Every business is different and there’s no single answer to how you should measure your first marketing hire.
But if you’re thinking of hiring your first marketer to join an early stage SaaS company, I’d recommend including these topics in the discussions with your potential marketing hire so expectations are set from the get go.
And if you already have a marketing team, some of these suggestions might be a helpful starting point for setting the marketing team’s KPIs.
It’s fine to not have all the answers up front, things might (will) change as you learn and start trying things / gathering data. But set a North Star by making sure everyone’s clear about where you are today and what the goal is.
How should your first marketing hire be measured?
Marketing leaders should be willing to own a number. And that number should be revenue.
You don’t have unlimited runway.
Like every other part of the business, marketing activity must tie back to revenue at some point - so why not make that the goal from the start.
Marketing’s number is revenue
Unless you can show how marketing impacts on revenue it’s pointless.
Making it easier to attract talent, generating more leads, improving lead quality, increasing conversion rate, reducing time to close, increasing average contract value, reducing churn - these are all things marketing could be helping with. But they all ultimately link back to revenue.
In the early days, the primary focus of most SaaS marketing teams is customer acquisition.
There are leading and lagging indicators of success in customer acquisition. But the simplest approach is to put your new marketing hire on a revenue quota, just like you would a new sales hire. And, just like a sales hire, that revenue quota should have a ramp (more on that in a moment).
So, let’s say your target is $150k new ARR / month.
Let’s assume you’re expecting 60% of the leads to be marketing generated and 40% to come from your existing network or the sales team’s outbound efforts.
You’ll set the marketing revenue quota at $78k / month (60% of $150k).
This is the number that marketing’s aiming for. And there are a few ways to measure this.
- Weighted value of marketing qualified leads created
- Weighted value of qualified opportunities / demos booked at the point they’re created
- Value of marketing generated revenue
- Value of marketing influenced revenue (be careful here - it’s easy for marketing to claim they’re influencing revenue by creating touches that are easy to attribute but add no value to the sales cycle)
Marketing should be incentivised to help sales improve the sales process because as the opportunity win rate improves, the value of the MQLs or opportunities marketing creates will increase.
And marketing should be incentivised to help with customer marketing because, as lifetime value increases, CAC can be increased giving them more opportunities to grow what they’re doing.
What if you’re pre-revenue?
The same model applies if you’re pre-revenue. How can you start to build relationships with potential future customers? Building a mailing list, growing a wait list, pre-registrations ....
Just take the expected conversion rate and revenue of those leads to measure progress against the revenue target.
What about other marketing metrics?
Other metrics are likely to be a leading indicator of revenue and include things like:
- Target account engagement
- Leads created
- Lead to demo request / trial conversion rate
But aim to get to measuring an actual revenue number as soon as possible.
A note on brand building in the early days
Brand’s super important. A strong brand generally means better leads, better conversion rates, and faster closes.
But brands take time (and money) to build. And in the earliest days, revenue today trumps revenue next year.
You need to have a date in mind when your current marketing investment will return cash. And that’s easier to estimate when you’re focussed on demand generation.
That’s not to say brand isn’t important. It is.
But brand building becomes easier when you have revenue (and therefore both more budget and customers to reference / to refer you / to engage with and share your content).
Of course, generating leads becomes easier when you have a strong brand in the market.
Discuss it with your new marketing hire, but it’s likely that brand will take a back seat in favour of bottom of funnel demand gen activity until the revenue quota’s being hit consistently.
How to be fair with your new marketing hire
It’s all well and good putting marketing on a revenue quota, but they’re going to need the tools to deliver.
That means actual tools like a CRM, but it also means enough time to get on top of the basics - see below.
And of course, budget. That means you agree with them what budget they’re going to need to hit their target.
How do you set that budget? Well it’s likely to be an iterative effort. You’ll start out with some assumptions and you’ll likely tweak it as time goes on. But it has to be realistic, and not some hope or a whim.
As a reminder, you should probably be aiming for a LTV:CAC ratio of 3:1. That’s going to be the biggest influencer of your marketing budget in the early days.
How long will it take your first marketing hire to start making a difference?
That’ll depend on the level of maturity of your business ...
Do you know what your ideal customer looks like?
Have you found some channels that are starting to deliver qualified leads / opportunities consistently?
Have you clarified your positioning? Your messaging? Your visual and verbal identity?
Is this delivered consistently across the business?
Have you started to build an audience? And what’s the quality of the audience like?
What systems do you have in place? A CRM? Marketing and revenue analytics / reporting?
It’s likely that some or all of this will be missing (even if you think it isn’t) and when you make your first marketing hire, they’ll need the time and budget to get these things in place before they start pouring media spend and leads into a leaky bucket.
Whilst every business will look different, here’s an example roadmap for a first marketing hire’s first three quarters.
Getting to know the team, the product, the customers, and the market.
This might seem frustrating but it’s time well spent. Unless your they understand the customer and the proposition, everything else is a waste of time so give your new marketing hire the space they need to get under the skin of the business.
In these first months, your new hire will likely start making iterative improvements and optimisations, identify the gaps, and make a plan for how to fill them.
There may be some really low hanging fruit that they can act on to start increasing lead volume.
All of this will likely mean getting some new systems in place and making sure the reporting that’s needed to make good decisions in the future (and to learn from anything you’ve done in the past) is in place.
By the end of this quarter there should be a solid plan for the next couple of quarters including both goals and activities, and you should be starting to gather your own data so you can learn and improve over time.
Messaging, core collateral, website, sales collateral, ad templates ....
Whilst your messaging will inevitably evolve over time, by the end of their first six months your new marketing hire should have built a solid understanding of the market, your position in the market, and have started making sure what you say and do reflects this.
They’ll likely be making sure messaging is consistent across all your channels - including your website.
There’s a sort-of joke that every new senior marketing hire will build a new website. Whilst it’s not always the right thing to do, your website is super important to the success of your whole revenue team so don’t be surprised if, by their second quarter with you, your new marketing hire starts planning a new website!
By the end of this second quarter, you should start to see a meaningful increase in marketing activity and you should expect to see marketing hit their revenue quota / ramp.
As a SaaS business with a recurring revenue model you’ll likely be looking to grow a compound 5-15% / month.
Whilst great marketing leaders will always be networking and building pool of people they’d like to hire some day, at this point they should have a solid idea of what your business is going to need.
They should have a really good idea (with a few months’ data) of which channels are going to scale, which ones won’t, and which ones they’re going to double down on.
And, with that in mind, they should be able to start forecasting future media spend requirements and produce a hiring plan.
Off that back of that hiring plan they should be starting to build a talent pipeline so that when it comes time to start making hires to hit the compound growth targets, they have a pool of potential great-fit hires.
What to do if you think your new marketing hire isn’t working out.
We all make hires with the best of intentions. But sometimes it just doesn’t work out.
That’s OK. But remember, marketing’s hard and specific results are never guaranteed within a timeframe. Often, it takes just one or two great ideas to get that growth flywheel started and, by giving up too early, you risk starting from scratch all over again when that one idea you needed to kick start your growth was just around the corner.
Look for indications that things are going in the right direction. If they’re not, then does your new marketer have an explanation for why it’s not going well? Is that supported by data? Do they have a plan to fix it?
Do bring up issues as they come up. If you think things aren’t on track, get it out in the open. Don’t leave it as a surprise for the end of probation.
Expect a lot, but also understand that things take time. Putting in the work up front to understand the customer, and to position the product right is vital for long term success. Keep communications open and try not to get frustrated when it takes a couple of months for things to really get moving. If you’ve made the right hire, it’ll be worth it in the long run.