Balancing Brand Spend vs. Demand Generation: Why LTV and Retention Are Key for Mid-cap SaaS Growth in 2025

Let’s be honest—2024 hasn’t been the easiest ride for most growth-stage, SaaS companies. Every marketer I talk to is working harder than ever to hit pipeline targets that feel impossible in this slower-growth economic environment. As we start thinking about 2025 planning, we find ourselves at a familiar crossroads: Should we double down on demand generation to meet short-term revenue goals, or take a longer-term approach and invest in our brand? The stakes are high. I’ve seen companies put all their eggs in the demand gen basket and hit their numbers for a few quarters, but eventually, they hit a wall. It becomes harder and harder to find those incremental leads.

Despite a desire for both demand generation and more brand building, almost 9 in 10 CMOs in the US surveyed in 2023 by Dentsu Creative said that they focus on the short term to the detriment of the long term (Marketing Charts). However, marketing leadership as well as their CEOs, have watched emerging-growth brands like Drift, a conversational marketing platform, invest in brand early on, outperform their competition, and finish with a successful sale to a strategic buyer (Drift is now owned by Salesloft).

For those mid-cap companies looking to double, finding the right balance between demand gen and brand investment is more important than ever, especially knowing that high-growth economies will come and go. Demand gen will keep today’s pipeline full—but it’s a strong brand that will sustain growth through tomorrow’s challenges.

The Growing Importance of Lifetime Value (LTV) and Customer Retention

Historically, as a CMO, I’ve always seen my primary mission as driving customer acquisition and fueling new annual recurring revenue. But recent challenges—like the pandemic and rising interest rates curbing business investment—have forced us to look elsewhere for growth. We’ve always known there’s “gold in them hills” when it comes to our existing customers, but the pressure to hit new logo quotas, along with limited resources, often overshadows our efforts to focus on customer advocacy and expansion.

That story is changing, though. Our PE partners are now pushing for “efficient growth”—not just growth at all costs, but growth that’s smarter and more sustainable. And the most efficient way to drive revenue growth? By maximizing the value of existing customers. As Insight Partners points out, “companies are increasingly shifting from landing 'new business ARR' to prioritizing 'expansion ARR', which rose to 48% of total new and expansion ARR in recent years” (Insight Partners, 2024 SaaS Marketing Benchmarks).

With this shift in priorities comes a shift in the KPIs we’re tracking. LTV, the total revenue a customer generates throughout their relationship with your company, has moved front and center. For us CMOs, this means our role doesn’t end after that first sale. Now, our marketing teams are critical in driving upsells, cross-sells, and most importantly--building brand advocacy.

But LTV and customer retention don’t exist in a vacuum. To maximize these metrics, we need more than just tactical marketing or sales efforts. It requires deliberate investment in brand building. A strong brand builds trust, deepens customer relationships, and turns loyal customers into vocal advocates, which is essential for both retention and sustainable growth. So, with this added priority, it’s time to reexamine how we split our resources between demand generation and brand investment—not just to keep the short-term pipeline full, but to sustain long-term customer value.

Brand Building Doesn't Always Mean Billboards and TV Spots

At PrismHR, a leading Human Capital Management (HCM) software provider for HR service providers in the U.S., we executed a content marketing strategy designed to strengthen our brand by delivering educational, value-added resources tailored to our customers. Through in-depth whitepapers, webinars, and videos (all of them made on small budgets), we didn’t just highlight our platform’s innovations—we told real user stories about how those innovations helped our customers scale their businesses and serve their clients more effectively. We filmed customers telling their PrismHR story at every possible event and sales call, in addition to pre-planned professional shoots. Our focus was on the story we were telling—not just about the pace of our innovation, but how it impacted everyday customer life. After a year of executing this content on social, email, events, webinars, and PR, we saw a real impact. Our NPS soared, our CSAT improved year-over-year at our user conference, and even during our merger with a strategic partner, our customer retention stayed strong.

Our brand reputation campaign didn’t just reinforce PrismHR’s position as a trusted, time-tested HCM platform. It showed our customers that we were driving innovation that really mattered.

Beyond content efforts and targeted ads in industry trade magazines, we took things up a notch with PrismHR LIVE—our annual flagship conference for HR professionals. It wasn’t just a great space for networking and training, though. It built a strong sense of community around our product. I’ll never forget the energy at the event. People were connecting, learning, and leaving as advocates for our brand.

By consistently delivering valuable content and hosting high-engagement events, we didn’t just strengthen our brand presence—we also saw a major boost in demand generation for new products and services. What came next was a flywheel effect that accelerated customer acquisition and opened up new revenue opportunities.

A Strong Brand Will Lift Demand Generation Results and Keep It Coming

A strong brand doesn’t just increase customer trust, it also boosts conversion rates across paid ads, email campaigns, and content marketing. According to the Ehrenberg-Bass Institute, brands with higher "mental availability"—the ones that are top of mind for customers—are 30% more likely to be shortlisted by B2B buyers when it’s time to make purchasing decisions (Direct Agents).

