S02E05

The startup-scaleup Marketing Playbook with Arun Pattabhiraman

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What tactics, frameworks and approaches work best for you when you scale your company? Arun Pattabhiraman, Chief Growth Officer at Freshworks opens up the startup – scaleup marketing playbook.

How do you approach marketing as you scale your company? How do you gear your teams as you grow? What tactics, frameworks, and approaches work best for you when you scale your company? This episode of the podcast attempts to answer these questions with Arun Pattabhiraman, the Chief Growth Officer at Freshworks.

In the last 10 years or so, Freshworks has scaled from zero to tens of thousands of paying customers and Arun — who leads revenue marketing and sales development functions at Freshworks — has played a key role in shaping that journey. He was previously head of marketing at Hotstar, and before that, the chief marketing officer at InMobi. As someone who has worked at both B2B and B2C companies, Arun brings a unique perspective to marketing. I would definitely say B2B is a much harder charter. But there are a lot of similarities and parallels that you can draw between both of these worlds.

Edited Excerpts.

Q: Let’s start with your journey. You’re an electrical engineer. You’ve had stints at TCS, L&T, InMobi, and Hotstar before joining Freshworks. Can you walk us through your career and how it has shaped your worldview as a marketer?

A: Although I started my career as a software engineer, my heart was always in marketing. I grew up in a culturally rich environment where art and music were a part of my life. My dad was a poet and my mom was a musician. Most people in my family were academically oriented. So I knew while growing up that I had to work at the intersection of art and science. And marketing became a natural choice.

In my career, I’ve shuffled between B2B and B2C marketing, although a majority of my recent years have been spent in the B2B world. I have been very privileged to work at global hypergrowth startups that have given me a holistic perspective on what it takes to scale a business globally, not just from a marketing standpoint, but also from a people technology and leadership perspective.

I feel very proud to have played a critical role in shaping the growth journey at two of India’s most successful unicorns — InMobi and now Freshworks. I think marketing should always be considered as a growth driver for the business. That’s how it truly earns the respect of all the stakeholders in the company and externally as well.

Q: Since you’ve worked with B2B and B2C companies — Hotstar is a pure B2C company and Freshworks is a clear B2B company — what are the parallels and differences that you can draw between the two?

Whether you’re in B2B or B2C, it is important to realize that you are ultimately marketing to people. Whether you’re running a routine email campaign or hosting an event, it is important to humanize the experience. At the end of the day, people remember how you made them feel. And therefore it’s important to be thoughtful about how you’re building a genuine relationship with your audience.

At least in my personal experience, B2B is much, much harder. Primarily because the sales cycles are longer; there are multiple decision-makers involved and you have fewer channels to reach and engage your audience. And more importantly, you also have a tougher challenge in articulating the impact that your campaigns have on the business. So in my experience, I would definitely say B2B is a much harder charter. But there are a lot of similarities and parallels that you can draw between both of these worlds.

Q: Freshworks is a classic case of selling business software to small and medium businesses and also large enterprises. We’ve had quite a journey from selling to small companies in the beginning and now to bigger companies with ease. In your view, how does enterprise marketing evolve as a startup grows from its early stages through the scale-up stages?

I’ve seen four to five major stages as the startup goes from seed to scale. The first stage is what I like to call the growth stage. These are the early years of the company where marketing teams are largely focused on driving acquisitions. Teams are typically very small. They work very closely with product development teams and are digitally savvy to create and distribute great content to scale customer acquisition. But the primary focus in the early years is really around achieving the product-market fit and acquiring a critical mass of customers.

The second stage is really brand establishment. Once you have product-market fit, you have a better understanding of what the value proposition is, and you are in a better position to define what your brand essence is. It also becomes important to start investing in branding consciously during the stage, because ultimately without the brand kicking in, it’s hard to scale your business.

The third stage is what I call scaling and specialization. Different companies enter this stage at different points in time. I would say that you enter the stage after you’ve hit escape velocity. At this point, it becomes important to drive specialization within your marketing department. You start building out your growth, brand, and product marketing engines with subject matter experts and start driving more accountability across brand and revenue enablement functions. This is the stage at which I joined Freshworks. We had just crossed $100 million in ARR at that point. And I was brought on board to help scale the company and the marketing organization.

