SaaS Playbook: Marketing
"You are out of business if you are out of leads"
The first Masterclass was all about building a high quality top of the funnel through the lens of Freshworks and how they evolved their marketing strategy, organization and tactics as they grew from 0 to 1 and then to 10. We had Ramesh, Vignesh and Balaji who have been part of the Freshworks organization from the early days and have made the marketing engine at Freshworks what it is. Considering the audience, the focus was on the 0 to 1 journey
The session was broadly structured around the following topics:
- Core aspects of Marketing as an activity and what should you prioritize at what time?
- Metrics, performance, RoI measurement and Experimentation
- Tooling/ Marketing stack
- Branding, Communication and Positioning
Core aspects of Marketing and what is important in the early days?
Up to $2M ARR, Freshworks marketing team was extremely simple and setup to focus on just 2 core aspects that matter most to early stage SaaS companies:
- Product Marketing: which was focused on corporate marketing, website content, use case scenarios as well as all sales enablement tools
- Lead Generation: Manage marketing $s to generate leads for the sales team through campaigns and organic activities (managed all SEO and SEM activities)
From day 1, the Freshworks team was focused on building for scale and maintaining a low CAC and so consciously decided to note have any SDRs. The company was built around low cost marketing and inbound leads, making it aligned toward scalability. Over time, the team evolved to focus on brand, partnerships, marketing operations and also added SDRs as the mid-market started to become a focus for the company.
Metrics, performance, RoI measurement and Experimentation
While the function and team structure has changed over time for Freshworks, the core KPIs that they measure have never changed and should not change. The focus for marketing has always remained the same:
- Leads (Free Trials) - with a benchmark lead to paid conversion of 5%
- Revenue generated (to align Sales to Marketing and make sure that leads generated are high quality)
- Return on Marketing spend (also called Return on Ad-Spend)
Each metric for Marketing was worked backward from the end-goal of the company, e.g. if the sales goal was $1M, marketing goal was to generate $3M+ in leads with an assumed conversion of ~30%. The focus was on simplicity and prioritized metrics aligned with end-goals. Only after significant scale/ maturity, Freshworks has started to add sub-metrics.
Most importantly, it is critical to review and calculate ad-spend payback (Cost of acquisition/ MRR) at a very granular level:
- Decide a benchmark based on LTV, Churn and other leading indicators that would put you in the target top decile of SaaS companies
- While founders need to look at overall payback at a monthly/ 90 day level, the marketing team needs to be looking at the granular payback at a campaign level
- Each campaign needs to be broken down into each channel and further go down at an ad level to decide which channels and campaigns to double down on
- Benchmark and measure payback based on MRR, so that we are accounting for churn over time
- Setup tracking templates for each individual campaign so that the source, campaign name, key words are captured through unique URLs which are then passed on into the CRM, this serves 2 purposes:
- Gives context to the sales person on where the customer has come from (e.g. if the keyword was Freshsales, then they know the customer already knows Freshsales and gives them context before calling the customer)
- Helps marketing team to do analytics on keywords, channels and setup an attribution model for the teams (90 day attribution)
- Over time, create conversion paths for customers through Google Analytics and closely prioritize the highest productivity pathways
Over time, in addition to the core marketing metrics, the Lead generation function at Freshworks also tracked:
- Search volumes/ impressions
- Engaged Sessions (>90s, page depth>3)
- Bounce rates, Exit rates
- Leads may land for a variety of reasons. To make retargeting more effective, focus on retargeting the customers who are "engaged" (Freshworks broadly defined as >90s time spend and page depth but this may be different depending on context)
- Use quick hacks/ leading indicators to prioritize leads, e.g. FW would prioritize business email IDs vs. Generic (i.e. @gmail or @yahoo email iDs)
- Look at bounce rates and exit rates in the context of where the traffic is generated from (e.g. for ads, high bounce was expected while long form content pages are continuously optimized to reduce bounce)
- Look at conversion rates in the context of the purpose of the page - e.g. informational pages are not measured for conversion, but rather for scroll rates, time spent on page etc. while ad pages were benchmarked to a 4-5% conversion
One interesting aspect the team highlighted was to focus on key word auctions which are in line with your own pricing:
- Use CPC and CPA metrics on Google key word planner
- Based on the demand, Google gives a range of CPC for every key word
- Use this as an indicator to determine which key word to participate in based on your products own pricing to make sure you are acquisitng customers at a reasonable price vs. your own price point
What is the tooling/ marketing stack
Starting out, the Freshworks team focused on using the low cost, but effective tools for marketing, specifically using a whole host of free tools from Google and other SEM tools (e.g. ahrefs) to create links and referral networks. Their overall stack looks fairly simple. They key aspects being execution vs. a complex stack/ tooling.
Branding, Communication and Positioning
Freshworks team focuses on using the see-think-do-care framework for segmenting their leads/ users based on their purchase journey. More specifically, they use certain channels based on where the users are in their discovery journey and creating consistent brand messaging throughout the users purchase journey.
- Building great brands: Brand Marketing for Category Creating Companies
- Branding Tips for Startups from VCs, Entrepreneurs and Marketing Experts
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