Software as a Service (SaaS) companies face some daunting challenges. Principal among them, getting to market, getting to breakeven and getting to market domination before the whole thing goes up in smoke. Marketers can't do much about getting the technology built out, but they can help to rapidly increase sales without blowing the budget.
Unfortunately, the last part is often what kills the deal—the budget. SaaS Sale Teams and Marketers must pay particularly close attention to customer acquisition costs (CAC) in order to survive. Marketing is only one part of the total CAC, but cost-effective marketing plays an important role. Here are a few tips to keep costs in check while increasing monthly recurring revenue.
Successful SaaS companies work hard on reaching likely subscribers rather than large volumes of marginally qualified inbound leads. This involves targeted inbound marketing and demand generation strategies designed to increase Marketing Qualified Leads (MQLs). In general, an MQL is already aware of your brand and is currently either exploring or evaluating your SaaS offering for a possible purchase but has not yet signed up for a free trial or demo (those might be defined as SQLs). We'll handle converting MQLs into SQLs shortly, but first, how do we get more MQLs into and moving through our sales funnel?
The strategy here is to hone your website messaging, blog, subscriber emails and all other communications to satisfy the needs of your buyers. The first step is to develop accurate buyer personas through interviews, ideally with real customers.
Next, we want to create content that will attract targeted buyers and appeal to them enough to convert on content offers and email subscriptions. That content must also be optimized for SEO with on-page factors using current best practices and relevant for most likely buyer search phrases.
Successful companies continue to produce targeted content on a regular basis and use marketing automation to track lead engagement and move them through the sales funnel with more personalized, problem-solving content. This approach is the best way to find and attract new buyers via search. While SEO is by far the lowest cost-per-click strategy, creating high quality content can be expensive. Here are some ways to reduce CAC:
While the inbound marketing methodology is crucial for long-term brand awareness and lead generation growth, it can take many months of consistent content publication to penetrate a new market or develop a solid sales pipeline. Most fast-growing SaaS companies also pursue targeted demand generation campaigns to ramp up MQLs quickly and start producing revenues.
Costs per lead are easier to see in a pay-per-click campaign than they are for content marketing, since there can be more in-house labor or freelance costs involved in creating, designing and promoting content. But if you are in a highly competitive market, costs per click can also get expensive, and if campaigns aren't carefully managed with very specific goals, costs can get out of control quickly. A few tips for reducing CAC in demand generation:
It's not about reducing budgets or controlling costs; it's about getting more qualified leads for every dollar spent on marketing.
Now that we have qualified buyers coming in through inbound and demand generation campaigns, we want to move them through the sales funnel as quickly as possible without alienating them. Once again, the last part is the tricky part. Step 1 is making sure Free Trial CTAs are visible wherever an MQL chooses to go, including website pages, blog, emails, social profiles and landing pages. While the costs for these steps are a bit more subtle than demand generation campaigns, they do involve content strategy, design and marketing automation to personalize the experience and compel MQLs to take that next step. It's all about conversion rates at this stage, and a few ways to reduce CAC include:
Now that we have converted raw leads into free trial subscribers (SQLs), we want to retain them as customers over the long haul, thereby steadily increasing monthly recurring revenue (MRR). To do that, we need to support them in the free trial process and make sure the software fits their needs like a glove and any concerns are addressed.
Traditionally, this step would be handled by a sales team, and, in many cases, it still is. But digital marketers can help reduce CAC by providing additional content and automated outreach campaigns, including:
The goal in all of this is to stay top-of-mind throughout the marketing and sales process and to provide valuable information that will help qualified buyers become customers. By automating at least some of this process, you can reduce, but not eliminate CAC. At some point, a human touch is still needed to overcome objections, clarify issues and drive home the value of becoming a loyal customer.
Photo credit: HA! Designs - Artbyheather
