Greetings, I am back with a new edition of Fresh Salmon. Your favorite B2B marketing newsletter. In case you celebrated Thanksgiving 🦃, I hope you had a wonderful time with your family and friends.

On a different note, I'm following the Football ⚽️ World Cup, and there have already been a few major upsets: Saudi Arabia beat Argentina, Japan beat Germany, and Iran beat Wales. It has been a very interesting start.

In this week's Fresh Salmon, I share a fallacy on Revenue Marketing vs Brand Marketing, my thoughts on investing in marketing, and benchmarks for SaaS CAC.

Let's jump right in. . . .

1) A Fallacy - Revenue Marketing Vs Brand Marketing 

Generating pipeline should always be the top priority when it comes to prioritizing marketing initiatives.

Demand is the lifeblood of a business, which is why it is so important to drive it.

More importantly, you can drive demand without a brand. When someone is searching on Google, for example, you can still capture them via Google Ads or SEO regardless of how strong your company’s brand is. 

Alternatively, if a business cannot drive demand, that's not favorable.

I have two observations that most marketing leaders get wrong because of convoluted understanding:

1. Categorizing Brand Marketing separate from Revenue Marketing

This is a huge flaw. 

Rather Brand Marketing is a subset of Revenue Marketing. 

To put it simply, if you have a brand, there will be a certain level of demand for your products that will drive revenue. In fact, there is a direct relation between the strength of your brand and the demand it drives.

If you categorize brand marketing outside of revenue marketing, then you are already drawing a line and expressing low confidence in the ability of brand marketing to drive qualified pipelines. 

Basically, if you aren't convinced, how are you going to convince your board of directors that such initiatives are worthwhile?

Alternatively, if you are convinced but still categorize revenue marketing and brand marketing separately, then you are framing it incorrectly. 

1. Framing issue

This is how you should be painting the clear picture of how all marketing channels are driving opportunities including brand.

If you categorize brand marketing outside of revenue marketing initiatives, you have basically stated what is unstated - brand marketing initiatives don't generate revenue.

The thing is, you should not be wasting your marketing budget on anything that doesn't ultimately drive demand or LTV. 

A good brand marketing strategy most definitely generates demand over time, but most brand marketing doesn't generate demand immediately, which is why marketers struggle to distill confidence in their CEO and board of directors.

I saw a statement from a CMO who said - Brand without demand = Bad outcome.

To be honest, this statement doesn't make any sense. Business without demand is bad, but brand without demand don't exist. 

Referring again to the graph I showed above. Your brand will drive demand based on its strength, but a brand without demand doesn't exist. Businesses without demand do exist, but that’s not a good thing.

The lack of differentiation between brand and business terminology is to blame.

2) Marketing is an Investment 

For founders without marketing experience, investing in marketing may seem daunting. Marketing takes time to produce results, but the cost is upfront.

The reality is - Marketing isn’t a switch that you could simply turn on or off at will to generate more revenue. It is in fact a continuous process of putting one layer over another, resulting in a compounding effect overtime. 

The process of scaling requires unprofitable experiments.

The initial challenge isn't just validating that people want what you're offering. Marketing must be able to reach them efficiently.

There can be a low LTV in early stages, which makes this even more difficult.

Looking at marketing investments beyond lead generation is supremely important. 

For example - most companies become market leaders through - differentiation. 

Newcomers mimic the establishment because they want credibility, which is the paradox of disruption. Doing what others don't is the only way to outperform. 

Branding, messaging, product differentiation, etc. are all aspects that are critical to a company's growth strategy, and primarily, driven by marketing.

The bottom line is you can’t scale a business without marketing. Invest in marketing.

3) SaaS CAC Benchmarks

It's that time of year when you are creating the next financial year's budget.

The other day, I was looking at my own plan and I wondered if our Customer Acquisition Cost (CAC) was high or low?

Taking a look at Nathan Latka's blog about SaaS CAC benchmarks was a great find for me. He conducted a survey of over 1400 companies, including bootstrapped SaaS companies. 

Y Axis shows how much companies pay to get $1 in new recurring revenue.

The X axis represents the revenue of those same companies.

Observations:

In order to get $1 in new annual recurring revenue, bootstrapped SaaS companies spend between $0.28 and $0.94.

When SaaS companies raise less than $10m, they spend between $0.56 in the early stages and $0.77 to grow to north of $50m in annual recurring revenue.

SaaS companies with less than $100 million in funding scale CAC the fastest, growing from $0.44 to $1.29 in spend to generate $1 in new ARR to grow from $1m to $50m.

Interesting, right?

Interesting Thing That I Read Last Week

Here is another gem shared on LinkedIn by the OG Category Designer: Christopher Locchead. Honestly, I can’t agree more.

Tweet That I Noticed Last Week

Facts . . .

Meme of The Week

What Do You Think?

This concludes this edition of Fresh Salmon.

I would like to hear what you thought of today's newsletter.

Also, let’s connect on Twitter and LinkedIn.

Cheers,

Vivek

PS. I love you ❤️