One of the main growth areas in UK tech in recent years has been in B2B Software as a Service (SaaS) startups. SaaS businesses are subscription based and rely on internet access as a delivery mechanism with many of them replacing legacy or back office functions.
SaaS is a relatively modern phenomenon, given its dependence on fast broadband, something many of us take for granted. However, it is only in the last decade that we’ve progressed from 56k dial-up Internet Access, and the need to go through a frustratingly slow process to ‘connect to the web’.
For those working in marketing, SaaS businesses offer unrivaled potential, but on the flip side, they can be particularly demanding. SaaS businesses rely on leads being (1) acquired, (2) converted and (3) retained, meaning that marketing has to play a significant role throughout the customer’s lifetime. The days of simply generating brand awareness and leads, and having a small set of marketing channels to reach a relatively homogenous audience are well gone. In a data-driven world, most SaaS marketers are expected to deliver strong metrics across all three areas, which is complicated by the fact that ‘product’ invariably impacts conversion and retention. If a product fails to deliver value, cancellation is often one mere click away. Add in the lower cost of entry for competitors, and the increasing cost of acquisition in a noisy environment with everyone competing for limited attention, and it is clear that SaaS marketers have their work cut out.
However, given the relatively nascent state of the SaaS market, senior seasoned marketers are in short supply. The net result is often a ‘marketing challenge’ as SaaS marketers fail to manage expectations or they fail to deliver the growth needed to satisfy investors. This is often set against a backdrop where senior management can often be oblivious to the challenges marketing faces or even the amount of work going on behind the scenes to deliver sufficient volumes of qualified leads. Finally, given the increased speed that SaaS startups are expected to mature, the skill-set demanded from marketers varies greatly. In many instances, junior marketers progress with the company's evolution, with little notice being paid to whether or not they are capable of making the leap.
So what are the requirements from marketing at the various stages of a startup’s lifecycle?
1 . Start-up Phase
At the start-up phase, many startups chose not to hire a marketing lead, instead opting to outsource the initial website build to an agency, and focusing primarily on product and sales. Cash is tight, and marketing is viewed as a luxury that simply can’t be afforded. Investing in product at this stage makes a lot of sense, as SaaS businesses need great applications, as mediocre offerings won’t cut it in a world where many SaaS offerings are seeking to displace existing processes, inertia or substitute offerings.
Cutting corners should not stretch to design, as a strong UI/UX, and features that meet real customer needs is paramount. After all, marketers are not alchemists, and their ability to generate leads and to drive conversions is highly dependent on the products ability to delight the needs of ther target audience.
Some marketing input is desirable at this stage though, as decisions made early on can have significant consequences downstream.
2. Post Start-up Phase
The business has survived year 1 and is beginning to see some traction. Product-market fit has been achieved, and an initial seed raise has been secured (such is the unit economics of SaaS businesses it is rare for startups to bootstrap their way to profitability). Hiring an initial marketing manager to drive sales usually happens at this stage. Often they are junior so as to keep costs down and they need to be a “jack of all trades” given that there is so much to do. At this stage, you need a doer - someone who can get things done.
Of course, there are some inherent challenges here too.
How do they know what to prioritize?
Have they the experience to focus on the right things?
Often the answer is no, and at this stage, management needs to actively manage them, which is not only demanding from a time perspective but also challenging if senior management lack marketing experience themselves.
Another challenge for these junior marketers is their ability to influence the product team. Are the teams operating in silos or can marketing influence the feature development roadmap in support of their goals of converting and retaining leads?
3. Growth Phase
As the company continues to grow, it is likely that the marketing team needs to expand, and specialist resource needs to be hired. Perhaps the company has landed a decent Series A cheque, and the cash is burning a hole in the bank account and needs to be spent.
At this stage, sales and marketing are often the main beneficiaries of cash injections (despite the fact that diverting a greater portion into product development is usually the best use of funds). Depending on the segment, the marketing specialists could range from growth hackers to inbound marketing specialists to product marketing managers.
All of a sudden that first junior marketing hire has team management responsibilities, and they now need to deliver through people. This raises a number of questions:
Are they capable of managing a team?
Can they delegate effectively?
Do they command respect from their peers in sales and product?
Do they even recognize the fact that the nature of their role has changed considerably?
In many instances, marketers in growth phase startups will have grown with the company and will have progressed quickly through the ranks. They may have built up a strong technical base given they have transitioned from being ‘jack of all trades', but what of their softer skills?
Many SaaS marketing professionals who have reached this stage may also lack broader experience gained from time spent in other SaaS startups.
Unfortunately for many, their time in this space is limited. A new phase is about to dawn.
4. Scale-Up Phase
All of a sudden opportunities overseas need to be exploited, to support a planned Series B raise. The erstwhile marketing manager now finds themselves leading (not managing) a team of 5-10.
The ever-changing marketing landscape means they need to keep their technical skills current, but they are struggling to manage their team, not to mind leading the SaaS company on its next stage of growth.
At this phase, the now senior marketing manager needs to focus on leading. Taking their place at the top table, managing stakeholders, signing off on budgets, and reporting to the board. But they are already working at full capacity.
In a short few years, they’ve had to go from being “stuck in the weeds” optimizing Adwords, to managing a team for the first time, before transitioning to a senior leadership role.
Is it any wonder so many SaaS marketers struggle?
If senior management stepped back and reflected on the journey, they’d quickly get to realize that not everyone can make the transition from doer to manager to leader.
When all this happens in a short space of time the problems magnify. After all, it is only a few short years ago that management literature talked about how leaders were different from managers.
“Managers embrace process, seek stability and control, and instinctively try to resolve problems quickly—sometimes before they fully understand a problem’s significance. Leaders, in contrast, tolerate chaos and lack of structure and are willing to delay closure in order to understand the issues more fully. ...business leaders have much more in common with artists, scientists, and other creative thinkers than they do with managers. Organizations need both managers and leaders to succeed, but developing both requires a reduced focus on logic and strategic exercises in favor of an environment where creativity and imagination are permitted to flourish.”
Managers and Leaders: Are They Different? by Abraham Zaleznik Harvard Business Review, (2004)
So what to do?
- Senior Management needs to realize the changing nature of the role and ensure someone from HR provides adequate training and support.
- The HR team needs to assess whether the marketing person can actually make the transition and if not to make a senior hire as they transition from manager to leader.
- External support should be considered at some points to assess, and to validate how the marketing lead is performing relative to the stage the business is at.
- A senior hire should be considered as the start-up plans to scale up. If the US becomes a core strategic objective than ensuring the new hire has US experience will be critical.
In summary, SaaS is a relatively immature industry, and senior experience is pretty thin on the ground. The demands on marketing are significant, and it is important to recognize that very few can make the journey from doer to manager to leader in the accelerated timescales we are witnessing. In many companies, the default position is to promote the first hire, as the startup matures. The inherent flaw in this approach is that different skill sets are needed at the various stages and not everyone is equipped to transition from managing to leading in such a short space of time. By recognising this journey, senior management can act more decisively when faced with marketing challenges.