What is SaaS
Marketing?
Table of Contents
What Is SaaS Marketing?
Software-as-a-Service (SaaS) marketing is a specialized marketing technique that helps promote and advertise internet-based tools and applications. SaaS products, like web-based and subscription-based services, can benefit from this marketing strategy which includes various marketing approaches and techniques to highlight their features and capabilities.Â
Given that these products are intangible, it can be difficult to convince potential customers to invest in them. Hence, SaaS marketing strategies, such as offering free trials or product demos, become even more critical in enabling businesses to let their clients experience the software before making any purchasing decisions.
So, what sets SaaS marketing apart from other forms of digital marketing, and why do you need specific marketing strategies to market your SaaS products effectively? You can find all the answers to these and many more questions in the comprehensive guide that we have prepared for you. The guide contains a wealth of information on SaaS marketing strategies, industry trends, and expert advice on how to create effective campaigns to help your business thrive in the market.
How Is SaaS Marketing Different From Digital Marketing?
Software-as-a-service (SaaS) marketing and digital marketing have distinct differences that set them apart. While digital marketing predominantly relies on online channels to sell a product, SaaS marketing is more focused on developing strong relationships with customers and generating recurring revenue. SaaS marketing involves continuous selling of the same service every month instead of a one-off sale, which necessitates specific marketing skills for creating lifetime value for customers.Â
The major challenge with SaaS marketing is convincing customers that the service is worth paying for each month. Maintaining current product offerings and keeping pace with competitors require regular incentives and updates. If you want to succeed in SaaS marketing, you need to adopt a different approach. You must have the right mindset and know-how to attract, sell, and retain your customer by creating a more customer-centric approach that focuses on customer lifetime value instead of just acquiring new leads. If you learn these tactics and target the right audience, you can build long-lasting relationships and generate reliable revenue streams.
SaaS Marketing Strategies
When we examine the various features of a SaaS product, it becomes evident that it caters to a specific set of clients. A successful SaaS marketing strategy necessitates identifying these clienteles, and retaining them for a longer period. To accomplish this, the SaaS marketing strategy comprises of three different phases, each requiring a unique marketing approach.
Here are the three stages:
- The first step is finding customers who will pay you every month for your service. You can use a variety of marketing and sales strategies to get these leads.
- The next step is to market your product to those customers so that they have enough information to make a purchase decision. The marketing is done both off-site and on-site. Off-site marketing entices the potential client to visit the website, whereas, on-site marketing methods try to close the deal when the customer is reviewing your product online.
- Retaining your existing customers is the final step. At the time, you can cross-sell by giving your existing customers specific discounts that may entice them to upgrade their accounts.
As you may have guessed, successful SaaS providers use different marketing strategies at every sales funnel stage. This guide will discuss the three segments in detail, but before starting the marketing initiative, there are two important things to verify.
First, you must ensure that your platform has sufficient information for the visitors to understand what makes your product unique. Remember that most SaaS customers look at different suppliers and products before making their selection. Therefore, your website should clearly state your unique selling proposition. This is the only way to seal the deal as quickly as possible.
Secondly, your website should be optimized for conversions and easy to navigate. No matter where your customer finds themselves on your website, you must keep them interested by using different types of CTAs, or calls to action. These CTAs can incorporate free trials, a subscription to the newsletter, or a request to follow your service on social media. It’s the only way you can get back to potential customers even if they didn’t subscribe to your service.
Now, let’s focus on finding paying customers.
A crucial step for a successful business. Don’t worry, we have resources and tips to help you attract them. The first step.
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How to Get Leads for Your SaaS Business
Lead generation is a crucial first step in any SaaS marketing campaign, but it can be particularly challenging given that SaaS leads are a unique breed. Unlike traditional leads, SaaS leads are typically composed of three distinct groups, each with its own set of challenges to overcome.
The first group consists of potential clients who are actively searching for your service and are already primed to make a switch. These types of leads can be easier to identify and engage with through traditional marketing methods such as targeted social media ads and inbound marketing techniques like offering free trials.
The second group is made up of individuals who are already using a similar service to yours, and convincing them to switch can be a bit more challenging. It’s important to steer clear of buying third-party email lists and instead focus on creating high-quality content that will grab their attention and highlight the unique benefits of your product.
The third group is often overlooked but can be one of the most valuable sets of leads to target: disgruntled customers who are unhappy with their current provider. Winning over these customers requires a more nuanced approach that focuses on building trust through influencer marketing and other strategies that directly address their pain points.
