Learn B2B SaaS Marketing

How to Build an Impactful B2B SaaS Marketing Budget

by 

Lauren O'Bryan

Last updated: July 31st, 2024

Building a B2B SaaS marketing budget requires careful planning and consideration. When done correctly, it can lead to sustainable business growth and happy management. But if you get it wrong, you risk jeopardizing the entire marketing strategy.

To help you make this process easier, we’ve created a comprehensive guide on building an impactful SaaS marketing budget. We’ve included everything you need from start to finish – from understanding your business goals and the resources you require right down to calculating a data-driven budget.

Let’s get to it.

Why Getting the B2B SaaS Marketing Budget Right is so Important

A well-planned B2B SaaS marketing budget is crucial for optimal resource allocation, enabling maximum scalability.

According to one HubSpot survey, over 80% of marketers were confident or very confident that their budget allocation would lead to a higher ROI. By investing in the right channels and strategies, you can achieve the best results and generate a higher ROI.

Additionally, an effective marketing budget provides a competitive advantage by increasing brand visibility and attracting customers more efficiently, which leads to rapidly outpacing competitors.

Another benefit of setting an effective budget is more accurate performance tracking and the ability to make data-based decisions. Companies can optimize the tech stack used by their teams and streamline investment in the right marketing channels.

In general, a well-funded and carefully developed marketing strategy will aid in attracting high-quality leads through investment in the right marketing channels. Leads who are nurtured throughout the sales funnel are more likely to develop a strong loyalty to your brand, which will result in a better customer lifetime value.

With all this in mind, here’s how to get started.

Start the Process: Research Your Market and Strategize

Before you go about allocating funds, you need to understand your target audience and the market, and establish a comprehensive marketing strategy.

By understanding your target audience and the market you’re operating in, you will identify the platforms or types of communication that will work best for them.

Target audience research for your SaaS solution should consider the following:

• Product needs
• Existing pain points
• User behavior.
• Key demographics
• Industry type
• Buyer personas

When developing a marketing strategy, make sure it incorporates all the channels you need to reach your target audience, and identify specific, measurable marketing objectives. Some examples include:

• Increasing brand awareness
• Generating leads
• Driving customer acquisition

When you know what you need to implement, who you’re targeting, and through which channels, you can allocate sufficient resources and budget.

Set KPIs and Allocate a Marketing Budget

To put it simply, your SaaS marketing budget will be a percentage of your revenue. However, there are different variables you need to take into consideration before you start talking about revenue and numbers.

Important variables to consider include:

• Business maturity: Is this a startup or an established business?
• Size of the business: Is this a small business or a large one with many employees?
• Established marketing foundations: Do you already have all the resources and software you need to implement the outlined strategy?
• Growth goals: What are your business growth goals?

These variables play a significant role in determining what percentage of revenue you need to invest in marketing. A young startup requires a big investment to build awareness and a solid customer base. On the other hand, an established business that aims to attract new clients may not need to invest as much in marketing.

The same can be said for the tech stack and available resources. For example, if growth goals and the marketing strategy require specific account-based nurturing and you don’t have suitable ABM software, then this needs to be factored into your budget.

Understand Your Baseline: Key Marketing Metrics

The key marketing metrics you need to know to build an effective B2B SaaS marketing budget include:

• Monthly recurring revenue (MRR)
• Customer lifetime value (LTV)
• Customer acquisition cost (CAC)
• Conversion rate

This is where things tend to get tricky, as understanding these metrics can be challenging for many founders and marketers. Of course, if you’re trying to set an SEO budget this becomes even more challenging because it’s difficult to put a finger on a timeframe or exact spend amount required to meet KPIs.

As a result of this lack of data or inability to use it, we see many small to mid-size companies not allocating enough funds toward marketing efforts.

Establish the Right Budget

A common approach to setting a marketing budget is to use the 3:1 rule, where the revenue and value a customer brings to your business (LTV) should be at least three times what you spend to convert them (CAC).

When calculating your budget, focus on Monthly Recurring Revenue (MRR). MRR is a key metric for founders and marketing managers and is essential for calculating LTV. To set your SaaS marketing budget, establish your desired MRR and work your way back. If there is a target monthly revenue, you can determine how many new users you need to secure to achieve this.

Then, work out how many clicks and visitors you need to attract to secure the conversions you need. This is where you bring in the conversion rate. If you know the percentage of visitors you convert, you can establish how many visitors you’ll need in total to get those conversions.

