Given the nature of the service, SaaS general marketing is significantly different from approaches in other industries. The transactions are online-based, without two sides ever having to meet face-to-face. Furthermore,
“As SaaS products are multilayered, you can offer different pricing plans and segregate the service based on features.”
Providers can give the target audience a more customized experience. SaaS brands that do a good job catering to their potential customers are the ones that usually perform the best. Most businesses use quotes for their expensive plans, which allows negotiating between two sides.
We will analyze some of the main characteristics of SaaS marketing in this article. We will also talk about the optimal promotional channels, customer journey, and other peculiarities.
B2B SaaS Marketing vs. Traditional Marketing
B2B SaaS marketing is a marketing strategy tailor-made for Software-as-a-Service products. The thing that differentiates this approach from others is the form of delivery.
“The only way a user can access SaaS product is through subscription.”
Only a handful of businesses allow you to purchase their product (making a lifetime subscription). In all other cases, you only get the chance to use the SaaS for the plan’s duration without the product changing ownership.
This strategy has its advantages and drawbacks. Although you can squeeze more money from individual customers during an extended period, this also means you should work hard so they don’t switch providers.
“Every SaaS B2B marketing strategy revolves around customer retention.”
When you sell to a target audience, you’re not interested in single purchases. Instead, making the initial sale is part of a long process where you try to maximize their lifetime value. So, having excellent customer service, dedicated account managers, and making continuous software improvements can significantly increase your recurring revenues.
Creating a SaaS Marketing Strategy
Unless you’re a veteran SaaS marketer, you might have trouble implementing a strategy for this kind of business. Software companies have their fair share of peculiarities, which can make things challenging for marketing and sales teams:
- Customers who buy SaaS products are usually interested in longer cooperation. This is especially true for B2B clients looking to improve daily operations. As a result, the sales cycle is generally longer and involves intense communication.
- Every SaaS is a compilation of its features. Alas, explaining some of these functions is sometimes hard, especially if you’re selling a revolutionary product.
- Although you want to give out free trials, you must be careful about what you include.
- Brand reputation is crucial for closing new deals but, more importantly, retaining clients.
If you wish to learn more about SaaS marketing goals and strategies, we suggest you read our latest SaaS marketing mix article. Just to give you a quick breakdown, here’s what every SaaS marketing strategy should entail:
- Developing software as an MVP first
- Designing an Ideal Customer Profile (ICP)
- Analyzing the Total Addressable Market (TAM)
- Creating a marketing mix
- Creating a marketing budget
- Creating a SaaS marketing plan
SaaS marketing strategies follow similar principles as marketing strategies in other industries.
First,
“You need to develop software that meets users’ needs.”
After that, you need to find an ideal customer profile and, if necessary, adjust SaaS features for that persona. This is followed by budgeting, creating pricing plans, finding the optimal target market, and finding SaaS marketing channels. Once you have all that figured out, it’s time to make an actionable marketing plan to put things in motion.
SaaS Customer Journey Marketing
Customer journey mapping was first introduced in 1998 by Oxford Corporate Consultants. According to the concept, a company’s main task is to guide a potential client through three different stages as they’re making a purchasing decision:
- Awareness – Customers understand they have a problem
- Consideration – Customer looks for available solutions
- Decision – Customer makes a purchase
Another thing that separates the SaaS business model is that you have much more control over the customer journey. Given that most clients will first try the product via the free trial, this opens several opportunities for user engagement.
Unlike traditional products, which presume a linear purchase,
“SaaS sales often involve some back-and-forth between customers and the sales team.”
Depending on the contract value, it isn’t uncommon for a SaaS company and the customer to communicate openly. In fact, buyers often get an account manager with higher-value purchases. Furthermore, unlike traditional products,
“SaaS providers make most of their money through retention.”
B2B SaaS clients only pay 5% to 15% of their lifetime value upfront. If we presume an LTV of 5%, they will re-subscribe to your software 19 more times! So, losing a person after the first month can have disastrous consequences for your business operations.
According to a study by Mixpanel, a solid retention rate for this industry is 35%. Keeping these clients will significantly increase your recurring revenues while increasing the marketing ROI.
Using a SaaS Marketing Funnel
Most people don’t understand the difference between customer journey, SaaS marketing funnel, and SaaS sales funnel. Although a part of the same activity, these phrases relate to different processes.
The customer journey represents different stages a user must go through until conversion. On the other hand,
“SaaS marketing funnel is crucial during awareness and consideration phases.”
Although you’ll use the funnel throughout your digital marketing campaign, it makes the biggest impact during the initial stages.
Companies use various promotional methods to make a person aware of their issues. After that, they present their product as the best possible solution. Most notably, you use a marketing funnel to build interest. With each subsequent step, you introduce a person to more complex topics while explaining product features in more detail.
