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Cem Bulut

What do you spend the most on as an early stage SaaS startup?

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Hello all! As a pre-Series A SaaS startup, what should you allocate the most of your budget? Is it best to focus on Marketing, Community or should Product Development be the first priority at this scale? Do you have any benchmarks such as 20% of your total spending would go to Marketing at this level? Thanks!
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Philipp Schwengel
Hi Cem, I'd ask myself which focus can unlock the most (sustainable) growth for you. If your churn is super high, don't invest in marketing and instead focus completely on Product Development. At this point, most new users would simply churn away. Once you get closer to PMF and the retention rates improve considerably, invest more heavily into marketing as this will unlock more growth than just Product Development.
Cem Bulut
@phil_schwengel Thanks for your response! We might be exposed to the pressure to show instant growth at the early stages but putting sustainability of growth first might be a healthier approach to succeed in the long term. Sometimes it's difficult to balance these in practice.
Philipp Schwengel
@cem_bulut Completely agree with what you said. It can be hard to balance this in reality. Just want to mention LTV here: 100 users that love your product and will keep using it for 1 year is worth more than signing up 500 new users of which most churn after a month.
Patrick
As a heavy technical founder, I admit I've spent far too much (nearly all) of my time on the product and very little on marketing. I think it depends on who you have on your team, and what is highest priority at your stage. I think there is a time for heads-down product focus, and sometimes that is still what I get the most hourly ROI from, but it's easy to fall into the trap of procrastinating on the important sales/marketing work just because you're not great with it. My goal is to spend 60% on sales and marketing, and 40% on product, moving forward. :)
Cem Bulut
@frontlyapp Product will never be "perfect" so it might be true that you should put your product out there and improve it on the way, as far as you manage to retain your customers at hand, right?
Stephanie Totty
We're pre-series A and I'd say we're about 60/40 product-to-marketing. We're also PLG, so focusing on product obviously should the be the priority, and marketing comes as a close second highly focused on acquisition and then re-engagement.
Cem Bulut
@stephanie_totty Thank you for your response! So even though you adopt PLG strategy and focus primarily on the product, marketing takes a great share of the budget as well.
Stephanie Totty
@cem_bulut For sure. Gotta have users for a product to be successful ;)
Gaurav Goyal
@mavlonbek_muratov Unfortunately, you can't prioritize one over the other. Depending upon your stage of the product, this would vary. Perfect your product in the current form, market aggressively, build for the next phase of growth, market again and so on. However, if you have resources, I would recommend spending equal bandwidth on both and running the workstreams together.
Cem Bulut
@gauravgoyal_gg It's a never-ending iteration to improve & ship it and then market it. Since sustainable growth would come from product's competence, I would think product development might be one step ahead in the early stages. On the other hand, the need for user feedback might balance it.
Gaurav Goyal
@cem_bulut Agree with you :)
Lucy Heskins
Hey Cem, I echo Alex's advice. When working in an early-stage startup, we focused on both marketing and product development at the same time. Marketing didn't really exist at this point, we spent a lot of our time on interviewing potential customers to work out what our message-market fit would be... way before product-market fit. We also mapped out their experience to understand their anxieties/triggers - this was then fed back into the product development side of things. Spend wise, I'd say 20% was a fair break down. Within this 60% was brand, 30% was product marketing, and 10% performance marketing.
Cem Bulut
@gingerbeer84 Thank you for the insights! I understand that you initially used Marketing to fine tune the product so it also feeds product development. Also it has been very insightful for me that you prioritize brand and product marketing over performance at this rate. I'd think performance would get a higher share to attain fast growth, but on second thought, it's not very wise to raise a building without laying a solid foundation.
Mavlonbek Muratov
Hi Cem. Do you have a sales team and are you doing any outbound outreach?
Cem Bulut
@mavlonbek_muratov Currently we do not have a sales team but we are doing some outbound outreach as well as working on partnerships
Todd (Fractional CTO)
Marketing (and research), then Product Development. Don't build unless you have buyers ready
Cem Bulut
@remotebranch Thanks! Insights from new buyers will feed the Product Development indeed, but do you think the product needs strong landing features to attract the initial buyers first, and then marketing should be prioritized over product development?
Todd (Fractional CTO)
@cem_bulut Yes exactly, but I would start by marketing a waitlist that outlines the benefits customers are buying before even building out the initial features.
Dan LaCivita
I think Product Dev is most critical at the earlier stage, especially as you are working toward product/market fit. Marketing is important of course, but marketing a product before it has strong traction with a core group of users may not be the best use of funds.
Cem Bulut
@dan_lacivita If you have high churn, it's like trying to fill a leaking bucket.
Dan LaCivita
@cem_bulut Well said..agree 100%!
Brittany Ferrero
People.
Cem Bulut
@brittany_ferrero Definitely. How would you shape your organization's focus then? Would you first invest in talent acquisition on development?
Raul Silverstone
Product, product, and then product! All three times in close loop with (potential/) customers. Before anything else you have to have something to sell!
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