When looking at the marketing organizations of successful B2B SaaS companies, the most obvious characteristics are often those that set them apart.
Some excel at creating a strong brand among their target audience.
Some excel at creating unique, insightful content that drives performance.
Others may excel at direct acquisition and paid marketing.
On the surface, you might not see much in common between these companies, especially between those in different markets and with different target audiences. But there is one characteristic shared by all successful B2B SaaS marketing organizations…the ability to establish and manage effective marketing goals.
The ability to create marketing goals that directly correlate with the success of the underlying business is an important skill for marketing leaders in any company type. This is especially true for B2B SaaS marketing organizations, where competition is high and being able to deliver measurable results in a clear time frame is more important than ever before.
We all like to see ourselves as results-oriented, but what does it really mean to create effective marketing goals? How can we actually create them?
With this post, we want to lay out the process that you can use to create effective B2B marketing goals that align your team and drive results within your own company.
But before we jump into the process, let’s quickly talk about what makes a good goal.
Good goals are those that are S.M.A.R.T.
In addition, good goals must have a clear motivation behind their creation.
Good goals are created with the purpose of organizational alignment and performance evaluation. When clearly communicated, each person within the organization should know, on a daily basis, what they need to achieve, how it supports the company and what activities they need to do in order to attain those goals.
Now let’s get back to the process of establishing effective marketing goals…
Establishing Business Goals
The entire process starts with the establishment of the business goal.
The business goal is the desired end result that a company, via the executive team and board of directors, sets within a particular period of time. They are usually being set on a quarterly and annual basis.
Often times, business goals are financial in nature and expressed in metrics such as total revenue, new bookings, annual recurring revenue (ARR) and monthly recurring revenue (MRR).
SaaS businesses are comprised of many different units, such as marketing, sales, support and customer success, who all individually contribute to the business goals of the organization. It is the responsibility for the heads of those organizations to create their organizational goals based off of the established business goal.
While the establishment of the business goal may not be the direct responsibility of a marketing organization, having a well-defined and well-communicated business goal forms the basis on which marketing goals are established.
An example of a business goal would be:
- Hit $10M in ARR by the end of FY 2019
Creating Your Marketing Goals
Once the business goal is established and communicated by management, you can begin to create your marketing end goal and the other marketing goals to be produced by your marketing organization.
Your marketing “end goal” refers to the bottom-line contribution that your marketing organization needs to provide to help attain the business goal. It can be expressed in a wide array of metrics but it should be closely aligned with the business goal. In most enterprise software companies, the end goal would be number of opportunities (and pipeline of those opportunities), though we often find such companies with an end goal of SQLs (sales qualified leads), MQLs (marketing qualified leads), and even number of customers (and associated Bookings/ARR/MRR). In classic, no-touch funnel B2B SaaS companies, often the marketing end goal would be customers/recurring revenue.
Marketing goals refer to the top level goals that your marketing organization needs to achieve in order to achieve the marketing end goal.
Essentially, you need to break down the business goal to determine the specific contributions of your marketing organization towards it.
Again, you must work backward to figure out what key metrics your marketing organization needs to produce in order to contribute to the business goal.
You need to account for your own Sales and Marketing metrics like conversion rates, velocity between lead-to-sales funnel stages, avg. sales cycle, etc. This will help you reverse engineer the business goal to determine your marketing goals.
Calculating marketings’ contribution to the business goal involves a deep analysis of current and historical marketing performance and benchmarks while taking into consideration a wide array of external factors such as seasons, holidays and events.
Let’s look at a basic example:
- Business Goal = Hit $10M in total ARR at the end of FY 2019
Say your company has the following metrics and historical averages (a bit simplified):
- Current ARR = $4M
- Avg. Deal Size = $100,000 ARR
- Avg. Sales Cycle = 60 Days
- Opportunity > Deal = 50%
- SQL > Opportunity = 70%
- MQL > SQL = 60%
- Leads > MQL = 50%
- Website Visitors > Leads = 5%
With these metrics, Marketing and Sales would need to close 40 deals, with an average deal size of $100,000, in order to add $6M in ARR and hit the business goal of $10M in total ARR by the end of 2019.
