SaaS marketing benchmarks: 3 budgeting and strategy trends for 2024

If you’re steering the marketing strategy of a B2B software company, consider this: Insight Partners’ Charlene Chen, Dustin Zaloom, and Pax Kaplan-Sherman have conducted a study that could guide your decisions. In an article released earlier this year, they share their top three trends and recommendations based on the analysis of marketing spend and performance data from the Insight Partners portfolio of 500+ B2B software companies.

The three key trends from 2023 worth knowing:

1. Persistent Growth Challenges: The marketing spend required to generate each dollar of new business ARR (total marketing spend / new logo ARR) has been rising for the past three years, reflecting slower growth and a higher cost to acquire new customers.
2. Strategic Marketing Investments: With a modest 14% year-on-year increase in total marketing spend compared to the previous year’s 79% surge, budgets are now more focused on customer retention and expansion. The share of expansion ARR out of the total new and expansion ARR climbed to 48% in 2023, up from 44% and 35% in the preceding years.
3. Efficient Growth Among High Performers: Top performers have improved their conversion rates and lifetime value by targeting their ideal buyers with relevant and personalized content and offers. Companies with average sales prices below $25k saw an 82% increase in marketing qualified lead to closed-won conversion rates, while those above $25k experienced a 44% rise.

Looking ahead to B2B software marketing in 2024, the team offers four recommendations:

• Optimize the Sales Funnel: Collaborate with sales to identify and resolve issues affecting lead quality and conversion rates.
• Focus on Customer Value: When evaluating marketing efficiency, factor in expansion ARR and actively contribute to customer loyalty and growth.
• Embrace Generative AI: Utilize the growing array of GenAI tools and solutions to boost productivity and efficiency in key marketing areas.
• Stay Ahead of Digital Trends: Anticipate and adapt to changes that could influence your digital marketing strategies, such as Google’s Search Generative Experience.

Summary

The article ‘SaaS marketing benchmarks: 3 budgeting and strategy trends for 2024’ by Charlene Chen, Dustin Zaloom, Pax Kaplan-Sherman provides insights and advice for B2B SaaS marketing leaders based on the analysis of marketing spend and performance data from 500+ portfolio companies. The article identifies three key trends that emerged in 2023: a slowdown in new business growth and increasing cost to acquire, more measured marketing spend and reprioritization, and high performers finding a path to outsized, efficient growth. The article also offers four recommendations for 2024: identify the root causes of funnel leakage, strike a balance between expansion and new logos, experiment with generative AI, and get ahead of changes that may hinder current strategies.

Insights

• Growth slowed, with deals becoming harder (and more costly) to close, as budgets for new software purchases continued to get squeezed.
• Marketing spend still rose by 14% year-on-year, but more modestly and shifted away from new business demand generation.
• Marketing headcount shifted to roles supporting strategy and driving targeted, relevant engagement throughout the funnel, such as product marketing, brand, and content.
• Expansion ARR as a percent of total new and expansion ARR rose to 48%, reflecting a shift in marketing and company priorities towards driving more efficient growth.