A company can use various types of inbound marketing during this stage:
- Email marketing
- Search engine optimization
- Influencer marketing
- Social media marketing
- Paid ads
- Traditional marketing
Most of these processes rely on a good SaaS content marketing strategy and your ability to write good copy. Even when using a Google Ad or a Facebook Ad, you still need to be persuasive enough to generate leads.
4 Steps of a SaaS Sales Funnel
Although the sales funnel and marketing funnel often work together, they have different goals. While the marketing funnel increases awareness, the sales funnel turns leads into paying customers. B2B SaaS companies use four processes to sell:
1. Initial Website Visit
A potential customer checks every available SaaS solution at the start of the consideration phase as they scour the web. If you rank in the first 10 results on the SERP, they might reach your website for the first time through organic search. If you run Google Ads or do social media advertising, they might engage with the ad and check out your website for the first time.
During this stage, they’re looking for valuable content and simple ways to learn about your product. This is where we must capture the lead and turn the marketing funnel into a sales funnel.
Given that the user is probably unacquainted with your solution, it might take some time until they transition to the next phase, where they’re ready for a demo. So, to push them forward, you can provide instructional videos and other resources that will showcase product features.
During this phase:
“It’s important for a company to provide valuable content during the prospecting phase and use retargeting ads to educate the customer as they learn about your brand”
These promotional messages are sent to website visitors that are early in the buying cycle. You increase brand awareness and trust by continuously exposing the target customers to your company via social media ads like Facebook or Linkedin Ads and SEM (Google Ads or Microsoft Ads).
The marketing funnel turns into the sales funnel when we classify a website visitor as a potential lead. At that point, the sales team generally evaluates the leads. SaaS brands differentiate between three types of leads:
- Marketing qualified leads (MQL)
- Sales qualified or accepted leads (SQL, SAL)
- Product qualified leads (PQL)
Marketing qualified lead is the most general type of lead where intent may or may not be very strong as customers are still learning about your product and may still be doing competitor research.
Users at this MQL stage will generally have multiple site visits, have clicked on your paid ads several times, or have frequently interacted with your brand in some other way.
It’s your marketing and sales team’s job to work together and qualify your MQL to see if they’re ready to do a demo, at which point they’re considered an SQL and then can become a PQL as they adopt the product (free 30-day trial).
“When a sales team qualifies an SQL and gets them onto the platform, the prospect turns into a PQL.”
There’s a direct line of communication between the brand and the prospect, and you’re slowly starting to convert them into paying customers as they get familiar with your brand.
Product-qualified leads are the best type of leads. These users have tried out your tool and are acquainted with its features. They’re the deepest leads within the funnel, and they just need a slight nudge to convert them.
2. Free Trial
The thing that makes the SaaS funnel different from other sales funnels is the trial stage. Interested parties have the opportunity to test the tool and its features. This allows them to determine firsthand if the product is right for them.
Although offering free trials is a common practice within the SaaS field,
“You shouldn’t use this option if you believe your software isn’t competitive enough.”
Free trials are fantastic as they provide firsthand experience. They create a sense of urgency (7-day trials are effective at doing this) in users while allowing them to commit to the paid version easier. Lastly, you can use trials to gain user feedback to improve the software and understand why they didn’t convert.
Unfortunately, trials also have their issues. Most importantly,
“They expose you to fierce competition within the SaaS market.”
Free trials can also prolong the sales cycle and increase overhead costs. Nevertheless, you still have to offer trials and demos because all SaaS companies do so, and it would make potential users sceptical if you didn’t.
You should remember that not all website visitors are leads. Depending on the SaaS type, 5.5% to 12.6% of visitors will turn into free trial users. Out of these users, 18.6% to 29.0% will convert into paying customers.
“Martech SaaS B2B Companies commonly use free trials as a part of their onboarding process.”
This is an activity during which the company introduces users to their software. While using the product, potential customers can test its features and compare it to alternatives. Thus, providing a good experience during free trials is crucial for conversion.
Due to the competitive nature of the SaaS industry, it’s almost necessary to have a trial stage. Free demos are especially important for enticing large B2B clients who pay top dollar to use your software. Depending on the company’s policies, some of the trial features might be locked.
3. Negotiation and Conversion
Upon testing the SaaS platform, B2B marketers can classify leads as product-qualified leads. The prospective customers have a complete understanding of your offer and are ready to purchase. However, the sale is not over. This is when:
“The SaaS company should contact the user and start the negotiation.”
Negotiation is vital for high-value B2B contracts. During this step, you can lower prices and customize features to meet users’ needs better.
According to a study, 90% of SaaS clients overpay for collaboration software (Asana, Monday, Trello). In other words, you always have some leeway for price modification as people are willing to pay extra for the right tool.