In addition, brand power can impact costs and maximize ROI in the long run. Companies with strong brands also enjoy lower Customer Acquisition Costs (CAC) (Faster Capital). A well-established brand attracts inbound leads and increases organic search traffic, reducing the need for costly paid channels. At Namely, where I was CMO after we acquired the company, I saw this firsthand. Inbound demand generation was easier, cheaper, and way more efficient. And it wasn’t by chance. Namely had spent years investing in their brand, and it made all the difference with organic lead results 2+ years later.

Insight Partners points out in their report, that “more sophisticated marketers are moving beyond just volume metrics, looking at acquisition cost in relation to lifetime value, realizing that a strong brand drives organic traffic and increases conversion efficiency.” On the flip side, companies that neglect brand building are forced to rely on cold outbound emails, expensive lead providers, and super-costly PPC campaigns. Not only is this approach expensive—it rarely works. They end up with low-intent leads that hardly ever convert into real business.

The Tipping Point: When Demand Generation Maxes Out

In my experience, in both early-stage start-ups and mid-cap growth companies, there comes a point where demand generation programs hit a wall. You keep pouring money into paid search and lead gen campaigns, but after a while, you start seeing diminishing returns. Leads get more expensive, and the flow slows down. Essentially, throwing more money into these channels without supporting them with brand-building efforts becomes less and less effective.

Here’s why: According to Martech.org, there’s a simple theory behind the demand generation curve that we often overlook when trying to balance brand-building with lead gen. At the earliest stages of the curve—brand recognition—your prospect starts to recognize your logo because they’ve seen it enough times in the right places. After continued exposure, they move to brand understanding, where they don’t just recognize your logo, but they know what you do and who you serve.

If you seed your message well, the prospect can recall your brand and add you to their shortlist when their pain points align with the solutions you offer. This is the “brand recall” phase, where awareness shifts to affinity. You begin to see more consistent inbound demand at this stage. With continued brand-building efforts and thought leadership, you can deepen that affinity into “brand preference.” This is when your brand is viewed as a true leader in the buyer’s mind.

As your brand progresses through these stages with your target audience, inbound demand gradually increases. However, because of the quick ROI pressures placed on many marketers, we often focus too heavily on lead gen, trying to pull prospects into the funnel before they even recognize or care about our brand or solution.

On the flip side, companies that invest in brand-building alongside demand gen tend to see more sustainable growth. Just look at HubSpot, Adobe, and Monday.com. HubSpot uses educational content—like guides and blog posts—to position themselves as trusted experts, building long-term relationships with their audience. Adobe strengthens its brand presence through social media, using engaging posts and regular interactions to stay top of mind. And if you’ve seen Monday.com’s billboards, you may know that they’re also investing in video marketing with eye-catching content that clearly explains how their product works.

Key Efficiency Metrics to Monitor

Sure, you can track traditional brand-building KPIs like share of voice, engagement, and even run pricey brand recall studies to gauge the impact of your campaigns year after year. But the real proof of whether your brand efforts are paying off? It’s in the metrics your finance team actually cares about—the ones that tie directly to efficiency and growth. These numbers don’t just matter to your board; they also help show if your brand-building is pulling its weight alongside your demand gen strategies.

To make sure you’re getting meaningful, bottom-line results, the finance team, in partnership with the CMO, should focus on these key metrics:

Customer Acquisition Cost (CAC): This tells you how much it costs to acquire a customer and the metric needs to be constantly refined. Keeping CAC under control means you have to keep an eye on your demand generation spend and efficiency, optimize your sales coverage and your sales teams’ efforts, and build on your brand equity to lift both marketing and sales efforts. What I’ve seen is that a good, strong brand can actually lower CAC by attracting organic, inbound leads, increasing conversion rates, and reducing your dependence on expensive paid channels.

CAC Payback Period: This is how long it takes to recoup your acquisition costs. A shorter payback period means you’re getting faster returns and healthier margins. Sometimes I like to look at CAC Payback on a per-channel basis, like my PPC campaigns, so I understand the specific return related to specific type of demand capture. Mostly, however, I take a blended approach across all my channels to get a holistic view of the marketing ROI.

Net Revenue Retention (NRR): NRR shows you how much revenue you’re keeping from existing customers, including upsells, cross-sells, and renewals. A high NRR means that your retention and expansion strategies are working. Strong brand equity can play a significant role here too. Customers who trust and identify with your brand are more likely to stay loyal and continue buying from your company.

LTV to CAC Ratio: This is the important one. It tells you how profitable each customer is over their lifetime compared to the cost of acquiring them. A high LTV to CAC ratio means that you are acquiring customers efficiently and maximizing their long-term revenue. This is where the balance between brand building and demand generation becomes clear. As your brand strengthens, you should see both sides of the equation improve: higher retention and LTV, lower CAC. A strong brand pulls in customers who stick around longer and are cheaper to acquire.