But once you cross the stage, at some point, you will need to reinvest in branding as a force multiplier. And this is the stage that I like to call brand acceleration. Once you have built credibility with your customers, seen good product-market fit and good success, you need to go back to the drawing board and check if your brand message is still resonating. And sometimes your brand might not be catching up to the true scale of success that you might be seeing on the ground. So at this stage, you go back to the drawing board and see how you can refine your brand positioning further and start investing in accelerating brand awareness and reputation in a very big way. There is very little chance of success, especially for a B2B company, if you do not have a strong brand in the long run.

The final stage to me is more of a utopian state, which is customer lifetime value maximization. As a marketing team, you begin to realize that once you reach a critical mass of customers, your brand is well established. You need to invest in customer marketing, driving cross-sell and upsell programs, and even referrals as a new acquisition channel so as to maximize the value you get from your most loyal customers. And this is not something that you do once and be done with. It’s something that you need to do as a constant exercise to ensure that you’re continuously optimizing your marketing efforts across acquisition, engagement, and advocacy. This is a stage that I feel that you don’t ever feel comfortable reaching.

Q: When you say you need different kinds of teams, how do these teams evolve across these stages?

When you are starting off, your teams are really small, and you probably need a lot of generalists. People who are digitally savvy and can dabble with a variety of marketing skills. They could write content, run digital ad campaigns, training salespeople, and so on. But as you start scaling the company, you need to bring in functional experts who really have the depth and expertise in each of those functional areas where you need to invest as a company.

And obviously the size of the marketing team also increases as you start scaling the company depending on whether you have a fully inhouse run marketing engine, or you have an outsourced model. It is not the size that matters really, but what kind of skills and sub functional units you’re building in the marketing organization that becomes important. And that varies and becomes more specialized as you start scaling the company.

Q: Obviously no two companies are the same. Different companies need to take different approaches to their marketing strategy based on what business they are in, what kind of complexities the business has to deal with. Is there a framework that you find very useful that others can follow?

A: I like to think of two broad dimensions before crafting a marketing strategy for the company. The first one is really around the complexity of the product that you’re trying to sell. And the second one is the complexity of the buying environment in which you operate. These two are very, very important. Depending on how complex your product is and how complex or simple your buying environment is your marketing approach and strategy will vastly vary. When we started out at Freshworks, we would primarily sell to the small and medium enterprises and a majority of those companies discovered Freshworks through a keyword search on Google. So we could afford to have an entirely inbound marketing engine, which was fueled by paid search ads as well as content marketing which was heavily optimized for search discovery. And we could scale demand that was mostly serviced by an inside sales team. And that was a very simple motion because the product was simple in smaller companies where you have fewer decision-makers. So it’s very easy to have a completely inbound sales led model when you are operating in that world.

As you start evolving, as your product starts maturing and becomes more and more sophisticated, you tend to go after slightly larger companies. And as you move into larger companies, typically there are more decision-makers who tend to get involved in the buying journey. Depending on how complex your product has become, you would need additional support either in the form of digital explainer videos or demos, or even a pre-sales team. And an outbound sales team that is actively engaging with prospects and giving them demos and explaining the value of the product.

So as you move from a simple product in a simple buying environment, towards a complex product in a complex buying environment, you start complimenting your inbound marketing efforts with a very strong outbound motion which could be either in the form of investing in an SDR team or a field sales team, or also in the form of a field marketing team, but you need to start getting closer to your customer as you start evolving your product.

And for companies that fall in between these two spectrums, the strategy could be calibrated downwards or upwards depending on where you operate. There are companies with very complex products but still, sell to businesses where it’s just a single decision-maker. So in those cases, you can still cover a lot of the sales journey through marketing led efforts by just ensuring that you have the right collaterals and the assets and the explainer videos on your website.