With a 50% conversion rate from Opportunity to Deal, Sales would require at least 80 Opportunities in their pipeline to hit this goal. Because of the 60-day sales cycle, these would need to be generated by around mid-October.
With the number of required opportunities to serve as your marketing end goal, you can work backward and calculate the necessary production at each step of the funnel that is required of your marketing organization.
With the 70% conversion rate from SQL to Opportunity, Marketing would need to generate 114 SQLs in order to produce 80 Opportunities.
With a 60% conversion rate from MQLs to SQLs, Marketing will need to generate 190 MQLS in order to produce 114 SQLs.
With a 50% conversion rate between leads to Leads to MQLs, Marketing will need to generate 380 Leads in order to produce 190 MQLs.
With a 5% conversion between Website Visitors to Leads, Marketing will need to generate 7,600 Website Visitors in order to produce 380 Leads.
From this example, your marketing end goal would be:
- 80 Opportunities
To attain your marketing end goal, your marketing organization would set the following goals:
- 114 SQLs
- 190 MQLs
- 380 Leads
- 7,600 Website Visitors
Determining Your Channel Goals
Once your marketing goals have been established, you will need to review your channels and evaluate your capabilities and create the goals for each of your marketing channels.
Channel goals refer to the set goals per marketing channel that, when combined, will enable your organization to achieve your marketing goals.
By creating goals for each marketing channel, you are bringing your entire marketing organization into alignment around the primary marketing goals while providing your team with sets of individual goals that they need to achieve.
The process of determining channel goals allows you, as a marketing leader, to evaluate your capabilities and understand what can be handled by your in-house team, what can or should be outsourced (through agencies, consultants, etc.) and what you will need to hire for.
This is also the stage where you will be able to implement channel testing. Through the accurate forecasting of your test channels, you will need to assign them goals to determine their effectiveness and understand how they contribute to your marketing goals.
Much like your marketing goals, you need to work backward and analyze your historical and current channel performance data to determine the production potential for each marketing channel.
Let’s do a basic example of a single marketing channel: Content Marketing
Say that your Content Marketing has the following historical performance averages:
- Cost per SQL = $10,000
- SQL > OPP = 60%
- MQL > SQL = 40%
- Lead > MQL = 30%
- New Visitors > Leads = 3%
If you were to allocate a $100K annual budget towards content, it should produce the following attributed production:
- 6 Opportunities
- 10 SQLs
- 25 MQLs
- 83 Leads
- 2,767 New Visitors
At this budget level, these performance numbers would make up the expected contribution that content marketing would make towards your marketing goals and serve as the goals for the team member(s) responsible for producing and promoting your content.
As we can see from this example, you will need to strategically allocate your marketing budget across your marketing channels in a way that will enable you to hit your primary marketing goals month over month.
This is not an easy task.
The more channels you have, the more difficult this will become.
In addition, there are a lot of external factors that can impact your marketing channel production like seasonality (holidays, channels-timing, etc.), competition, channel relations, company announcements, etc. You need to account for those factors as much as possible to achieve the best possible results. Even without account for them, if you use the above process, you will be in a better state than 90% of the market.
Building Out Your Tactical Goals
After the creation of your marketing channel goals, you need to go one step further and break down your marketing channel goals to establish the tactical goals for each of your campaigns.
Tactical goals refer to specific micro-goals that your campaigns need to achieve in order to deliver their overall channel goals. Usually, those tactical goals are channel-specific and may vary between different channels.
These goals aren’t funnel goals in that they do not directly reflect the metrics of the marketing channel goals. They also tend to be so micro in nature that they only concern only the members of the organization that are responsible for specific channels.
Sticking with the content marketing channel, an example of a tactical goal would be:
A content marketing piece needs to achieve a 50% read ratio and at least 500 views in order to generate the necessary amount of leads to align with its channel goals (as we assume the correlation between these tactical goals and our marketing goals).
Other examples of tactical goals could be metrics such as open rates, clickthrough rates, impressions, etc.
Building the foundation of a successful B2B SaaS marketing organization begins with setting effective marketing goals.
Creating marketing goals in alignment with the business goal remains the only way to ensure that your focus remains on the activities that will advance the business and show the value of marketing to management.
By working with the process that we have outlined in this article, you will be able to continuously build effective marketing goals that drive business impact and aligns your marketing organization around performance expectations.