Your company is not going to win on features and product.
It is almost boring to say this out loud, and yet many still think that the fact their product is better than their competitors’ is going to give them sustainable competitive advantage.
Your product needs to be good, as infallible as it can get, and that is pretty much the basic expectation of any person who is buying anything. Even more so in B2B. And yet, that is not what is going to make your company successful in the long term.
Slack went public last week, and they disclosed (among other things) that they invest 56% of their revenue in marketing and sales. Salesforce and Tableau spend respectively 46% and 51% of their revenue in marketing and sales. Out of 205 Saas companies surveyed here in 2017, the median marketing and sales spend as % of revenue was 37 (and by the way, the once who spend more than the median had a marked tendency to grow at a much faster pace).
I like the way David Cancel, CEO and co-founder of Drift (and former Chief Product Officer at Hubspot) explains the importance of marketing and brand in the Saas industry.
In this interview, he describes the current as the P&G wave of Saas. When Saas got started (the Edison wave), few companies were trying to figure out what Saas was and essentially come up with the basics. Then, the industry started to affirm (the Ford wave): a number of companies consolidating practices and growing their businesses. Now, in the P&G wave of Saas, a fast-increasing number of Saas companies (Cisco estimated there were 156,796 third-party apps serving businesses in 2016, a 30x increase in a matter of two years!) need to give buyers a reason to choose them against the competition. And the reason is never the product.
There’s no intention here to claim that merely spending money in marketing and sales is sufficient for success. It is not, as it is not having a good product. The companies that I have mentioned here (Slack, Salesforce, Drift) have excellent marketing people, that know well how to craft a strategy way before moving into tactics.
Nonetheless there’s a clear necessity for Saas companies to take marketing and sales more seriously. Marketing, in particular, is not the interns you are hiring for the summer to take care of your social media pages, nor is it the student you underpay to drive traffic and leads to your website. Make sure you have a solid marketing team that understands positioning, customer research, value proposition and all the elements of a marketing strategy.
Today, there’s no more excuses to overview this fundamental part of building a success story.