If the negotiation is successful, you will convert the lead into a paying customer.
4. Retention
A high retention rate is crucial for SaaS businesses. Their total customer lifetime value is often 20 to 30 times bigger than the value of the initial contract. Here are some of the best strategies to increase retention and recurring revenue:
- Customize onboarding
- Offer self-service
- Increase engagement across the board
- Make continuous improvements to the software
- Improve customer support
- Use surveys to gain better insights
Furthermore, like in all other businesses, retaining a client is much easier than closing a new one. So, you should make an enormous marketing effort to keep existing customers.
Analyzing Key Marketing Metrics
If you wish to have a better understanding of your marketing funnels and overall performance, you should refer to our key SaaS marketing metrics blog.
“These indicators analyze every aspect of your business, such as conversion rates, recurring revenues, customer acquisition, and net promoter score.”
Your marketing team can use various tools to assess the performance of every marketing channel and business in general. For example, Google Analytics and AhRefs are fantastic for evaluating website performance. On the other hand, Sprout Social is an excellent solution for your social media accounts.
Monthly Recurring Revenue
Monthly recurring revenue tells us how much money a company makes during a month. You calculate it by multiplying the number of users and the average amount earned per client. Monthly recurring revenue is crucial for understanding how a SaaS company performs from month to month.
Customer Acquisition Cost
Customer acquisition costs, or CAC, are crucial for determining how much it costs us to get a new client. It measures marketing efficiency, specifically, whether the current marketing plan works out.
Customer Lifetime Value
CLTV, or customer lifetime value, tells a company how much money it can make per average client. Given the nature of SaaS business, a brand can expect multiple subscriptions from a single source. The general rule is that your CLTV should be 3 times higher than your CAC.
Customer Churn
Customer churn is a metric specific to the SaaS industry. It shows you the percentage of clients you lose month to month. In other words,
“It demonstrates the efficiency of your customer retention strategy.”
It’s worth noting that customer churn doesn’t consider new clients. In that regard, it isn’t the best metric for assessing month-to-month revenues and profits.
Signups and Activations
With these two metrics, you can determine the SaaS level of interest. Generally speaking, increasing the number of signups and activation each month shows marketing improvement and higher brand awareness. To better understand the indicator, you should pair it up with conversion rates.
Conversion Rate
Any type of business can benefit from conversion rate metrics.
“When it comes to SaaS brands, we use this indicator to measure landing page conversion, and trial conversion.”
Companies usually pair it up with other metrics to determine growth rates and expected revenues.
Net Promoter Score
Net promoter score is a metric that businesses use to gauge public opinion. It’s a score from 0 to 10 that shows the customer satisfaction rate. Net promoter score is a valuable survey tool that tells brands whether they need to make improvements to their product and service.
Best SaaS Marketing Processes
As an intangible, subscription-based product, SaaS is best advertised via digital marketing channels. Brands execute their marketing and sales process exclusively online without directly facing their clients. Unlike traditional companies,
“SaaS brands use their website as a point of contact with customers.”
No matter which marketing process or channel you use, you should always have a polished site and landing pages. Brands should also invest in content marketing as the basis of all other marketing efforts.
Search Engine Optimization (SEO)
Search engine optimization is the alpha and omega of SaaS promotion. By relying on this process, you can improve website functionality and drive more organic traffic via search engines. As such,
“Optimization helps you squeeze more money from each visitor.”
Unfortunately, this field can be highly competitive. Approximately 90% of web pages gain no search traffic whatsoever. If we also consider that optimization needs time to provide results, it becomes obvious why people opt for other marketing approaches.
Pay-Per-Click (PPC)
Most SaaS marketers use the term PPC for Google Ads. However, it also refers to social media advertising. Unlike SEO, PPC is much more predictable. It allows you to instantly generate traffic to your site, and you only pay for leads that click on the link.
Unfortunately, PPC is one of the worst methods for increasing long-term brand awareness. What’s worse, as soon as you stop paying, you stop receiving the benefits.
Social Media Marketing (SMM)
Social media marketing allows you to connect with your audience in an unassuming manner.
“SMM is the best way to warm up cold leads.”
The great thing about this approach is that you can modify SaaS marketing campaigns according to the ideal buyer persona. Depending on the platform, you can also alternate between different content types. The SMM approach also allows material reuse across other media, which can significantly cut your costs.
One of the biggest issues with SMM is that it’s very time-consuming. You have to create new content daily and consult the manager before posting anything. What’s worse, a large percentage of the traffic isn’t good leads. So, you can easily get stuck counting vanity metrics that don’t impact your bottom line.
Email Marketing
Email marketing is heavily dependent on marketing automation tools. Companies use SaaS platforms such as MailChimp to instantly send hundreds of messages to their target audience.
