A “box office success” doesn’t earn that accolade by pure luck or merit. The main reason people flock to see a new release in such big numbers is largely due to marketing – a lot of it.
I’ve been in the growth hacking game for a pretty long time now – 14 years, give or take a few months. During that time, I’ve followed, listened to, and learned from some pretty brilliant minds. Neil Patel, Noah Kagan, and Sean Ellis (the guy responsible for coining the term “growth hacking”) are all well worth watching – if you don’t already.
In that time I’ve also seen a lot more marketers enter the scene and embrace growth hacking. Some have made a bigger impact than others, and some have made much less of an impact than I personally think they deserve.
Here are 15 lesser-known growth marketers who are worth watching and learning from this year.
I always get asked how I manage all the projects and companies I’m involved in. What most people don’t understand is that there is only one marketing strategy for everything I’m doing, and that this makes things a bit more manageable.
Don’t get me wrong, it’s hard freaking work, but it is possible.
Sales and Marketing are both working towards the same goal: securing business and helping their company grow.
But how they do this differs significantly.
Web Profits’ USP is that we focus on all parts of the marketing funnel – from securing leads for our clients, to converting them – and later down the line, turning those customers into brand advocates. We also have an multi channel approach to maximize the opportunities for each client’s situation
The SaaS market’s rapid growth shows no signs of slowing down. According to data from Statista, the industry is worth approximately $93 billion today and could be worth more than $150 billion by 2020. We’ve already seen huge changes in delivery, from all-inclusive platforms to more specialized tools and applications centered around specific processes like marketing automation and content marketing.
As the market continues to grow, we may also see changes to how SaaS companies measure growth and success, though efficiency and eliminating churn are likely to remain top priorities.
I recently talked with Byron Deeter, a partner with Bessemer Venture Partners, where he and his firm provide venture capital to cloud-based businesses in this market. We discussed which metrics are most important now, and Byron shared where he sees the focus shifting in a few years.
Sujan: What do you think is important for SaaS founders to measure right now?
Byron: We have this notion of the 5 C’s of cloud finance. Different weightings apply as you scale, but early on, there’s this notion of CMRR or CARR, which is Committed Monthly Recurring Revenue or Committed Annual Recurring Revenue.
This includes contracted revenue that may not go live, in addition to imminent customer churn. This figure is important because it’s a leading indicator of business. It answers the question, ‘What is the exact state of the business’s health today?’
Sujan: As a business grows past 10 million ARR, hitting that traction point, what metrics become important? Do they change?
Byron: Early on, it’s all about establishing market fit and growing revenue and figuring out the model. As you start to get to that 5,10,15 million ARR level, then you start needing to prove that the business can scale. That’s when we look at things such as Customer Acquisition Cost (CAC), payback, and churn rate. We look at the ratio of customer lifetime value to CAC and then free cash flow. Collectively, those are the top five metrics we look at in the growth stage.
Specifically what we’re looking at more these days is something we call the customer efficiency score, which is basically the interplay between the growth rate and capital efficiency. If you’re familiar with the rule of 40, which talks about revenue growth and profit, this is CARR growth and free cash flow. We’ve actually mapped out how efficient top companies are at each stage of growth and then benchmark new deals against that.
Sujan: When you’re evaluating a business, do you look at the channels a company uses to drive growth?
Byron: We definitely do. We particularly look for efficiency by channel, then marginal efficiency by channel and what is most scalable. A lot of our businesses benefit from organic traffic, but that’s not really scalable or sustainable. So the question becomes, ‘What’s the efficient rate of growth for this business and with additional investment, how can we grow it faster?’ It makes sense to raise venture capital when the business can access growth opportunities through marketing expansion and wants to use venture capital specifically for sales and marketing expansion.
At that point, we’ll look at which channels can be scaled up efficiently to have a sub two-year payback or, ideally, a sub one-year payback so we get quick returns on our collective dollars.
Sujan: How do you assess channel scalability?
Byron: There are different analyses for different types, and the simplest is search engine marketing. So we look at the volume of key terms available, the elasticity of supply, and the costs associated with ramping up your SEO. These make up the time-tested methodology of consumer internet companies.
