SaaS Marketing Basics
Marketing a SaaS service is not entirely different than marketing any other product or service, but there are a few key distinct differences in how you have to approach your strategy. Typically, the best overall methodology for SaaS is inbound marketing, where you provide attractive and useful content based around your service to attract potential customers and then work on converting them. In the SaaS model, this often means upselling them from a freemium plan.
SaaS companies operate solely on and through the Internet, so any marketing strategy that places online conversions front and center, such as inbound, is key. If your company is business to business (B2B) rather than business to customer (B2C) offline channels such as trade shows and industry conferences are also highly valuable. For most, though, the Internet is the place to go. After all, that is how your clients are going to be interfacing with your application.
SaaS Marketing First Steps
The first step to any marketing strategy is to know your customers. These are sometimes called personas by marketers and are complete descriptions of your ideal customers. We have written about how to create personas before and it’s no different for a SaaS company and just as important. Since you will be selling your product completely online to anyone from anywhere, and since you are most likely operating on tight margins, your sales department will probably be very small. Thus, it is almost extra important that you lock down your target personas.
Usually, it is the sales department who take the leads brought in by the marketing department and try to convert them into customers. However, most SaaS companies operate with severely reduced or non-existent sales departments, letting their website, product, and customer service convert leads. Therefore, you do not want to spend time working with leads who will not be successful users of your product. Well thought out personas are key to ensuring your efforts are not going to waste.
Whether you work on the freemium or trial based model, you need to think very carefully about what types of potential leads would be willing to upgrade to the next tier/purchase the full version. For example, computer literacy may come into play depending on the complexity of your product. These prime targets will also have to be people who are willing to make full use of your entire service. Especially on a freemium model, there will be many users who don’t need the full functionality of what you are offering. Likewise, there will be others who will straight up refuse to learn how to use your product to its fullest potential. These are not the leads you are looking for.
The Need for Marketing Automation
Because your sales department might actually be one IT guy who codes HTML and isn’t a designated salesperson, you will need to rely on automated online activities to push your leads. Usually, this is done with what is called a DRIP email campaign. This is a fancy term for an automated email system that sends emails to your leads over time – like a dripping faucet, and sometimes just as annoying (if it is not done well). To prepare for this, you need to write out email chains with the objective of getting someone on the fence to convert. Linking the tone of the email to the persona can be crucial and fancy marketing software, such as HubSpot, can make personalizing email chains to different personas a breeze. Key topics in these emails will be showing company personality, teaching them how to solve problems relevant to them with your app, and promoting your app and giving them fewer reasons to say no to purchase. An optimized drip email campaign helps push leads to customers and keeps people from falling off your service when they shouldn’t.
A core part of inbound, or just about any online marketing strategy, is a company blog. For SaaS companies it usually imperative for the blog to focus on long tail SEO keywords that solve specific problems. This means your blog probably won’t get thousands of visitors, but it will help corner the market for those searching for the specific problem you have the solution for. If you want to write blog articles that have high shareability, you might have to branch out from your set topics. Posts about company personality, transparency, or success/failure stories generally do well here but you might not be hitting your target demographic with these posts. Which is fine.
The personality of a company can sometimes be a deal breaker, especially for B2C businesses, but it needs to be honest. Everyone has a story and your company shouldn’t be different. The story is not just how it was founded, but why. Telling your story through your marketing really builds bonds with your target persona and with the fierce competition in the SaaS space, should give you the edge with your target demographic.
So far, SaaS marketing is pretty standard fare with an emphasis on Drip campaigns and inbound marketing – these are the two most effective tactics, but let’s talk overall strategy. This is where it really starts to differ.
The barriers to entry are relatively low for SaaS – get some money, get some developers, and you are in. Of course, it’s a simplification but we can see it in the sheer multitude of SaaS products available, often with several competing in the same market slice. The biggest challenge then is getting noticed. Getting noticed is a mixture of genius, hard work, smarts, and dumb luck.
Free stuff helps. Inbound marketing is well suited for SaaS because giving stuff away for free (e-books, podcasts, white papers, webinars, etc.) is actually cheaper than hiring a sales team to hit the pavements. Content creation is still not cheap, and you have to make competitive quality content which is becoming increasingly difficult. However, a great offer of free awesome stuff can be a great way to get noticed. So is a great service and a trial or free version (freemium) is almost mandatory now for SaaS.
