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How SaaS Marketers Can Help Reduce CAC

By John McTigueMar 3, 2014

reduce saas cac using inbound marketingSoftware 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.

Generate Marketing Qualified Leads

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?

Content Marketing and SEO

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:

  • Ask your thought leaders and subject area experts to join the blogging effort
  • Get the whole company involved in promoting your content on their LinkedIn, Twitter and Google+ networks
  • Join forces with other industry thought leaders in co-authored or co-sponsored blogs, interviews, webinars and speaking engagements
  • Pursue content syndication networks to get your blogs and other content published to a broader, but still targeted audience

Demand Generation and PPC

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:

  • Start with a limited budget in multiple channels, testing for highest conversion rates for both leads and MQLs
  • Create narrowly focused ad campaigns based on likely buyer personas
  • Move budgets into the most successful channels
  • Manage PPC campaigns carefully, paying attention to and suppressing irrelevant searches with negative keywords
  • Keep an eye on PPC costs, especially cost per conversions

It's not about reducing budgets or controlling costs; it's about getting more qualified leads for every dollar spent on marketing.

Convert More MQLs to SQLs

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:

  • In the buyer discovery process (interviews), ask them what would compel them to sign up for a free trial?
  • What barriers are there to signing up?
  • What are they looking for as an outcome to a free trial?
  • What do they need to help them complete the trial?
  • Craft these messages into CTAs and landing pages—make sure you answer all buyer questions and avoid barriers wherever possible

Convert More SQLs to MRR

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:

  • Easy-to-find user resources, how-to-videos, FAQs and user forums to ask and answer questions
  • Online learning centers with in-depth how-to's and tips for success
  • Drip email campaigns offering the above resources to help users successfully complete the trial and answer their questions
  • Blogs, social media updates and personalized content on the website letting users know about new features or tips on new ways to get more out of the software

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.

Next Post: How to Increase Customer Lifetime Value (LTV)

Photo credit: HA! Designs - Artbyheather

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Additional Topics: Tech Marketing
The Author

John McTigue

With over 30 years of business and marketing experience, John loves to blog about ideas and trends that challenge inbound marketers and sales and marketing executives. John has a unique way of blending truth with sarcasm and passion with wit. You can connect with John via LinkedIn, Twitter and Google Plus.
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