At the other end, there are things like evangelism to scale your organic channel that you can estimate, but are harder to quantify. In between, there are more traditional direct sales methods, from looking at rep efficiency and productivity to channel partners and relationships.
I’ll note that channel relationships haven’t really been too successful in cloud from the reseller’s perspective, so they tend to be more oriented to direct channels that the companies can influence, where they can move the needle themselves.
Sujan: Anything else related to SaaS metrics that you think is relevant right now?
Byron: I think there’s this notion of efficiency by valuing public companies based on efficiency growth as opposed to ‘growth at all costs,’ and that’s trickling into the private markets as well. The tightest correlation of any metrics links to this efficiency rule. It trumps revenue growth and free cash flow, it trumps CAC to CLV, and it even outweighs other metrics we think are important. The efficiency rule is typically the purest way to determine the proper multiple to apply to a business.
Sujan: Efficiency has been commonly addressed, but is this something that has always been a priority and is just now being vocalized?
Byron: It has been valued, but it has ranked second or third to top-line growth and user acquisition. So when capital was cheap last year and before, the crude proxy for business value was revenue growth and as long as you weren’t burning massive sums of money to do it, you were given the benefit of the doubt.
And that applies to companies like Zenefits and Box in our portfolio, which grew very fast but spent a lot of money to do it. Box is actually turning free cash flow positive and growing much more efficiently now because of that. Just look at a business like Shopify, which is among the highest multiple businesses because of that interplay between growth and profitability.
And that’s what is different now. If you look back three years ago, the R-squared for revenue growth was about 70% in terms of what was the best predictor for the multiple in the business. Now, the revenue multiple is cut in half in terms of a predictor, and the efficiency score is now much more predictive than the revenue multiple.
Sujan: Do you think efficiency will still be a top metric five years from now?
Byron: I think efficiency is a good long-term metric. It reflects the maturation of the cloud space, because all businesses should be valued as a multiple of their free cash flows or the sum of their total free future cash flows, whether it’s Walmart, a high-tech company, or a McDonald’s franchise. We did find high predictability in long-term gross margins and renewal rates; free cash flow capabilities of these cloud businesses a few years ago led people to use revenue as a crude proxy for everything below it. Investors are more discerning now and we have large businesses at scale that are showing how the P&Ls are likely to unfold.
This leads to more educated investors, and we believe this is a good thing for the industry. Our CEOs are embracing it because then they can make trade-offs around the right rate and pace of investment for their business.
Are you involved in the SaaS market? What metrics do you focus on for your SaaS? Share your thoughts with me in the comments below:
Few businesses – if any – need millions of customers to do well. Sure, if you want to join the ranks of the world’s richest, you need to think big. Really big. But if you’re happy with a steady income and manageable growth, all you realistically need is a small but dedicated, cult-like following.
I’m excited to announce the launch of the Growth Mapping Podcast, hosted by me and Aaron Agius, my good friend and the owner of a competing marketing agency 🙂
We’ve designed this podcast to be a no-BS guide to customer acquisition and growing your business. Each episode is 15 – 25 minutes long, and will cover one topic that will move the needle in your marketing efforts.
Episode 1: How to Get Backlinks from Some of the Biggest Websites in the World
Earning links from publications like Forbes, Entrepreneur, and the Huffington Post can boost more than just your website’s domain authority; it provides credible social proof for your product or company (“As Seen in Forbes…”), drives targeted referral traffic, and opens doors for relationships with other high-profile publications.
In our first episode, we discuss how to write content that even has a chance to earn these links, what kind of writers are good targets to start building relationships with, and best practices for actually connecting with them.
Episode 2: The Real Secrets to Getting Your First 100 SaaS Customers
Your first 100 customers are often the hardest to get. In our second podcast, Aaron and I dive into how to build buzz before your launch, strategies to bake marketing into your product, and the reality and potential payoff of co-marketing and building relationships with influencers.
Episode 3: How to Create 10x Traffic that Drives Massive Leads and Sales
10x content has been a staple of my content strategy for almost a year now. In this episode, Aaron and I discuss what 10x content is (and what it isn’t), the step-by-step process we use to create it, and how to promote it to earn links and rank for the high-volume search terms that make the investment worth it.