Ultimately, successful SaaS lead generation requires a multifaceted approach that combines targeted marketing tactics with high-quality content, influencer partnerships, and a deep understanding of each group’s unique needs and preferences.
How to Market SaaS Products
Most SaaS marketing strategies are done off-site. However, you can also structure your website content to promote your product to website visitors. Here are the top five marketing tips that use at least one of the methods:
Pay-Per-Click Advertising is a highly effective marketing strategy that can be used to target your audience accurately. If you possess excellent ad copywriting skills, you can use PPC ads to target your customer profile directly. A recent study found that nearly half of all clients who click on mobile PPC ads end up calling the advertiser. If this seems too good to be true, it is essential to note that paid ads convert much better than organic results, making it a no-brainer, provided you have the budget to pay for targeted ads.
Transparent Pricing Structure is one of the most critical marketing strategies for SaaS products. It is wise to use a consistent pricing strategy that is transparent across the board. Avoid using marketing gimmicks as customers tend not to like seeing two different versions of the price. Additionally, advertising a monthly price based on 12 months of subscription is not advisable as it may negatively impact your reputation. A clear perspective can be achieved by placing monthly and yearly prices side by side.
Search Engine Optimization is a highly effective way to target your ideal customer without the marketing budget required for PPC. If you’re not comfortable with PPC or can’t afford it, consider hiring a SaaS marketing agency to do the SEO for your brand. Although instant results are unlikely, consistent traffic in the long run, free of cost, is guaranteed.
Providing free trials is an effective marketing strategy that everyone loves. Giving website visitors the option to test your product is wise. Although there are no specific rules dictating the length of such freebies, it’s best to keep them short. In most cases, one or two weeks are enough for most people to try it.
When it comes to offering a freemium,(Free trial) it’s important to consider the perceived value of your product. That’s one reason why it’s important to ask for credit card information during the free trial period. Not only does it ensure that you’re not undervaluing your product, but it communicates to potential customers that you take your offering seriously. It’s also essential to remind users to cancel their free trial in advance to avoid charges they weren’t expecting. However, consider offering a week’s extension to those who may want a little extra time to explore your product. These small gestures can go a long way in building brand loyalty and trust.
When it comes to pricing tiers, it’s important to keep it simple. Generally, three tiers offer the best results, although you may want to add a fourth for higher-end or B2B SaaS organizations. Consider highlighting only the most important features in your pricing table and let customers explore your website to discover the additional benefits of your product. Overall, it’s important to balance transparency with simplicity to build customer trust and encourage subscriptions.
How to Sell Your SaaS Service
From the perspective of a SaaS platform, selling strategies are mainly used once the customer is actively surfing your website. Sometimes, you can use both marketing and selling strategies simultaneously; however, it’s not the norm.
Here are some neat tricks to sell your service and improve your conversion rate:
Use a landing page to capture your visitors’ attention and provide them with necessary information. It offers a comprehensive overview of your business and controls the message delivery. Creating content for a landing page is challenging. Consider hiring a professional copywriter who specializes in creating effective content that converts visitors into customers. A copywriter will optimize your landing page content and ensure it speaks to your target audience. Investing in a copywriter can help you create a landing page that converts visitors into customers.
Creating a comparison table. These tables have a double function: firstly, they showcase the superiority of your product over your competitors and, secondly, they prevent customers from visiting your competitors’ websites. If you are confident that your product is better than your competition, why not create a comparison chart showing the features of your service versus theirs?
However, it would be best if you were mindful of the accuracy of the information you publish. Before creating a chart, make sure to evaluate your competitors’ website and update related stats frequently. To protect yourself from scrutiny if any updates go unnoticed, it is crucial to publish the date of the last observation. Safeguarding your business further, including a disclaimer under the chart, is good practice. Let your customers make an informed decision with a clear comparison table on your website.
Use Video Demonstrations: Video demonstrations can be used as an alternative to a free trial. You can use such videos to highlight your product, the user interface, and other important platform functions.
Your landing page is a good place to put a couple of these videos; however, demonstration videos should be super-short, less than three minutes, so that your visitors can stay focused on the actual message. Since videos often behave inconsistently on different browsers and mobile platforms, it’s also recommended to use captions on your video. Captions let viewers understand the video content despite a clunky interface.
