July 11, 2022

How Do I Acquire New Customers? | Storytelling With Data

Maggie Paul
Marketing Coordinator

This is Part Five in our Series, "Finance: Storytelling with Data". Catch up below: 

Part One: Using Your Financial Data to tell Your SaaS Business' Story

Part Two: What Has My SaaS Business Achieved?

Part Three: How Do I Think My Company Will Grow in the Future?

Part Four: How Much is Left After I Deliver My Product or Service?

Finance: Storytelling with Data

Part Five: How do I acquire new customers?

At this point, you've found out how much cash is left after you've delivered your product or service, and now you're back to learn the next big thing: acquiring new customers. (If you haven't, it's not too late. Catch up on what you've missed or start reading the series from Part One, Two, Three or Four).

A crucial question that is always on any business person's mind is, how do I acquire new customers?  At first glance, the answer may seem simple, considering you’ve done it before. However, you want to remember to make sure your answer stays consistent with the rest of the story you are telling. When contemplating how your company would grow in the future, do the revenue forecasts you proposed reflect the main channels through which you actually gain new business?

The biggest mistake I see while people are preparing their forecasts is a mismatch between the revenue growth story and the sales & marketing costs story. If an investor is reviewing your projections and they see an exponential increase to revenue while sales and marketing costs remain steady, they will start to think your revenue forecasts are not achievable or realistic.

Begin with the actual breakdown of how you gain new customers based on their source: Online advertising, outbound sales team, referrals, etc. Consider other strategies your company might want to use and how you could implement them.

Next, List out all of your customer acquisition channels. Challenge yourself to take a look back at your revenue forecast and review which channels you listed as your building blocks to come up with that forecast (hint: go back and read part 3 for more details).

Here comes the fun part. Do both of your lists align while ensuring that your story is consistent?  Perhaps you mentioned that you rely on events to acquire customers, but when you look at your revenue forecast you aren’t including any new deals from events for the year. In this case, your revenue forecast might be understated.

On the other hand, maybe you built your revenue projections knowing that in the past you have  gotten customers from referrals, events and through hustling as a founder to close deals. However, now thinking about your customer acquisition channels, you realize missed you’ve missed out on allocating a portion of your time to the sales function. In this case, the way you’ve grown your business does not align with how you predicted you would. Not only that, but you’ve missed out on growth by not following through with your predictions.

Consistency is the key to understanding how you acquire new customers.  

Have your list of customer acquisition channels finalized, as the next step includes breaking down the actual numbers that will be your sales & marketing costs in your income statement.

Understanding these costs may be more challenging depending on the stage of your business and the amount of historical data you have that can be analyzed. For example, if your business is already tracking your customer acquisition cost by channel, it may be fairly easy to extrapolate those costs forward based on the revenue forecast you already built.

However, a lot of companies don’t have this data and have to start from scratch. Similar to your revenue forecasting, break down your costs into the basic building blocks. If you've mentioned you rely on a sales team to close deals, calculate the number of new deals you are forecasting in the year and come up with a reasonable assumption for how many deals one person can close in a year.  From there it’s simple math: If you need 100 new deals, and you know one person can close 25 deals, you know you’ll need four  sales people.  Next, What is the cost of four sales people? Consider their base salary, payroll taxes, benefits, and commissions. What other costs are needed for these four salespeople to be successful? Think about travel costs, software (CRM) costs, and training costs. Now, add these up, and you have your sales costs. Of course, when calculating your CAC, you’ll want to include all your sales and marketing costs. Check out our complete guide to CAC for a more detailed breakdown.

Overall, your financials should reflect your revenue growth strategy:

  • If you rely on ads and social media to grow your business… make sure those costs are in marketing
  • If you rely on sales people to close deals…. make sure you have that in sales
  • If you close your own deals… allocate some of your own costs to sales
  • If you rely on referrals and network effects… these may not be as cost-heavy, but  as these network effects can take a while to build, take that into consideration with the timing of your revenue growth.

Knowing the answers to simple questions often isn't enough, but knowing the right questions to ask yourself and their answers will lead you down a more successful path. Once you have found these answers to your customer acquisition questions, you have put yourself in a better position to prepare your financial forecast.

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