Bookings vs Profits: Can They Co-Exist in B2B Marketing?

By Matt Heinz, President & Founder of Heinz Marketing

The CEO of a venture capital-backed start-up once told me he was willing to spend 100 percent of a target customer’s lifetime value if we could get them signed and add their logo to his fundraising deck.

He was, quite literally, hoping to break even on his customer relationships just to live another day.

In the VC community, that’s seen as aggressive but not necessarily crazy.

On the other hand, I can hear my private equity friends choking on their sensible lunches at the sound of this.

For many companies trying to prove they should continue to exist, signing customers at all costs is a legitimate option.  Getting the next round of funding isn’t necessarily about proving you can do it at a profit, it’s about proving that target companies will part with their own hard-earned money to solve the problem you address.

In other words, a VC-backed company’s focus on bookings is about validation, not profitability.  It’s about market share, not even lifetime value (at least not immediately).

If you’re a marketer, it’s important to be really clear which stage of company you’re working for.

Because if you’re working for a growth-phase company, especially one backed by private equity, you’d do well to get very familiar with EBITDA.  Profitability, not mere growth, is the name of the game.

Similarly, your priorities and metrics as a growth-phase marketer are going be different as well.  Can you measure your customer acquisition cost (CAC) across both sales and marketing?  Can you sustain that CAC as you scale?

There is a time and place for “sign them up at all costs.”  The marketing superheroes of companies focused on scale know that accelerated bookings must also meet a profitability threshold to be seen as successful.