine if the programs are worth investment,

• Conversion rate to sales opportunities and closed-won business.

The above metrics are especially important in early-stage companies where resources are tight. The best thing you can do is measure and change course as needed in an agile fashion; the worst thing you can do is trust in the program without any demonstrable tracking and ultimately lose time, money, and opportunity.

So, taking the outcomes into account, how would you measure? If you are working on brand recognition or market differentiation, you want to think about the share of voice, message sentiment, competitive disruption in articles, and engagements with your content. Don’t measure things like the number of media articles, as that’s largely useless. Measure the quality of articles and the quality of the publication. Don’t look at how many Twitter or LinkedIn followers your company has. Remember, there is a big difference between marketing and noise, and to fall into the digital branding pitfalls of noise could diminish your brand, even if the numbers might look good on paper.

Conversely, if you are focusing on marketing sourced pipeline generation, you’re going to look very closely at your top of funnel and the quality of leads that come into that funnel based on lead profiling, you’re going to set KPIs for the conversion rates at every stage of the marketing funnel, then conversion goals for the hand-off to sales, what types of leads are moving quickly through the opportunity stages, and which ones yield closed-won business. A decent marketer cares about the leads coming in; the best marketer cares about the entire lead lifecycle.

No matter where you start your program, however, you must always measure some basics. I call these the table stakes of marketing measurement: quality of net new leads, conversion across marketing funnel, marketing to sales conversion, marketing customer acquisition cost (CAC), lifetime value (LTV) of a marketing sourced customer, pipeline sourced percentage, closed-won sourced percentage, cost per lead, share-of-voice, and overall marketing return on investment.

3. How many program dollars do I budget?

So you know the near-term goals and how to measure, now it’s time to figure out your marketing operating expenses or OPEX. When first kicking off you may not need a full-fledged marketing budget; you’d likely work with finance on a procurement basis determined by need and business impact. Either way, knowing where to start spending and how much needs to be examined with a fine-tooth comb to reduce the risk of not only over investing, but investing in nice-to-haves versus must-haves. A startup marketing budget is generally 12% to 20% of projected gross revenue, and determining where in that range often depends on the type of product or service you are selling, and whether consumer or enterprise.

For a brand awareness or market differentiation program, you’ll want to invest in content development, market research and public relations (PR). But you don’t have to start big spending, as the investments in market research and PR can get out of control quickly. Don’t bite off more than you are ready for because you’re being aspirational; aspirational marketing investment is a severe business risk. For content development, consider an independent consultant that is specialized in your field; or find a boutique firm that has content development and media relations expertise. Don’t invest in all of the market research firms, just the ones you think are going to move the needle or perhaps your competitors are touting. Get the most basic package for your company size, work smartly with your account manager at the firm so they can do some of the work for you, and gobble up data that can help inform your other business decisions.

For an aggressive pipeline development program, you’re going to want to invest in lead profiling and marketing automation tools. As a company grows, spreadsheets go from being annoying to being a liability. Manual emails are impossible to track and build upon. It’s best to start early with tooling that integrates into your CRM and can help you both manage and measure programs. Not to mention, they help you avoid compliance risk. Similar to the advice above, do not invest aspirationally but do invest in tooling that can scale as the business grows. Most marketing automation tools charge according to the size of the lead database, so pay as you grow is the best option. There are a lot of other more sophisticated add-ons but you do not need those when starting out, and only consider as you have more mature programs.

4. Who should I hire?

Many people start here. Never start here! Now you know what the outcomes need to be, how you are going to measure programs and success, and have an idea of what you are willing to invest to get the program going. Now, who is going to do the work? I’ll say first, that if you are a very early stage startup or even in your Series A round, do not hire a vice president or chief marketing officer. You can grow your marketing programs without that level of experience and leadership, plus, those roles are expensive and often, depending on background, they haven’t been in the weeds for a while. You want to put your hiring dollars to good use in independent, self-starters who are no more than mid-level in experience and can quickly get working on the programs that you need to drive the business.

For a content and branding program, bring in a solid writer and researcher, potentially someone who has interned or done a year or two working under a strong mentor. Bring in a marketing operations analyst who can stand up your tooling and run demand generation campaigns. Both of those profiles are going to cost you much less than an executive, and they are going to get more done. Perhaps at some point, you bring in a director of marketing; make sure they are a high-performing generalist that can help you build a more specialized team. Do not hire an executive until you are at least a Series B.

Again, there are also great boutique agencies out there who won’t charge an arm and a leg, and who also are willing to grow their teams with your business and serve as an external marketing team. Examples of these firms are Look Left Marketing and Bluetext.

Think of marketing as a puzzle. You will eventually want to build out a robust, fully integrated program, but you start with the corners and then fill in the gaps. In the above scenarios, you start to see how a good branding program brings in net new leads that are critical to a healthy marketing funnel and ultimately a healthy pipeline. Build your marketing with a near-term focus in mind, achieve that milestone to help grow the business, measure the path and the outcomes, and then further invest. This is how you create a strong marketing foundation that will help propel your business in the future.

Jennifer Leggio has been a security marketer for nearly 20 years, leading teams, programs, and strategies for startups and public companies alike. A fierce advocate for truth in security marketing, ethics in market leadership, and protection of security research, she has spoken on these topics at DEF CON, Hack in the Box, RSA Conference, and a myriad of podcasts. She is the CMO at Claroty, the global leader in industrial cybersecurity, and one of Rain Capital’s portfolio companies. Jennifer can be found on Twitter at @mediaphyter.