But when you go into a business where a lot of business stakeholders get involved in making a decision, you have to have a high-touch sales team. So you’ll need an outbound sales team that supports the marketing engine. So then demand generation gets distributed across all of these different teams.

Q: I want to move on to another question, which is seen as a debate sometimes, about funnels and flywheels. What works in modern companies?

A: I don’t think the flywheel is a new concept. I think marketers have always understood that the role of marketing is not just to fill the funnel with more qualified prospects, but to actually maximize customer lifetime value. The reality is that marketing needs to hold itself accountable for metrics across all stages of the customer life cycle, starting from acquisition, activation, engagement, retention, and advocacy. And by creating programs and campaigns that not only generate new customers but also get more value out of existing customers, you can truly unlock the flywheel. But it’s also important to recognize that in today’s world, almost all customer-facing teams end up driving demand and the lines between sales marketing and even customer support or customer success teams are being blurred.

On one hand, you see marketing is striving to run more personalized, high touch one-to-one campaigns through Account-Based Marketing (ABM). While on the other hand, sales teams are actually running a lot of one-to-many email campaigns through say, Sales Navigator or Outreach and even customer support teams (when they are attending to inbound support queries) find opportunities to cross-sell and upsell new features on support calls.

So the accountability around demand generation is actually getting distributed across all of the teams that are customer-facing. The flywheel model forces you to put customers at the very center of your business. Which is how it was always meant to be in the first place. So it reminds everyone that all go-to-market teams have an active role to play in impacting the customer experience and the business impact. And in that sense, it’s not a new concept, but it’s definitely a relevant concept that all marketers should understand.

Q: Building in public has become popular in early-stage companies these days. A lot of founders do that. And then there are many other tactics that have worked well in the past. For example, some companies try to be ‘invite only’ to create some kind of scarcity around the product. So Quora and Superhuman did that at some point. You probably have to switch gears and look at scaling and marketing beyond word of mouth or building in public. When do you know that a startup is at that point?

A: You start thinking about scaling your marketing engine once you’ve hit product-market fit. Until then it makes sense to focus on early adopters and that they are truly happy with your product. And you get real inputs from customers on what they like and what needs to improve about the product. This is not to say that you shouldn’t try and be creative in the early days. At the end of the day, creativity fuels marketing.

One of the leading indicators of product-market fit is churn. If you see your churn hitting an agreeable number (churn can vary by industry or product) and if you have a good handle on why people are churning, and if you are controlling that and bringing it down to agreeable levels, you are ready to scale. And that’s when you move beyond short-term gimmicky tactics to start building a more long-term sustainable marketing strategy and approach.

Q: If you start reading up on Google or any of those marketing books you’ll see there are dozens of different tactics — outbound, email, content marketing, search engine, account-based, word of mouth, and so on. What are the key trends that you’re seeing these days? And what’s a good framework for companies to think about what will work best for them?

A: I like to look at two key parameters when identifying channels and tactics. One is scalability, and the second is efficiency. I believe both of these are important for any particular channel to become a significant contributor to your marketing strategy. While some channels or tactics can offer you good results at a small scale, you will realize that as you start spending more and more money and effort behind that, you will reach certain scale barriers and realize that they may not be able to scale beyond a certain point. For instance, with Google AdWords (and a large part of Freshworks’ early growth came on the back of Google search), you realize that you are limited by the search volumes you have around a particular keyword. At the same time, it is a super-efficient channel because it comes with very high intent. As you start testing new channels, like content or influencer marketing or paid search or social or LinkedIn or ABM, it is important to start looking at scalability and efficiency.

Once you have heavily tested your campaigns across a spectrum of different channels and tactics that you have at your disposal, I would stack rank them based on these two parameters. Unless they offer a meaningful scale and are able to drive leads efficiently, they shouldn’t really figure in your long term marketing mix. It is important to have a few key channels that have a reasonable scale and are highly efficient rather than spreading yourself thin across.

Q: And what are the key trends that you’re seeing?

