SaaS Marketing - How to Create a Winning Strategy
Welcome to our blog series where we discuss how to win at B2B SaaS Marketing - Part one of a five-part series
SAAS GROWTHSAAS SALESSAAS MARKETINGB2B SAAS
While the concept of SaaS has been around since the 1960s, it wasn't until 1999 that the SaaS revolution really started. The advent of cloud computing opened opportunities for companies to really take advantage of this concept. In 1999, Salesforce was one of the first with the introduction of a customer relationship management (CRM) platform. It was not that the CRM was revolutionary, but the way it was being marketed and sold. For the first time, the customer did not own the product they “purchased” but leased it from Salesforce. More impactful was that the program did not sit in a server or a computer at the customer's location, but was located off-site in remote servers and delivered on demand. The utilization of cloud computing revolutionized software sales, and the age of SaaS was born.
Today, the SaaS business model is ubiquitous, as the SaaS market has exceeded $197 billion in revenue. This trend is not slowing down and is expected to grow to $232 billion by 2024 (Synder).
The marketing and sales strategies for SaaS products have also continued to evolve over the years. This blog will explore some of the differences involved with SaaS marketing, several proven strategies, and the metrics that are unique to this industry.
What is SaaS
Software as a Service (SaaS) is a cloud computing model where software applications are provided to users over the internet. SaaS eliminates the need for users to install and maintain software on their own devices. Instead, users can access the software through a web browser or mobile app, making it more convenient and accessible.
SaaS is typically offered on a subscription basis, allowing users to pay for the software on a monthly or yearly basis. This pay-as-you-go model provides flexibility and scalability, as users can easily upgrade or downgrade their subscription as needed.
SaaS providers are responsible for maintaining and updating the software, ensuring that users always have access to the latest features and security updates.
Overall, SaaS offers business owners a cost-effective and hassle-free solution. It ensures that they always have the most up-to-date version of the software and the entry point for acquiring it is significantly less expensive than the traditional buy-and-own distribution model.
How is the SaaS Marketing Methodology Different
Intangible Product - An intangible product, such as SaaS, presents a number of challenges for a marketer. Because it cannot be touched, felt, or seen, it is more difficult to convey its value to potential customers.
The lack of a physical presence can make it difficult to establish trust and credibility. Accordingly, intangible products often require a higher level of customer education and understanding. Since they cannot be easily experienced or evaluated, potential customers may have difficulty grasping the benefits or advantages they offer. Measuring the success of marketing efforts for intangible products can be more complex, as there are no tangible metrics like sales volume or inventory turnover. Overall, marketing intangible products requires innovative strategies to effectively communicate their value and overcome the inherent challenges.
Product Expertise - While every marketer needs to understand the products/services they are promoting, a SaaS marketer must be a product expert. A SaaS marketer needs to understand the current product features but also what the product roadmap is and implementation period. They must work with the product team to provide educational and how-to content that explains how customers can get the most value out of the SaaS product. These tips, tricks, and optimization ideas need to be communicated in blogs, videos, and webinars to ensure new and existing customers continue to see the value.
Phased Approach - Because a SaaS product is intangible and inherently difficult for a prospect to see its value, the SaaS marketer must have a two-phased approach to a prospect. In the consideration stage, the SaaS marketer's goal is to encourage the buyer to seek a free trial or a demo conducted by a product expert. Without actually trying or seeing how the product works, it is unlikely they will acquire a subscription. If that free trial or demo does not result in an immediate sale, the Marketing team must work with the Sales team to continue to nurture the prospect.
Pro Tip - It is a better strategy for the bottom-of-the-funnel leads to be directed to a demo rather than a free trial.
While it is much easier to get a prospect to a free trial, they will not convert to a customer at the same rate as one who has attended a demo. The commitment required to attend a demo is a much higher bar. During a free trial, a prospect also does not get the benefit of having their questions answered or learn how the features can work for them . There are ways of increasing the commitment of the free trial user by implementing an "Opt-out" free trial that requires them to have a credit card on file to begin the trial. The cost of acquisition for a free trial is much higher than when they are directed to a demo.
The average conversion rate, where a B2B company offers a free trial, is between 14-25%. When the same company implements a demo model, the close rate is between 26-40%.