Emailing goes hand in hand with other approaches. You can use it to build links during SEO or warm up social media leads. The only issue is that it doesn’t convert at such a high rate, and it rarely provides results by itself.
Influencer Marketing
In 2022, the influencer marketing industry grew to $16.4 billion. This is a massive improvement compared to 2021 when it was worth $13.8 billion.
“Influencer marketing goes hand-in-hand with SMM.”
A promoter can advertise your company on the same platform that your company uses. After promoting a brand, 65% of followers checked out the company’s website or app, while 46% of these visitors made a purchase.
Like other promotional methods, influencer marketing has its fair share of issues. Finding the right person for the job is usually companies’ biggest problem. Hiring a promoter is usually more expensive than other methods, and you must be wary of fake influencers.
SaaS Content Marketing
Content marketing is a vital part of your promotional process. Although it isn’t an advertising approach, companies use it for almost all their marketing campaigns. You need well-written articles, social media posts, brochures, and other material to make a difference.
Unfortunately, companies are often too stingy with their content. According to a HubSpot study,
“46% of companies spend from $0 to $3,000 on content marketing.”
The only saving grace is that 69% of brands are looking to increase their budgets. Based on this data alone, you can gain a significant marketing advantage just by investing more money in this process.
3 Surefire SaaS Marketing Tactics
SaaS technology companies use different promotional methods to entice their leads. As we’ve previously talked extensively about free trials, we’ll skip that one for now. The other tactics include freemium products, mobile apps, and personalized marketing.
1. SaaS Freemium Marketing
After free trials, the freemium model is the most common tactic for promoting and selling your SaaS products. Freemium SaaS allows users to enjoy the software indefinitely but with limited features. In most cases, the developer prohibits the functions that would bring the most value.
The Freemium model has a few obvious benefits compared to free trials:
- Quick customer base growth
- Increases brand awareness
- Allows access to different profiles of customers
- Allows feature and usage customization
- It can generate more money than the standard paid plans
While freemium seems superior to free trials, there are reasons why companies don’t use it more often:
- There’s no guarantee users will make a purchase
- Quickly drains your cash
- Prevents you from gathering paid customer data
For a freemium tactic to be efficient, you need to be careful what you’re offering. A user should be inclined to purchase your features. The free functions are great for introducing a person to a tool and increasing loyalty. However, that doesn’t mean they will make a purchase if there’s something better on the SaaS market.
2. SaaS Mobile App Marketing
B2B SaaS platforms aren’t ideal for mobile devices. Large suites have numerous functionalities, which are hard to use from a tablet or phone. Still, given their increasing popularity, it’s imperative for your company to provide a mobile solution. Even if you can’t do any work from your phone, you can at least access data.
Here are a few tricks that will help you modify your SaaS for mobile devices:
- Create a wireframe and content inventory
- Enlarge elements and simplify menus
- Remove and simplify content
- Avoid graphics, pop-ups, and anything else that might interfere
- Simplify signups
Having a mobile app can make a difference for some users. It allows working on the go while commuting or travelling.
3. SaaS Personalized Marketing
One of the reasons why SaaS solutions have become so popular is their flexibility. These platforms allow you to unburden company servers by transferring sensitive company data to the cloud. Furthermore,
“You can use SaaS from any place in the world, whether via desktop or mobile device.”
Personalized marketing goes hand-in-hand with SaaS products. Given that most companies can modify product features, price, and delivery, they can provide just the solution a customer needs. In fact, SaaS brands that customize their products and processes are usually the ones that dominate the market.
“86% of users claim that personalization has a major impact on their purchasing.”
By customizing their offer, SaaS brands can provide three major benefits:
- Faster and easier scaling
- Elimination of recurring issues
- Adapting to company standard
Watch SaaS Marketing Makeover
By reading this guide, you should have a better understanding of SaaS marketing. Still, we understand if you’re having trouble implementing some of these principles into your business model.
If you wish to improve your daily operations, we suggest you watch SaaS Marketing Makeover. This funky series is available on YouTube and major podcast platforms. During the show, experts choose a random SaaS and, as the name implies, improve its marketing processes.
FAQ
What is SaaS marketing?
SaaS marketing refers to a set of procedures meant to increase brand awareness and generate leads for a SaaS business. It combines traditional and digital marketing channels and procedures.
What is the difference between SaaS marketing and normal marketing?
Unlike traditional companies, SaaS brands sell their products exclusively online. Software-as-a-Service works as a subscription-based product, where you gain access to the platform for the duration of the contract.
How do SaaS companies attract customers?
SaaS companies use digital marketing channels to share their message with a broader audience. They use tactics such as free trials and freemium products to increase their customer base.
