Mistake #3: Spending Money on Automation Before Spending Time Doing Things That Don’t Scale
“Growth solves (nearly) all problems”. These words from Sam Altman from Y Combinator continue to inspire founders and early stage startup teams to pull through the toughest of challenges.
But the pressure to find the “hockey stick of growth” can make teams myopic and tunnel visioned. I was partly responsible for one such mistake in the middle of some tough days at Pipemonk (now acquired by Freshservice).
Like most SaaS product startups in early stages, we had started by experimenting with a lot of marketing/growth channels. Blogging, promotion in app marketplaces, influencer outreach, participation in forums and communities, outbound email campaigns etc.
We gained good traction and reached $10,000 MRR within the first 11–12 months. Lot of the things that helped us to reach the milestone were “things that don’t scale”. Some of them were:
- Manually conducting deep keyword and topic research for hours before writing each blog post
- Browsing online forums to find specific threads where target customers were talking about ecommerce accounting issues (The product used to integrate e-commerce and accounting platforms like Shopify and QuickBooks Online)
- Individually emailing specific target companies with personalized pitches.
- Delighting qualified free trial users with personalized on-boarding and live chat to ensure customer success.
Around the time when we reached the $10,000 MRR milestone, we raised our Pre-Series A round of $2.1 million. The investment helped us to act on our plan of building a great team and allowed us to increase our budget for marketing campaigns. Soon we found ourselves trying out experiments faster, but due to multiple reasons many of them failed (many of the mistakes will be highlighted in this series). For 3–4 months, our goals were not being met.
When diagnosing the “why” of the failure, one of the mistakes I did was to succumb to a short sighted reasoning. A reasoning that said spending on good marketing automation (MA) software is the answer to “How to get more qualified leads, faster”.
Little did I know that MA software like Hubspot, Pardot allow teams to be faster and get the best out of their marketing campaigns, but they don’t replace a growth channel.
We had hired a new marketing team lead. He did a good job of dissecting the issues behind our slow growth. But he stressed on the fact that one of the main reason was that we hadn’t invested in a good marketing automation software. Hence, lot of our time and energy was spent on landing page creation, manual keyword research, manual scraping of customer data and we were not spending enough time on attribution, tracking and things like automated email nurturing and drip campaigns.
I had also read many blog posts about how marketing automation makes things easy. So even though our CEO was initially against the idea of spending upwards of $1000 a month on Hubspot, we ended up purchasing it. Some dreams we had:
- We could reach out to 1000+ of leads together with well designed email campaigns.
- We will create landing pages easily with well designed forms and content modules — with little/no dev team effort.
- We will setup automated drip campaigns to onboard our trial users using industry best practice content and templates and so on…
But while we invested in great tools and dreamt big to reach $100,000 MRR in the next two years, I lost track of one aspect which had helped the team to get to $10,000 MRR. Doing enough things that may not scale to find some which will.
Marketing automation needs to come after you have identified the scalable channels of marketing in your specific niche, not before.
- We failed to realize that we hadn’t tested messaging enough in our existing landing pages.
- We hadn’t tried out enough variations of emails to convert a free trial user to a paid customer.
- We hadn’t cracked the content type, tone and distribution that will get us hundreds of thousands of qualified leads.
Not surprisingly, even though we spent tons of time and money to implement marketing automation, our monthly targets were not being met. We had given into the pressure of growth by running experiments with flawed assumptions.
In the early stages, I believe that the priority should be on identifying the marketing channels and campaigns that work for the niche. Experimentation at speed is key. Automation is to scale marketing, not to do the marketing for us.
To hit the point home, due to this mistake we were unable to justify our higher CAC/LTV. Within the next 2 quarters, we cancelled the Hubspot subscription. The costly mistake had taught me a lot more than what I had asked for.
Hope you found this experience worth learning from. I am happy to discuss more. Looking forward to your questions and feedback. Do you believe spending money on automation is required in early stages? Leave your comments below.
