Mike:
Welcome to episode 38 of B2B SaaS Marketing Snacks. This is Mike and today we are talking about situational awareness as a go to market leader. So when you are the marketing leader or a founder or the leader of your go-to-market, you have to make decisions about where your time and money go, because you only have a limited amount of both of those things and not every playbook is going to work in every circumstance. You can't just take a marketing strategy and copy paste it across a bunch of different scenarios and hope that it just kind of works. What I mean by that is: the strategies that will work before you've achieved product market fit are really different from the ones that will work once you've started to gain some traction and get some customers that will pay and stay and even more different from when you have a lot of customers, say hundreds of them, and you're trying to start optimizing for things like ARPU and CAC and cost of service and those type of metrics.
So this concept of situational awareness is really what Stijn kind of uses to explain the differences between, kind of a true strategic marketing leader, and someone who is more executional or tactically focused. So in this episode, he'll explain the concept and then the two kind of key dimensions that you need to really understand if you want to become more situationally aware as a marketer or a founder. Cool. Let's get into it.
Okay. So lately I've heard you talk about situational awareness as a CMO, marketing leader. What can you tell me about that?
Stijn:
Yeah, Mike, as you know, when we published T2D3, we had two specific concepts that we used to think about maturity of the company, the business that you're trying to do marketing for. One was the maturity of your own solution and your own company. That's really the foundation of the structure of the book, right? You see it also in the poster here on the wall. You go from getting to MVP to then product market fit, scaling up to T2D3 growth and at some point getting to profitability, getting to a hundred million ARR. That's one dimension. And then the other dimension is, how mature is the market that you are in or that you're trying to enter? And we use the crossing the chasm model. We have some other ways to think about maturity of the market, because it will change your go to market strategy so dramatically, right?
Both where you are yourself, have you reached product-market-fit or not, and then the other dimension, how mature is your category? So what I have found in the last couple of months, as I share these thoughts with CMOs, with CEOs, with marketing teams, that this concept of really understanding where you are on both of those two dimensions is very powerful. It is very powerful to question, to challenge whether certain things are worth doing, to double down in areas where you may not have thought you had to invest, to be ready to invest in a specific area. Because for example, a category is young and you have to educate the market. To know that you have to, and sort of make sure that you understand what that lift will be before you commit to a certain go-to-market strategy. It's been very, very interesting to have those conversations. People really gravitate to the topic. So I've now kind of combined those two axi, both your company maturity and the category maturity. And the part of the strategizing that is to understand where you are, that's what I mean now with situational awareness. So yeah, that's why you hear me talk about that a lot.
Mike:
And when does it have the most impact? Like, when does situational awareness count the most?
Stijn:
Yeah. So imagine, someone asks you, "What should I budget for marketing?" It's a very simple question. Some people think it's a very simple answer too. "Oh, just take a percentage of your revenue or add a couple of things together. Oh, $20,000 for a PR campaign and $40,000 for a good website and another 15 for some good branding." And it just doesn't work like that. A real good answer to that question includes, "Hey, I'm in a very young category,” which means that it's going to be cheap for me to buy people's attention. So Google clicks will be cheap. It will be easier for me to rank organically in search engines because there's not a lot of competition for attention. But if the category is young or the category might not even exist, we're creating, we're making the market, we're creating the category, you also have to invest in that, right?
You have to do more work to educate people on the problem that you're solving for, to make people problem aware, to maybe coin certain terminology in a way that people understand what it means, so that they can understand what you do. That is costly. Right? So when you ask the question, "Hey, how much marketing budget do I have?” Understanding what that market maturity is, is really important. The second one is, how mature are you? And this is back to the baseball analogy that we use in T2D3. Are you still getting to MVP, to minimum viable product? That requires a certain type of effort and go-to-market? Or are you already on your way to product market fit? Are you past that milestone? Are you at a place where you know what your beachhead is, which means you now understand where to pour more gasoline on the fire, what marketing initiatives you can use to grow.
When you are a marketing leader, one of the first questions you try to answer is, "What is my ICP? What's the ideal customer profile? What type of customer do I want more of?" If you don't have product market fit, it's hard to answer that question, so which then means that you cannot really go answer your budget question with "Oh, I'm going to invest in this marketing campaign,” or “I'm going to invest in this initiative based on this ideal customer profile, where I think I can find more of those.” You don't really have an answer to that question.
Another very important part of that situational awareness question is how does your customer fit your go-to-market ambition? If you have a relatively low average contract value, Mike, if your customers are only buying maybe a thousand dollars worth of product or service from you on an annual basis ... Let's say your ARR per customer, often called ARPU, or ACV, average contract value, is say between maybe a thousand and a couple thousand dollars, you cannot really afford to do traditional marketing and buying clicks. It's just too expensive. You can certainly not afford a sales force, right? That is just far too expensive. So you end up having to either do what's called product led growth, to figure out a way to get growth from your existing customers who find others, the product itself, driving that type of flywheel momentum, or you have to find some kind of a partnership where the marketing and sales job is basically done by someone else.
Maybe you give up margin for that, but if you are the marketing leader and you come into a new company, understanding the limitations that you will have in what type of go-to-market you can deploy is really important. And that's that situational awareness. So understanding, based on ACV, what type of go-to-market your business model can bear and what it can afford, and then understanding where you are in sort of this journey in the different maturity stages of your company. And we have a lot of other details in the book that you could use to determine that, some of these questions. And then finally, how mature is the market that you are in, and this model, Crossing the Chasm, Geoffrey Moore's book, is an interesting way to think about that. It's not a perfect science, by the way, but the more mature the market, the more you will have to pay for attention, for clicks, the more salespeople will cost. And so understanding where you are and if you're earlier in this journey, then you'll have to educate the market. That can also be costly in a different way.