Entrepreneurs and CEOs alike are faced with big challenges when it comes to starting up and growing a software-as-a-service (SaaS) company. At the beginning of the venture you must bring your product to market and generate revenues fast enough to avoid going broke. If you are lucky enough to reach the break-even point before your finances run dry, then you must grow fast enough to capture your market and deny would-be competitors. In all phases you must keep an eye on the cost of acquiring customers and the lifetime value each customer returns. Inbound marketing can assist you in all of these scenarios.
Immediately after launch you are primarily concerned with brand awareness and lead generation. You must rapidly fill your sales funnel with qualified sales leads using targeted campaigns across all of the relevant channels, including SEO, SEM, content marketing, social media marketing, print and broadcast media advertising, trade shows and special events. The mix of channels and investment in each one will depend on your product and target markets, typical sales cycle and the amount of funding you have raised for sales and marketing costs. You mission is to optimize this mix to find the best conversion rates that deliver new customers without excessive near-term churn.
After launch you have anywhere from a few months to a year to increase monthly recurring revenue (less churn) to the break-even point, overcoming what David Skok calls the "cash gap". Your strategy here is a delicate balance between signing up new customers and keeping customer acquisition costs as low as possible. You must reduce the "gap" by building inbound leads and converting them to customers in a scalable way without breaking the budget. The more investment you need for both sales and non-sales costs, the harder it will be to reach break even before the cash runs out. Key strategies in this phase are generating brand loyalty and referrals and delivering superior product performance as well as customer service. This is the place where great ideas most commonly meet their demise.
If you survive to break-even without losing your shirt, then you face a new dilemma. Now the marketplace knows about you, and so do your competitors. They also know that you are vulnerable until you can dominate the market and suppress the wannabes. Your only hope is to grow rapidly enough to become the 800 pound gorilla in your niche within a relatively a short period of time. The only way you can accomplish this is through careful planning at the outset and an agile approach to growth. If you have measured and analyzed all of your key metrics through startup and break-even, you know how to invest your marketing resources wisely to fill your sales funnel and optimize conversion rates. You can forecast sales and churn rates, which allows you to ramp up sales teams, production staff and support to meet anticipated demand. You can scale your operation to rapidly capture the market.
Marketing is an important piece of the equation, and the extent to which you are able to align sales, marketing, production and support is crucial in all phases of your SaaS startup and growth plan. Inbound marketing can contribute in each phase through lead generation, customer satisfaction and reduced churn and advanced marketing analytics. If you would like to learn more about these contributions, please join us for an exciting new webinar on December 7, 2011 at 1PM: