What makes companies successful?
There are a myriad of factors for fast and sustainable business development, including building a powerful brand, forging strong partnerships, and having a flexible management system in place. But having a single, clear business goal is arguably one of the most important elements for success. A focused goal makes your team more purposeful in how they spend their time, and thus more productive—which paves the way for rapid company growth that's actually sustainable.
As a 100% self-funded and fully remote team, we at Hubstaff have been using a simple, two-step process that has helped us grow and scale our business sustainably. And we're happier and more productive than ever: our marketing strategy examples helped us go from $250K to $1.2M in revenue in just 18 months.
Here's how we did it:
Step 1: Identify a single business goal
As our co-founder Dave Nevogt says, a huge part of the battle of running a successful business is focusing your energy and resources on the right things. That’s why every year we set a very specific business goal and only take on projects that directly further this goal. Last year, our goal was to reach $70k in Monthly Recurring Revenue. To achieve this, we used the Theory of Constraints to break down our yearly business goal into quarterly goals. Then we broke quarterly goals down into weekly tasks:
Step 2: Use time data to pinpoint tasks that drive ROI today
Time data is one of your most important business metrics. Use it to assess ROI, know what’s working and what’s not, and determine the best use of your team's time. Plus, you can more effectively plan and scale your team based on actual business needs. For example, if your development team is spending more time on customer support than on dev work, it’s time to hire more support team members. Your team’s time data can give you these kinds of valuable insights.
At Hubstaff, we track time on all our tasks across all departments, from marketing and customer support to development. At the end of each week, month or quarter, we can see exactly how much time was spent on a particular task—and how much revenue it generated.
Here is the formula our marketing team uses to measure ROI for each task:
Customer Acquisition Cost (CAC) = (# of hours spent on that task) x (your hourly wage + other expenses, like software tools)/(# of paying customers acquired from the task)
CAC = ((5 hrs X $35) + $25)/10= $20 per customer
After calculating that number (CAC), we ask ourselves one question: is Average Lifetime Value (ALV) > 3 x Customer Acquisition Cost?
- If the answer is no, is there any way to make this strategy more efficient and cost-effective? If yes, try to refine it and measure ROI again.
- If the answer is yes, that’s a task with proven ROI.
Once you’ve calculated the ROI of particular tasks, it’s time to use the Pareto principle, also known as the 80/20 rule. The basic idea is that 80% of your revenue will come from 20% of your marketing tasks. You just need to identify that 20% and bet heavily on them.
It’s also crucial to keep in mind that just because something drives revenue today, doesn't mean it will six months down the line. The rule of thumb is that if you see any tasks with proven high ROI, you should double down on them today.
Added benefits of the two-step process
Madhav Bhandari is a marketing manager at Hubstaff. He helps acquire customers with high ROI marketing experiments, action focused analytics, and product iterations. You can follow him on Twitter at @themadbhandari