A: I think the biggest change in the post pandemic world is that almost a hundred percent of marketing is now digital. And therefore there is a need to break through the clutter and create new forms of content or distribute that content to influencers who have already built credibility. In that sense, I think video based content marketing and influencer led marketing are two big themes that are seeing great traction currently.
Another major trend shaping B2B marketing is account based marketing. Account based marketing or ABM is something that’s been spoken about for years now, but the truth is that almost all B2B marketing needs to be account based.

There is this common perception that ABM is meant for large enterprises. Contrary to that belief, when you are in B2B, you are in essence going after a set of accounts irrespective of how many accounts you’re going after. And there are multiple decision-makers within an account. So your marketing needs to influence all of those decision-makers, several times in their journey. Obviously, at the top end of the pyramid, where you’re going after the large enterprises, you need a high-touch strategy. But as you start moving down the pyramid, going after the larger set of smaller accounts, you could have a very strong programmatic approach to ABM.

Q: Earlier when we had Tyler Sloat, the CFO of Freshworks on the podcast, he spoke of growing with efficiency. We talk about the rule of 40 quite often — that is, when you add up your growth rate and your bottom line, if you’re in the range of the number 40, that’s healthy. And marketing is a lever for growth. What is a good thumb rule to follow when it comes to marketing expenses?

A: There are basically two or three things that I look at to see if marketing dollars are being efficiently spent. One is: are we generating at least five to eight times the pipeline for each dollar spent? And I’ve seen this number go up to even 10 for larger companies, but when you are in a hyper growth mode, I would say a number between five to eight is pretty good.

The second metric is: what percentage of your revenue are you really investing back into marketing? For a company that sells into a mid-market or an enterprise segment, it is common to invest 10 to 15% of its revenue back into marketing. Anything lower or anything higher is something you need to take a harder look at. And for SaaS businesses like Freshworks or any other company that is heavily led by inbound marketing, another good indicator of efficiency is payback. That is, how much time does it take for you to recover the money you spent on acquiring a customer. For a high performing SaaS marketing team, the payback should be less than 12 months. If I invest a $100, it should take me less than 12 months to recover that. So it is important to have a good handle of what your cost of acquisitions and your lifetime value of a customer is.

Q: What is a good time to look at hiring marketing leaders? How would you advise startups to think about this?

A: Beyond a certain revenue scale, you tend to realize that you can’t scale marketing without having specialists and subject matter experts on your team. When you’re small you want a versatile team that is nimble and can dabble across different marketing channels. But as you start scaling, you need functional experts who can drive that craftsmanship and depth in the function. And it is also important to realize that marketing is actually a multi-disciplinary function ranging from digital marketing to brand and content marketing, partner marketing, marketing operations, analytics, customer marketing, and community marketing. There is a wide range of skills that are required to make a marketing organization successful. For that matter, even a chief marketing officer or a chief growth officer can’t be an expert in every facet of marketing.

So as you scale, you need to build a team with complementary skills that can advise and inform you to build a more comprehensive marketing strategy. The way I like to think of my marketing leadership team is that they are not my army of soldiers, but my council of ministers.

Q: Freshworks has its offices in many different countries. And it also sells to customers in different geographies as well. You have talked previously about the need for ‘glocalization’ where a company is able to tailor its messaging for different geographies. Can you unpack this for us a little bit and possibly give us a few examples?

A: When you are going after many markets, you may have to speak in different languages, but you still need to have a consistent voice. By this, I mean that your brand should have a core message that remains consistent across markets, so you don’t end up looking like a different company in each geography. At the same time, you need to be alive to the realities of the local market, and ensure that you tweak subtler aspects of your messaging based on local market needs. Also, different markets are at a different stage of evolution, when it comes to technology adoption, so you need to tailor your programs accordingly.

Let me give you an example in the context of Freshworks. We have typically found that companies in the US are more advanced when it comes to adopting newer technologies. So you may have to lead your campaigns with messaging around AI/ML or other key investments you are making in your platform to serve millennials,and prove to your prospects that you are truly cutting edge. In Europe, on the other hand, it’s surprising but true, that ‘digital transformation’ is still a very dominant theme for many companies, and you still find CIOs or Chief Digital officers for whom ‘digital transformation’ is a big mandate, and are looking for tools to modernize their customer engagement platforms. So, as you take the same campaign from one market to another, you may have to make subtle changes to your messaging so that you are hitting the right notes with your customers. At the same time, it’s important that you don’t run entirely different campaigns across different markets, because in today’s digital world, customers across markets experience your brand through the content and campaigns you launch, and it’s important that they still build a consistent understanding of who you are, what you offer and what makes you different. That’s really what I mean by glocalisation — being a global company that is also locally relevant.

