What is SaaS Marketing? Tips For Growth!

The acronym “SaaS” stands for Software as a Service. A SaaS company provides an application that runs in the cloud and continuously delivers additions and enhancements to this software. In other words, the customer does not buy the software but takes out a subscription to use the software. As long as the subscription runs, you get automatic access to all updates and new features. This is why SaaS is sometimes called Software on Demand. Because the software does not belong to the customer: they only purchase it for the duration of the subscription.

As a SaaS entrepreneur, it is essential to work on customer relationships on an ongoing basis. After all, you don’t have as much to gain from a one-time sale. And everything to gain from a long subscription period. That’s what makes SaaS marketing different from the marketing of most other companies. SaaS marketing contains all the strategies and activities you put in place to ensure customers to commit to your service for a longer period of time.

What is unique to SaaS marketing?

The fact that a SaaS company does not offer a physical product or a one-time purchase means that its marketing is very different from that of a “traditional” company. And that makes sense: if you sell your customers a product, you cannot improve your product after the purchase. In principle, you then have nothing more to tell your customer.

With SaaS this works differently: if the customer finds that the user costs no longer outweigh the user experience, the customer can simply cancel the subscription. And then your revenue ceases.

Therefore, from the perspective of SaaS marketing, it is essential to continuously work on demonstrating the relevance of the software. For both new and existing customers.

Start by researching your ideal customer profile

If you know exactly which customers fit into your ideal customer profile (ICP in short), implementing your marketing strategy will yield much better leads and ultimately more paying customers. So start researching your ideal customer profile by:

  • Identifying what makes your solution unique compared to competitors.
  • Identifying your target audience, e.g. by industry, number of employees, specific technology (e.g. Pipedrive CRM users), etc.
  • Determining your buying committee and the decision makers’ influencers.
  • Discover what pain points you solve for them or what “jobs to be done” you make easier for them.
  • What does it ultimately benefit your target audience, and what is the end result?

You can deploy the storytelling framework for SaaS marketing if you know who your ideal customer is.

4 ways to recruit new users to SaaS

It’s not easy to get people to sign up for a subscription from scratch. That’s why most SaaS companies let their potential customers “taste” their service in some way. After all, the best argument you have as a marketer for selling your service is the service itself.

There are several ways to introduce people to your product in a low-key way. To find out what works best for your business, it’s best to experiment with different methods. The method you choose also depends on the pricing model of your SaaS and the complexity of the software.

The freemium version

A popular way to get people to switch to a paid SaaS subscription is to offer what is called a freemium version of the service. This means that in addition to your paid service, you also present a free service online. This service is accessible to everyone.

A freemium has enough similarities to the paid version to let people experience the relevance of your product. But it lacks enough features to make people crave the paid version. An example of this is Dropbox where you can store data in their cloud.

A characteristic of the freemium model is that it is free and has no time limit: basically, people can keep using the free version without ever switching to a subscription. This is also the biggest disadvantage of the freemium model: it costs quite a bit of money to run a freemium and in practice, it is sometimes difficult to recoup that from the users who eventually become paying customers.

So if you choose the freemium model, it might be a good idea to consider whether you’re adding another source of income to it. Think of income from ads or selling other products that complement the free version.

A side benefit of running a freemium version is that it gives you a lot of exposure for your business. In addition, you get free access to a large amount of user data. You can then use that user data to improve your product.

Free trial

Instead of offering a stripped-down version for an unlimited time, you can choose to provide your full service for a limited time. That way, prospective paying users can experience for themselves all the benefits of your SaaS. Typically, such a trial period lasts anywhere from 14 to 60 days. During that time, prospective customers can test whether your product meets their needs and whether they think your service is worth the money. Hopefully, this will get them hooked on your service.

This method works particularly well if your service is in a niche and solves a very specific problem. Your users are extra motivated to find out if your service actually makes their lives easier and are willing to pay if it does. Many social media publishing tools and CRM systems use the free trial to acquire new customers.

Try out at a reduced rate

Trying out doesn’t always have to be free. If you have a good service, it’s okay to charge money for the trial period. This can actually enhance the perceived value of your service. You can choose to offer a trial week or a trial month at a reduced rate.

By doing so, you may also be pre-selecting: the people who come to try your software in this scenario are already interested enough to pay even for an introduction. A switch to a paid subscription is already a little less far away.

Demos

Giving a demo is also a proven tactic in SaaS marketing to introduce people to a product. With a demo, you give potential customers a chance to interactively get in touch with what your SaaS has to offer. That way you work on connecting, building trust, and dispelling any doubts.

In short: you give people the chance to see if your service is the right choice. For example, you can use Google Meet, Zoom, or Teams for this purpose. But you can also choose to organize webinars or set up 1-on-1 videos.

Measuring SaaS marketing success

There are several metrics to keep an eye on, to determine if your SaaS marketing is effective and how your SaaS business is doing. Below are the most important KPIs:

  • Visitors: The more visitors you have, the more new customers you (hopefully) also have.
  • Conversion: With conversion, you measure what percentage of visitors to your website act on your call (do what you want them to do). You don’t just want to look at how many visitors end up signing up for a paid subscription. But also how many take each step in the sales funnel. This will give you insight into how many initial leads eventually convert step-by-step into long-term customers. Also, check out the average B2B SaaS conversion rates.
  • Customer Churn: This is the number to measure how many customers cancel their subscriptions again. This is an essential metric for SaaS companies because it is many times cheaper to retain existing customers than to acquire new ones. Therefore, as a SaaS company, you want to keep Customer Churn as low as possible.
  • Customer Lifetime Value (CLV): This figure indicates how much a paying customer is worth on average to your business. You calculate this by multiplying the average subscription price by the average lifetime value of a customer. You divide the total by the number of customers.
  • Customer Acquisition Cost: This metric indicates how much it costs to bring in a customer. You calculate this by dividing your marketing costs over a period of time by the number of customers you brought in as a result. If you’re just starting out, this amount will be high. As you go longer, you want this figure to go down.
  • CAC-to-LTV Ratio: With this metric, you look at how Customer Acquisition Cost and Customer Lifetime Value compare. The lower this number, the better. You then spend relatively little marketing money getting value out of your customers.
  • Monthly Recurring Revenue (MRR): This is the total amount your SaaS company generates from all active paying customers per month. It does not include one-time payments. MRR allows you to assess the financial health of your SaaS and project future revenue based on active subscriptions.

Start small, think big!

Of course, you want to conquer the world with your SaaS. Still, it makes sense to start by conquering a niche. Knowing exactly who your potential customers are and what problem you will solve for them, makes it much easier to target them and differentiate yourself positively from competitors.

By then, you will have already gained credibility and start to grow. Moreover, you need to build a decent cash flow to appeal to a wider audience in order to capture a larger market share.

Also read: what is Demand Generation?

Be creative with the use of marketing channels and campaigns

As a SaaS startup, you don’t have an endless budget to put into marketing. This means that you don’t have large sums of money for paid advertising, for example. So you will have to make a lot of impact with a limited budget. Think about:

By getting started with this, you can achieve great results even without a large marketing budget. Using small experiments, you can monitor if your marketing efforts are successful. And when an experiment works, you scale it up!

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