And if you like what you hear…
Head over to iTunes and leave us a review.
Do you want a career in a high-growth industry in which both skilled professionals and dedicated individuals with a drive to learn are in high demand?
A career in an industry that values diverse skill sets, from creatives to analysts, mathematicians, and techies?
A career in an industry that could land you your choice of in-house or agency roles, but also lends itself to remote working and freelancing?
Then digital marketing could be the path for you. Intrigued?
I dedicate this year to the people around me and teams I have had the privilege of working with.
Team: Colin Mathews, Alex & Paul, Robert Senoff, Jerad Maplethrope, Matthew & Daniel from Quuu, Kumar, Scott, Mark Lindquist, Cat Dix, Sophie, Nick, Tam and the list goes on..
Awesome People: Hana Abaza, Ty, David Nihil, Max Alt, Peep Laja, Neil Patel, Benji, William Harris, Rob, Sol (Aka Cookie Monster), Dan Martell, Oli Gardner, Johnathan Dane, Arjun Arora, Trent G, Morgan Brown, Noah Kagan, Hiten Shah and the list goes on
Each person contributed to my personal growth and influenced my decision or direction.
- Clarity. This year everything I was doing over the last few year started to click and make sense. I saw a clear path to achieve what was once broad & lofty goal.
- Fun: Even though I worked harder than ever I had the most fun I’ve ever had
- Fuzzy mission statement from 2014 and from my childhood became solidified
- Replaced my skydiving hobby with buying & growing businesses (somehow I got bored of skydiving and I found the challenge of growing companies and all the hard work that goes into it to be fun)
- Acquired 3 companies: Pick.co, Linktexting.com and Confidential (Shopify app)
- Started a new agency: Web Profits
- In negotiation for book deal (2018 publish date)
- Created 56 videos. My last video shoot I created 7 videos in 58 minutes (record breaking)
- I spent over 100 days on the road.
- Absorbed some of the Aussie culture
- Gave a talk at Stanford and convinced 1 student pursue his dreams.
- His startup raised 3.5 million dollars
- Broke bread with hundreds of smart people
- Learned to say NO! I say No to most things these days.
- 392 Consulting Leads – Web Profits/SP Consulting
- 8219 SaaS Trials
- 2900 backlinks to Sujanpatel.com and all my sites
- I personally get 100 mentions a month (3.2x increase)
- My content generated 8.7 million pageviews
- 29 Speaking engagements:
- 2 speaking tours:
- 11 Workshops in Sydney & Melbourne
- 6 talks in 5 weeks (SF, LA, Sydney, Ottawa, SF)
- ContentMarketer.io pivoted to Mailshake.com
- Bought my dad a Telsa Model S instead of being douchy and buying myself a Ferrari.
- 100 Days of Growth Book passed 40,000 copies sold
- I pushed myself beyond my limits. It was emotionally taxing.
- Narrow.io had a major outage that took 3 months to fix.
- Because of the issue we lost 30% over night.
- Jerad released a fix and we regained 80% of them in the last 10 days
- FOMO. Because I say No to a lot of opportunities
- Gained 23 lbs since 12/31/14
- Start: 130lbs
- Current: 153lbs (double chin status)
- Got sued for a patent infringement from a failed mobile app in 2014 🙁
- Spent more on legal fees than on having fun
- Spent way too much time in airports & on planes
- Health: Diet & Exercise
- I refuse to gain anymore weight
- More Fun
- Recently bought a Porsche 911 GT3 and signed up for 6 track days at Circuit of the Americas in Austin
- Have a 4 day snowboard trip planned in January
- I’m learning how to add humor to my public speaking
- Help more people. Advisor, webinars, podcasts and increasing my transparency
- 2 books
- 1 on growth marketing in 2017
- I’m currently working with a publisher for 2018 release. Early title is called: UnderdogS
- Growth SaaS businesses by 3x (it’s simple, doable but freaking hard)
What’s your highlights & lowlights of 2016 and plans for 2017?