Your Startup Doesn’t Need Marketing Automation if Your ARR Is Below $1m

(few exceptions apply)

Recently, I was approached by a startup that wants to build a scalable sales process, improve demand generation, and enter a new vertical market. The founders were closing ~$1M in Series A funding. Before the final commitment, the VCs asked a 3rd party consultant (not myself) to conduct a sales and marketing due diligence report. The consultant suggested to implement a marketing automation solution to accelerate the growth of the startup.

Quick Startup Profile:

Market: B2B, SaaS, highly customizable solution

Revenue: ~$40K MRR

Avg. Deal Size: $3K/month

Team: 3 co-founders (CEO, CTO, and CMO, who focuses on marketing and sales initiatives), 1 sales person and a development team

Current process:

The Sales rep has about 7–10 product demos per week. All leads are generated from the outbound email campaign that has 5 touches over a 3 month period (way too long, in my opinion). The startup outsources the creation of targeted lists oversees (it’s a typical practice in the industry). The email subjects and the body copy have not been tested or optimized, the campaign consists of one sequence and one content copy in each of five steps. I recommend to start with at least 2 sequences and a couple of email copies for each touch.

Does it sound to you like they need a marketing automation solution at this stage?

When you only generate enough leads for one sales rep that means you do not have any leads that you can “nurture”, so to speak. Every lead that comes through the gates needs to have a personal touch.

As soon as you start generating enough leads to hire 3 sales reps you can look into some ideas of how you can nurture contacts in a more automated way. With 3 Account Execs now, you can afford an SDR, whose job would be to filter out valuable leads for your AE and bucket the rest into a ‘never’, ‘not yet’, and ‘follow up at later’ categories.

I suggest building a monthly or bi-monthly newsletter for the last 2 buckets. Until you hit $1M in ARR, this is your lead nurturing and a lead scoring solution (lean and mean). You will learn what works and do it manually until you will know exactly what you need from your marketing automation solution.

Are you not sold on this idea yet?

To outline, here are the 3 reasons why you do not need marketing automation before $1M in ARR:

1. There is nothing to automate yet

We have kind of covered this already.

2. Automation requires a significant budget and resources (you don’t yet have)

Marketing automation requires consistent resources and budget (implementation contractors, full time employees). After implementing new solution, companies tend to hire a tool expert.

Instead of looking for the right person for your organization you will incline to find the right person for your tool.

3. Automating wrong process will cost you later on

Some solutions are better for some processes and tasks. The only way to improve ROI on implementing marketing automation is to learn your optimal process while doing it manually. Changing what ended up to be a bad solution later on requires major efforts.

That being said, if you decide that your startup is the exception to this rule and you absolutely need to have a marketing automation solution early on, here is my advice:

Pick the simplest and the lightest solution possible, so you can easily change it when the goals/priorities shift.

On the other hand, don’t wait on implementing marketing automation for too long — it can slow down your growth.

Recommended Reading:

Is Marketing Automation Worth the Hassle? New Data Raises Questions

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