Founding a tech company is tough, and with the tightening funding climate, exacerbated by the recent collapse of Silicon Valley Bank, it’s gotten infinitely tougher. Founders at different stages are facing serious headwinds:
- a 31% drop in startup funding in 2022
- reduction of private valuations in lock step with public software companies
- a non-existent IPO market
- a gaping hole in access to timely venture debt
Double-digit revenue multiples are now elusive: investors across venture, institutional and even retail, are now valuing efficient growth, as opposed to growth at all costs. For founders, the current climate mandates they successfully rearchitect their organization for efficient growth and, in the process, build a modern go-to-market strategy to achieve profitability.
Engineering Marketing Orchestration for Growth
Legacy B2B SaaS companies are typically oriented around a “funnel-first” approach where each function is hyper-focused on its specific role. The traditional metaphor is a relay race to the finish line: Marketing passes the baton to sales which then hands it off to customer success (CS). However, this creates inherent inefficiencies – and internal friction – that inhibit an organization’s growth potential since each department is incentivized to operate in a silo to achieve independent KPIs.
Founders have the opportunity to decouple marketing, sales, product and CS from their functional definitions and bring their organizations together. This isn’t a new concept: account-based marketing has acted as the initial template for a modern approach to growth. The issue has been that many companies treated ABX as simply one more layer in the technology stack or an independent revenue program, rather than a holistic marketing orchestration strategy. The organizational and operational shifts were hard to achieve at legacy companies.
The current market environment mandates that founders to build a unified growth engine from day one. The guiding principles to growth marketing orchestration are as follows:
- A buyer-first vs. bookings-first mentality
- Prioritizing data capture, integration and communication
- One team, one goal with shared KPIs
Each department is a separate section of a “growth orchestra,” playing in harmony to the tune of efficient growth. The CEO is the conductor: ensuring that each group is creating a beautiful symphony to a standing ovation from both customers and investors.
Buyer-first vs. Bookings-first
The majority of SaaS companies still take a top-down approach to bookings forecasting: they define their targets and attempt to reverse engineer a path forward to hit it. This process works in an environment where retroactive data correlates to future performance and/or for larger companies that are operating at significant scale. It also was state-of-the-art when these companies were young growth startups.
Startup companies can now take a buyer-first data-driven approach to generating revenue and architect the organization and tech stack to relentlessly focus on winning and retaining the highest quality revenue. Each team plays a different instrument:
- Marketing – Creates demand and taps into demand signals, actively tests and refines the value proposition to the market, and internally, represents the voice of the market
- Sales – Communicates who is currently in market, the existing realities of the buying process and the acute pain points that motivate prospects to convert
- Product – Delivers against the promise by driving the customer to the “aha moment” of value creation and long-term success
- Customer Success – Understands the ideal customer for durable growth and acts as the voice of the customer for critical feedback to recalibrate the GTM
- Revenue Operations – Facilitates the collection and communication of organizational intelligence to ensure proper visibility across the organization
- Finance – Stress tests the real-time data against cash runway to communicate regularly to the CEO and the board
Since each function owns a critical piece of buyer intelligence, modern growth organizations must prioritize processes to interact and stay on the same page. Effective teams rely on an array of tools from joint dashboards to a regular cadence of communication. Otherwise, each section of the orchestra will contribute to an out-of-sync cacophony: a complete turnoff for the modern buyer.
Data Capture, Integration & Communication
Architecting an organization for efficiency goes well beyond simple cost cutting: it’s a fundamental shift in how the interplay of talent, technology and process systemically drives sustainable growth. Data is the primary instrument for a growth orchestra. Every decision should be framed through the lens of “does taking this action improve our company’s ability to collect, integrate and/or communicate data about our customer?” Companies that win in a capital constrained environment:
- Establish a brand North Star and consistently reinforce internally and to the markets
- Adopt a culture of aggressive and relentless hypothesis testing
- Build and maintain data infrastructure to align resources and right-size investment
- Implement technology to gain visibility into and integrate real-time market signals
- Invest in process and stricter governance to ensure data is captured and centralized
- Leverage generative AI and automation to increase productivity and reduce friction
Many companies, especially incumbents and larger competitors, are retreating in the current environment. While it may seem counterintuitive, the next market leaders are using this opportunity to retool and invest aggressively in data infrastructure and growth orchestration to refine their brands, revamp their messaging and systematically win market share.
One Team, One Goal
Another trap that startups can avoid is that of overreliance on attribution data. We know we just said that data is your growth fuel, and we stand by that. Attribution data – while well intentioned and can provide helpful signals – will have you focused on tactics and lose sight of the big picture. Don’t waste precious capital to communicate the minutiae of each tactic.
Instead, startups need to align on the overall impact; looking holistically on how investment is driving growth. Today’s market environment has created a hard reset for technology company enterprise value, so the entire company must be hyper-focused on a singular objective.
The newly constructed growth orchestra must be equipped with the proper intelligence and reporting infrastructure to answer three fundamental questions:
- Growth – Is the company increasingly communicating and creating value?
- Key metrics include:
- New logo bookings growth rate (QoQ & YoY)
- Average deal size & sales cycle
- Conversion rates
- Key metrics include:
- Efficiency – Is that value communication and creation durable?
- Key metrics include:
- CAC payback
- Gross dollar/Net revenue retention
- Operating spend as a percent of revenue
- Key metrics include:
- Outlook – What can investors expect in the future?
- Key metrics include:
- Pipeline coverage
- NPS and churn
- Expansion bookings
- Key metrics include:
The CEO, CFO and department leaders must be able to answer these fundamental questions on a quarterly basis. The best companies will have this instrumentation in place and implement regular leadership reviews well in advance of the next board meeting.
To not only survive, but thrive in this new market environment, founders will need support. Whether it’s for the next fundraise, acquisition or even an IPO, ICR’s Growth Marketing Practice is founder first: we apply both an investor and operator lens to help your company right-size investment, achieve efficient growth traction, and communicate that story to the markets.
Our Growth Marketing practice partners with founders to build a predictable and efficient revenue engine. Kick off a free GrowthCast preview to surface prioritized opportunities to achieve pipeline and durable growth.