The process doesn’t end there. Now, you need to test different traffic channels to establish the best customer-channel fit. We recommend casting the net wide and assessing channels like content marketing, SEO, PPC advertising, social media, and email marketing.

Finally, multiply the click goal by the average cost per click across the most effective channels, and you’ll have your marketing budget.

Distributing Budget to Different Channels

Deciding how to split your marketing budget and distribute portions to your chosen marketing channels can be tricky, so we recommend playing it safe and following the 70-20-10 rule.

• 70% into the channels you know are effective and have performance data to back this up
• 20% in newer tactics that you’re somewhat confident in
• 10% in experimental channels

This approach ensures that the majority of your budget is spent on proven methods while still allowing room for innovation and testing new strategies.

Measuring Results and Adapting

At the end of the day, any budget changes need to be implemented gradually and given enough time to see results. Implement robust marketing analytics tools to monitor the performance of campaigns. These tools will provide valuable insights into how well your strategies are working and where adjustments may be needed.

To effectively plan for the future, it’s crucial to understand the trends that are shaping marketing budgets. These trends provide a roadmap for where to allocate resources and anticipate challenges.

2024 Marketing Budget Trends

In 2024, marketing budgets are being shaped by the following key trends.

1. Generative AI: Investment in generative AI will only increase as the technology continues to improve. As more businesses report success with AI-powered tools, the race to integrate AI will only heat up.
2. Quality Content: Even though AI is racing onto the scene, that doesn’t remove the need for human-produced content. If anything, the push for high-quality, relatable content is stronger than ever. Think thought leadership pieces and real-world narratives that resonate with audiences.
3. Video Media: Video media is becoming increasingly popular, with users preferring short-form video over image or text-based ads. As a result, marketers are prioritizing the creation of engaging video content.
4. No More Cookies: By now, we’re all well aware that Google is ending the use of third-party cookies. This means businesses that had previously relied upon third-party cookies for user information must now effectively transition to utilizing first-party customer data.
5. ABM: Marketers are increasingly adopting Account-Based marketing techniques because of their ability to personalize communication. They’re finding great benefits in strategically targeting high-value leads, and this marketing technique will only get more popular in 2024.
6. Data Security: Data security has been on everyone’s minds since the inception of the GDPR in Europe. Laws around data security are only getting tougher, which means marketers and SaaS businesses must remain compliant or potentially face legal action.

As marketing strategies evolve to adapt to these trends, businesses must also consider how to effectively staff their teams to implement these changes.

Staffing Considerations

When you’ve established your business growth goals, you may have identified the need to increase your team to achieve the desired results. So, the question is, will you hire in-house or an agency?

Hiring in-house requires a significant time investment for recruiting and onboarding, but it pays out over the long run. In contrast, hiring a marketing agency allows near-immediate implementation of your business growth plans.

If you choose the latter option, you need to decide between engaging an agency with a full marketing team or an individual consultant. An individual consultant brings specialized expertise, filling specific gaps or providing expert guidance. An agency, on the other hand, can provide a comprehensive marketing team or additional support to your existing team, handling all aspects of your marketing strategy. And to make sure your money is well spent, tracking ROI is paramount.

How Powered By Search is Different

At Powered by Search, we exclusively work with B2B SaaS clients. Our ideal clients are those who have secured their product-market fit and are ready to scale now. This focus allows us to deliver highly specialized and effective strategies.

We keep our team small and only engage experienced consultants, from upper management to the implementation team. This ensures that you receive expert advice and support throughout your engagement with us.

When it comes to results, we know how easy it is to rattle off some vanity metrics and say “job done,” but we don’t do that. We are focused on revenue and sustainable growth over the long term. From our years of engagements with various clients, we have developed a collection of marketing playbooks that work time and time again. You can even try them out for yourself or get in touch and see what we can do for you.

Wrapping Up

Locking in a B2B SaaS marketing budget that gives you enough room to grow and doesn’t send you into the red is really important. Yet many founders and marketers find it difficult to achieve this, and it’s more often than not attributed to poor metrics tracking. Understand your business metrics, adopt a suitable budget, and scale as rapidly as you want.

But, while you’re thinking about setting business growth goals and scalability, first take our SaaS scalability score self-assessment. This self-assessment will help you understand where you sit against the competition and what you need to improve in order to outpace them.