Free Trial or Freemium Model?
But which one is better, a trial or freemium? It really depends on your service and how to sell it. Typically, trials work better in B2B but in B2C it almost doesn’t matter. Keep in mind that it is very difficult to upsell someone from a freemium account to a premium account. When you offer a free version, even if it is basic compared to the premium version, the user automatically feels like they are are going to pay for something they get for free. It’s a psychological thing. Look at some numbers and you see that only around 3% of users of a freemium product actually get upsold to the premium version.
So what about a trial? Well, trials work better with B2B because of the complexity of the systems. If you are selling a business process oriented service, it most likely needs to be integrated and adopted into the company’s current structure. This takes time and by putting them on a timed trial, the company is forced to evaluate the tool. If they were on a freemium model, they have less of a reason to evaluate your service and they will “get around to it eventually.” Beware that this still happens with trials, and if so, your trial period may be too short. Shoot for 30 days, it is kind of the standard and falls into most people’s expectations. Providing a trial is also more beneficial to B2B because it is easier to work with the company to help them get set up with your service. On a freemium model, you may be busier trying to get the people to pay for their free stuff.
Timed trials also tend to shorten the sales cycle which saves on customer acquisition costs (CAC). Being under a timer speeds up the process of deducing whether a lead would be a good client or not, and vice versa. The longer you have to spend nurturing a potential client, the higher the CAC is, so often SaaS companies want to reduce the time spent.
Another way to get noticed is to provide integrations with other SaaS services. If your company is B2B, there is a good chance that your clients are already using a handful of SaaS services for various things. By allowing your app to integrate with other SaaS apps, not only do you get free advertising, but it can sway users to choose your product. If a company’s various SaaS services can work together it is a huge advantage for the client. SaaS companies often advertise what other applications they integrate with just for this reason.
Just like in all marketing, a SaaS marketing strategy needs to show a return on ROI. This may be waived if your company prioritizes other metrics dependent on the type of investors it has, or if it needs to grow quickly. Monthly Recurring Revenue (MRR) and Customer Acquisition Cost (CAC) are the most common metrics used to measure effectiveness, but these aren’t the only ones. Whatever metrics you choose, make sure they are relevant to your business model.
The Biggest Mistake in SaaS Marketing
The biggest mistake is marketing your service as a product. It’s called “Software as a Service” for a reason. The strength of any SaaS company isn’t its product, it’s the service. Take advantage of this by taking care to maintain an effective customer service team. Your users need to feel they are getting their money’s worth, and after a period of time, the benefits of using a cloud-based product rather than a local one may wear thin.
By their nature, SaaS products are not always the easiest to get along with, especially in B2B. Get the edge by providing training in your software to get customers up and ready with your app as soon as possible. Not only is this a sign of good customer service, but it reduces churn (the super villain of SaaS). If you are on the free trial model, it gives potential leads the information they need to evaluate your service fairly.
Prepare your customer service and marketing teams for failure. While we all hope that our businesses won’t do anything wrong, there is always a possibility that mistakes will be made. Your customer service team needs to know the best ways to respond and deal with the issue for your ideal customers. Likewise, your marketing team needs to know the details and reach of any negative effect to dampen the potential fallout. A strategy that is increasingly getting used is to be much more transparent about mistakes and failures than would otherwise be expected in the past. Not only does this demonstrate your company being able to “own up” to its mistakes, it also puts a human face on the business. People are more understanding of problems when they have honesty and trust.
For day to day activity, both the marketing and customer service team need to work together to gather as much feedback as they can from users. One advantage of SaaS for clients is that it is updated and managed remotely, alleviating company IT departments for “busy work”. It is also advantageous for you. Your application can change and expand to fit the needs of your customers without hassling them. They are paying for a continuous service and if your service never changes, they will not be getting their money’s worth. Not responding to feedback is also a sign of bad customer service.
A lot of SaaS marketing is the same as traditional marketing, but you want to focus on online efforts, provide great service, and have something people actually want. Get noticed by standing out and going above and beyond your competitors in providing a service. SaaS marketing still requires discipline, but with dedication and a clear strategy you should be just fine. Get those leads, upsell them to the paid plans, and make them stay by delighting them. A high number of users looks good, but it is the long-term, dedicated clients which will decide whether your company sinks or swims.