Q: People like me who are inside the company know that there is a lot of heavy lifting that happens in the back rooms selling from Chennai and San Francisco to enterprises across the world. One of the things we say at Freshworks is that sometimes you have to take on the gorilla just to be in the consideration set. Do something very audacious to get a seat at the table. What are your thoughts on this?

A: We largely play in red ocean markets that have a huge TAM and are already well established. You have large legacy players, Goliaths in their own sense. And in order to be able to make a dent in the space, despite having the best breed of products, you might find it very, very difficult to break through the clutter and earn a seat at the table with some of the decision makers. To do that, you need to invest in bold marketing campaigns. And I think that’s what we have attempted over the years. It has served the company well during its early years when we were just getting started. But I think we have now reached a stage where we have built great credibility around the products on the back of the investments we have made in technology and the credibility that we have won through Gartner and Forrrester. And the world now sees your company as visionary players who are truly leading the market with cutting-edge features and capabilities. So as you’re starting to mature in your business, I think you need to pivot from being a challenger brand to being someone who is able to win and build credibility with your audience on the back of what you bring to the table. And I think that’s the shift that we see ourselves making as we become bigger and bigger.

You still need to do things differently in order to become visible as a brand, for instance, last year when the pandemic hit us, everyone was going digital. And we needed to ensure that we put out stuff that people would actually care to take a look at. We decided to launch a Netflix-like docu-series. This was actually an idea that came up from one of my marketing leaders in Europe. And it was a runaway success because suddenly people were willing to spend their precious time watching them because it was interesting. It was different at the same time it was informative.

Q: When the lockdown happened in March- April, most companies were trying to reassess a bunch of fundamentals: how much runway do I have? What are the customer pain points? Can I discover how the customer needs are evolving these days? And , how can we marry our product proposition with that need? And Freshworks also had a similar approach. When it comes to marketing, what are some of the things that worked for us?

A: When the environment around you is really challenging, you refocus your efforts on your existing customers, instead of doubling down on constantly acquiring new customers. Acquiring new customers is going to be harder, given that they’re going through a pandemic. And when I say doubling on our customers, it wasn’t really to sell them a new solution or drive a cross-sell campaign, but to really check in on them and to understand what pain points they were facing. When you go back to your customer with a true spirit to learn and understand and listen to their pains, you build ideas, you build greater empathy, which then translates into the programs that you might run during that time. And that’s exactly what we did. We went back to our customers, just checking in on them.

And we were overwhelmed with the kind of response we received. Many of them were not asking for discounts or offers because they were going through a tough time. In fact, a lot of them wrote back just saying ‘thanks for checking in on us. We really value the fact that you cared about us deeply.’ And thankfully we were also in a space that helped us sail through this pandemic with greater ease than I would say some of the other companies. This is because we were in the business of offering software that could enable remote customer support, remote work, and remote selling. All of our products were in spaces that were seeing huge demand anyways. And we benefited from that demand.

The second thing is offering help. One way to do that from a marketing standpoint is to put out educational, informative content. In those first three months, we launched a series of content hubs, one around remote selling, one around remote support, and one around remote work. And we brought in thought leaders, influencers, and people from across the industries who share their valuable expertise around how they are tackling the pandemic. Those content marketing efforts paid off greatly. Despite huge cuts in our budgets, we saw traffic on the website shoot up by almost 60% all coming from non-paid.

Q: This is, this has been truly amazing. Thank you so much for sharing all the insights with our listeners. If they need to follow you or reach out to you, what’s the best way to do that?

A: I’m active on most social channels, but I think the best platform to reach out to me would be on LinkedIn.

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