SaaS stands for software as a service. It is a way of expanding software from a mere single-purchase product to a set of functions or capabilities that a customer subscribes to. SaaS applications are hosted on the cloud, allowing users access to comprehensive services without having to worry about storage, hardware limitations, version incompatibilities, and maintenance. All users need is a basic device and an internet connection.
What is SaaS Marketing?
The various approaches of digital marketers are as diverse as their clients. Industry outsiders may think that the methods to reach and convert different audiences are widely similar. However, with so many channels and marketing options, it takes an expert to know how to tailor your marketing strategy to attract the right audience and achieve the best outcomes.
SaaS marketing is the combination of strategies and actions that work to position and promote the services offered by a SaaS brand. The primary focus of SaaS marketing is to address your audience’s needs, attract them to try a software service (often free of charge), and eventually persuade them to sign up for a paid subscription.
How is SaaS Marketing Unique?
Since a SaaS service does not have a physical form, it can be difficult to prove its value. You must convince users of the benefits and capabilities of your service to obtain new customers. Furthermore, since SaaS depends on providing a recurring service and not a one-off transaction, businesses need to continuously demonstrate that their service is worth the subscription fees. Therefore, SaaS marketing metrics focus on calculating customer lifetime value (CLV) instead of short-term ROIs.
The majority of SaaS offerings are targeted at business-to-business (B2B) customers. B2B SaaS marketing strategy is distinct from B2C SaaS marketing as well. B2B purchasers seek to address specific needs. Higher stakes and larger transactions are involved, making the sales process longer and more complex. Due to the rapid scalability and easy onboarding of SaaS services, the B2B SaaS industry has grown exponentially in recent years. This means fierce competition between SaaS providers.
SaaS Marketing Terminology
The below terms are frequently used when measuring the effectiveness of SaaS marketing.
Customer Lifetime Value (CLV)
As mentioned earlier, CLV is an essential metric for SaaS businesses. CLV is an estimate of the net profit a single paying customer will contribute to your revenue during the lifetime of their relationship with your company.
Customer Acquisition Cost (CAC)
The CAC is the average amount that your business has to spend to earn a single new paying customer. CAC is the sum of costs—such as advertising expenses and the salaries of sales staff—divided by the total number of new customers acquired.
Customer Churn Rate
Churn is a term that commonly appears in marketing metrics. Churn refers to customers that are lost to a business through failure to renew or cancellation of their subscription. Therefore, the customer churn rate is the percentage of paying customers that are lost to churn over a period of time.
Customer Onboarding
Customer onboarding is the process of enabling a newly-subscribed customer to start using your service effectively. This process can include account setup, tutorials, and integrations. The smoother the onboarding process, the more likely users are to continue using your service.
Monthly Recurring Revenue (MRR)
Monthly recurring revenue is the total revenue that your company earns exclusively from paying subscribers each month. MRR can be crossed with churn rate and net revenue to establish MRR churn rate and MRR expansion rate and determine the loss or growth of your recurring revenue.
How to Start SaaS Marketing?
If it is not already apparent from SaaS terminology, customer retention is the key to a successful SaaS business. Spending large amounts on advertising for customer acquisition is pointless if the conversion rate from trial to subscription is low. The first step to a good SaaS marketing strategy is to focus on connecting with prospects who already need your solution and are thus more likely to convert.
To do this, you need to increase your brand visibility and create content that will attract the right prospects. Creating content that resolves your customer’s pain points will help you to rank better in search results and generate more organic traffic. Once customers have found you, make the trial signup and onboarding process as easy and smooth as possible.
Next, you need to provide a positive user experience. A good user experience not only reduces churn and improves retention but also enhances your word-of-mouth marketing. In addition, consider ways to incentivize the referral of new users and how to make the invitation process convenient. Referral marketing is a powerful strategy that has led to the growth of SaaS companies like Zoom.
If your customers find value and satisfaction in your services, they will be less likely to switch to another service suite or company. The SaaS model relies on recurring revenue and CLV. By tailoring your marketing to reach your target audience, providing an outstanding service, and encouraging your users to promote your product, you can secure revenue and be successful in the SaaS space.