The good news is that you can strategically set up your marketing strategy, so the focus is getting the prospect to a demo and have the backup option a free trial.
Data-Driven Approach - While Prevail Marketing believes that ALL marketing must be data-driven (we track 400 KPIs each month for clients), SaaS marketing demands it. A great deal of the success you will obtain as a marketer is derived from A/B testing....everything and all the time. This data-driven approach extends to product development. While you never build your product roadmap around the specific requests of a single company, to stay relevant, a marketer needs to gather feedback and learn the collective desires and needs of their customers. Often, the information will allow the product team to introduce features that will help retain clients.
Competition - There is a lot of competition in the SaaS marketplace, so when a prospect identifies a need, they may be overwhelmed with the available options. Most do not have the time to look at every possible solution. To be noticed, a SaaS marketer must have an overwhelming presence on the internet with content that addresses the pain points and concerns of their target audience. They need to ensure that they are well represented on third-party referral sites, because many prospects rely upon them to narrow their choices.
Sales Cycle - When compared to other B2B industries, the manufacturing sales cycle for most SaaS products is extremely short. This means that both the Marketing and Sales team must adopt an aggressive speed-to-lead mentality. On the marketing side, you always offer bottom-of-the-funnel opportunities, as sometimes the pain being experienced by the prospect leads them to this outcome. When nurturing a lead, the time between engagement is significantly truncated. For Sales, it means ANY person who submits a bottom-of-the-funnel activity is contacted by phone within seconds of that activity.
Benefit-Based Marketing - It is called software as a service, because you are not really selling a product. You are selling a solution to a pain point or problem that the prospect is having. Avoid the temptation to market features of your SaaS product. The buyer doesn't care what features it may have. They only care about how it will help them improve and grow their business. So, focus on the entirety of the benefits. This may include everything from how often the product enhancements occur to the customer support they are provided.
Client Retention - Client retention is of utmost importance for SaaS products. This is because the SaaS subscription-based model provides more opportunities for the client to switch to another provider. This means that the Marketing Department must provide continuous engagement and nurturing of existing clients to ensure they renew their subscriptions.
We have found, the same degree of effort that it took to acquire the SaaS client is required to retain them. In our next article, we will discuss the types of activities that a Marketing department should engage to avoid losing a customer to the intense competition in the marketplace.
High customer retention rates not only drive revenue but also are more cost-effective than acquiring new ones. By focusing on client retention, SaaS companies can create long-term and sustainable relationships with their clients, leading to increased customer lifetime value and overall business growth.
In our next segment, we will discuss strategies that we have used for our clients that delivered amazing results.
In many respects, SaaS marketing has many of the same foundations as marketing for any other product or service, but, before we delve into what makes SaaS marketing unique, let’s look at the similarities:
Buyer Personas – The one truth that applies to every marketing sector, channel, and strategy is that you need to understand who your targeted buyer personas are. This means understanding, at every stage of the buyers’ journey, what will attract, engage, nurture, and convert them (see Buyer Personas – the Foundation of Strategic Marketing).
While this is no different for a SaaS engagement, there needs to be special emphasis on what will retain the customer, once won. We will explore this more later.
Content Marketing – As with other forms of marketing, you need to create great content that will attract and resonate with your targeted personas. This content needs to be shared, in a format that will resonate with them, and be distributed where they go for information, entertainment, and third-party verification. For the attraction stage, the content needs to demonstrate you understand their pain points and their industry.
What may be different is that, often, you are also creating unique branded content for resellers or influencers who are promoting your SaaS product. We will discuss this more later.
Demand and Lead Generation - As in all marketing, you need to generate demand, convert it to leads, and nurture the prospect to become a customer. While many of the same channels may be used, the tactics may be different, because SaaS usually has a very short sales cycle.
We begin our series on Software as a Service (SaaS) marketing. We will examine how SaaS has transformed the way businesses operate in today's digital landscape and how to successfully market. Today, we will discuss the SaaS formula and how marketing SaaS may differ from marketing for traditional products. In parts two, three, and four, we will share the marketing programs that have proven to create success for our SaaS clients. In part five, we will address the metrics you need to be tracking that are unique to SaaS products. So buckle up, and let's talk SaaS.
Welcome to the Age of SaaS