A Common Question: How Much of My Budget Should I Spend on Brand?

For SaaS companies looking to scale, finding the right balance between short-term demand generation and long-term brand-building is essential. Salesforce provides one example. According to Direct Agents, they allocate around 50% of their marketing budget to brand building. And the result: the Salesforce brand value has increased 13% year over year, reaching $23.8 billion in 2023 (Direct Agents).

But for those of us with smaller budgets, a split like that is daunting. A good starting point for mid-cap companies looking to scale is to allocate about 60-65% of the marketing budget to demand generation and 35-40% to brand-building. As your company grows and the market becomes more saturated, you’ll likely need to increase your brand investment. For example, if your company is at the $300M ARR mark and looking to double in 3 to 5 years, shifting toward a 50/50 or even a 60/40 split in favor of brand-building might be a better strategy—especially if you're up against established competitors.

Why make this shift? It’s simple: as your company grows, brand-building becomes more than just a differentiator—it’s a key driver for lowering long-term CAC. A strong brand pulls in more inbound leads, improves conversion rates, and reduces your reliance on expensive demand gen tactics. And as we’ve seen with companies like Salesforce, a well-established brand doesn’t just attract new customers—it keeps existing ones loyal, driving up lifetime value. In highly competitive markets, investing more in brand, while maintaining an efficient demand gen program, can lead to sustainable growth and help secure a stronger foothold in the industry.

So how do you make the leap if you’ve traditionally spent less than 20% of your budget on brand? Here are a few ideas to help you shift your marketing mix without losing momentum on demand generation:

1. Audit Your Demand Gen Initiatives: Start by taking a close look at your current demand gen efforts. Identify any campaigns or channels that aren’t delivering strong results or have a poor ROI. Instead of continuing to pour money into tactics that aren't performing, consider reallocating part of that budget toward brand-building activities. This shift could be the spark for stronger long-term growth and better demand gen results down the road.
2. Start Small and Measure: You don’t have to overhaul your budget all at once. Begin by shifting 5-10% of your budget toward brand-building initiatives. Track important brand metrics like share of voice, engagement, and, most importantly, how brand awareness is impacting your demand gen efforts. Watch how conversion rates and CAC change as your brand presence grows. The data will help make the case for increasing brand spend further.
3. Create Content That Serves Both Goals: Like PrismHR's brand reputation campaign, one of the easiest ways to start increasing brand spend is through content marketing. Thought leadership pieces, case studies, and video series can build credibility for your brand while also generating leads. It’s a smart way to support both brand and demand gen simultaneously.
4. Leverage Paid and Organic Channels: Use paid campaigns strategically to boost your brand. For example, sponsored content on LinkedIn, industry partnerships, or podcast sponsorships can position your brand as a thought leader. Meanwhile, boosting your SEO and organic social media presence will amplify these efforts without significantly increasing your budget.
5. Commit to Consistency: Consistency is the cornerstone of brand-building. Make sure your brand platform is fully understood and embraced—not just by the marketing team, but by sales, customer success, and operations too. Hold workshops and identify brand ambassadors within your organization who can educate others on how to represent your brand correctly. Consistent messaging builds brand recognition and trust, making it more likely that customers will choose your solution in the future.

The Time to Invest in Your Brand is Now

Striking the right balance between brand spend and demand generation during periods of moderate to slow growth isn’t just a nice-to-have—it’s critical for long-term success. For mid-market SaaS companies, especially those scaling in competitive markets, focusing too much on demand gen can feel like the quick, easy win. But here’s the thing: it’s a shortsighted approach. If your brand isn’t working as hard as your demand-gen efforts, you’re leaving a lot of long-term value on the table—things like stronger customer retention and higher LTV.

A word of caution, however. While the core principles of branding and the long-term value it produces remain the same, the way brands are strengthened is evolving rapidly with the rise of AI. AI technology now enables brands to create deeper, more meaningful connections with their target audiences, moving away from a one-size-fits-all approach. Personalized messaging, AI-driven website content, and the integration of first- and third-party data allow companies to deliver tailored experiences to prospects, fostering a new level of brand affinity.

Investing in your brand today goes beyond traditional advertising or creative video marketing—it’s about curating experiences that resonate on a personal level. By leveraging AI to customize the brand experience, you not only strengthen relationships with your target audience but also build a brand that stands out and sustains long-term growth in an ever-changing marketplace.

Here’s the reality: the longer you wait to build your brand, the harder it becomes to capture customer loyalty, drive Lifetime Value (LTV), and lower Customer Acquisition Costs (CAC). My advice? Take a close look at what constitutes your brand today. If your Ideal Customer doesn’t know who you are, or worse, doesn’t care, there's no time to waste.