Keep Your Sign-Up Forms Short: If you’ve succeeded in convincing your targeted audience to sign up for your service, a lengthy sign-up form is the last straw that can easily put them off. This is why your marketing team should make every effort to streamline the sign-up process.
A good starting point is to ask for only the most vital information because you will have plenty of time to get other credentials at a later stage. Also, make sure to get the subscriber’s email address, so you can retarget them using ads and webinars if required.
Use Live Chat: Of all the sales features, customer service always stands out. Traditionally, phone support was the preferred method. Now, live chat has replaced it to become the most cost-effective and manageable customer service asset.
 Numerous case studies from B2B SaaS marketing companies also show that the majority of customers still expect an immediate response to their inquiries. Under such conditions, live chat is very effective because it solves most problems within 42 seconds. The only downside to the chat is the scripted response used by some companies, which is often extremely annoying and out of context. In this case, it’s better to publish FAQs instead of irritating your prospect.
How to Measure SaaS Marketing
SaaS performance metrics are absolutely critical to keep a close eye on, as they are the markers that indicate just how effective your company is at attracting new customers and maintaining existing ones. With an array of key performance indicators available, it can be difficult to know which ones to prioritize.
That being said, this guide will exclusively focus on the top 5 performance metrics, which have proven to be particularly dependable in assessing the efficacy of SaaS marketing campaigns. By tracking these metrics, you will have all the information you need to help ensure your company’s continued growth and success. So let’s dive into the top five metrics that every SaaS business should be keeping a careful watch on!
1) Churn
Churn: Customer churn indicates the number of customers who cancel your subscription in a given period. It’s usually calculated every month. A good rule of thumb is to keep your churn rate less than 5%.
Churn is calculated by dividing the number of customers who’ve canceled their subscription this month by the total customer count at the beginning of the month.
Churn rate = (Total number of customers who’ve canceled this month / total subscribers at the beginning of the month) x 100
2) Monthly Recurring Revenue
Monthly Recurring Revenue:Â MRRÂ is the revenue that the SaaS company generates in a given period. It is calculated by taking the number of total accounts for the month multiplied by their rate in dollars per account.
MRR = Total number of accounts for the month x rate in dollars per account
3) Customer Lifetime Value
Customer Lifetime Value: CLV determines the total amount of money that your SaaS business is expected to receive during the lifetime of a customer. The easiest way to calculate this is to multiply the average revenue by the length of the contract, ARPA. Another formula to generate CLV is:
CLV = (1/churn rate) x ARPA
4) Customer Retention
Customer Retention: Also known as net revenue retention, NRR looks at the revenue streams from the existing customer base. To calculate NRR, you also require stats on MRR and churn.
Once you have the MRR figure and churn rate, use the following formula to calculate customer retention:
NRR = ([(MRR + expansion revenue) – revenue lost from downgrades and churn]/ MRR) x 100
5) Customer Acquisition Cost
Customer Acquisition Cost: CAC is the total sales and marketing cost required to acquire the customer. You can calculate it by adding the sales and marketing expenses and then dividing the result by the number of new customers in that period
CAC = total cost of sales and marketing / total number of new customers
As mentioned, these are not the only key performance metrics, but they are surely the most important.
How Much Money Should You Expect to Spend Per Month on Effective SaaS Growth Marketing?
When it comes to SaaS marketing, there are several key factors to keep in mind. It’s important to note that there is no definitive answer as to how much software companies should spend on marketing and brand awareness, but most established companies tend to invest between 15% and 25% of their revenue in these areas. Of course, revenue can be affected by a variety of factors, but aiming for 10% to 15% MRR (monthly revenue rate) in the first 6 months is a solid goal.
For startups, research has shown that successful SaaS companies typically spend 80% to 120% of their annual revenue on marketing during their first three years. It’s clear that marketing is a crucial element in promoting your SaaS offering and reaching your desired audience.
In addition to marketing spend, it’s important to remember that SaaS is a service rather than a product. This means that the entire software system is tightly coupled, including the team that provides the service. It’s essential that everyone involved in the process, from customer support to developers, copywriters, and decision-makers, understands the key concepts that hold the SaaS together.
One effective SaaS marketing technique is showcasing your company culture and values. This humanizes your brand and can help attract and retain paying customers who share your values. Ultimately, simply having a great product isn’t enough – the key is to communicate the value that your SaaS service provides to customers.