SaaS Marketing: A Comprehensive Guide (Plus Techniques)
Updated September 25, 2023
Software-as-a-service (SaaS) companies develop software that they sell to customers via the internet on a subscription basis. Because SaaS products differ from traditional products, SaaS companies also market in a different way to consumers. If you work in marketing or you're interested in pursuing a career in the field, understanding the characteristics of a SaaS marketing strategy can help you generate brand awareness, broaden your reach and acquire new subscribers.
In this article, we define SaaS marketing, explain how it differs from other forms of marketing, discuss some common marketing techniques to consider and provide a step-by-step guide for implementing your strategy.
What is SaaS marketing?
SaaS marketing is a type of marketing that focuses on promoting and generating leads for subscription-based software products. SaaS businesses typically sell their products in cloud-based applications that customers can access on demand. They may also customize products and upgrades to meet the specific needs of a client organization.
Because SaaS companies usually base their subscription fees on how much data a customer uses or how many users a business adds to their plan, they're always searching for new ways to increase memberships and promote upgrades. The goal of SaaS marketing is to ensure visibility on the market to attract new customers, along with awareness of new offerings to existing customers.
Read more: What is Software as a Service (SaaS)?
SaaS marketing terminology to know
Below are some terms to help you understand SaaS marketing:
Customer acquisition cost (CAC): This is the cost of gaining a new paying customer on any marketing channel. You can calculate it by dividing the total expenses of the marketing channel by the number of paying customers the channel creates.
Customer lifetime value (CLV): This is the average value a paying customer brings to a SaaS company through their subscriptions. You can calculate this value by multiplying the subscription price by the length of the subscription and then dividing by the total number of customers.
CLV:CAC ratio: This is the simple ratio of whether your CLV is greater than or less than your CAC. You can calculate this value by dividing CAC by CLV.
Customer churn rate: This is the percentage of customers who cancel their subscriptions during any period. You can calculate this value by dividing the number of users who left in the period by the total existing users and then multiplying by 100.
Net promoter score: This is how likely a customer is to promote a brand or product. To find this value, you can use a single-question survey that asks how likely customers are to promote the product.
Customer onboarding: This is the process of turning customers who used a free trial into paying customers.
Monthly recurring revenue (MRR): This is the total revenue an organization earns each month by the subscription fees.
How is SaaS marketing different from other types of marketing?
SaaS marketing differs from other types of marketing because it centers on products that are intangible and, often, multifaceted. At the same time, consumers tend to prefer products they can easily understand and examine physically before purchase. Given this distinction between SaaS and traditional products, it's essential for SaaS marketers to be aware of particular factors as they develop their marketing strategy, such as the following:
The target audience: Though SaaS companies may aim some of their products at end users, many others target companies, specifically the decision-makers who aren't likely to use the software themselves. The idea is to persuade leaders that the product can provide their organization with a competitive advantage.
Longer customer journeys: A customer journey is a path one takes from the time they discover a product to the time they commit to a purchase. When it comes to SaaS, you can expect the journey to last longer because it may involve more demonstrations to educate potential customers about the service and a greater deal of persuasion to sell them on the merits of an intangible product.
Tiered pricing: SaaS lends itself to tiered pricing, in which you offer multiple iterations of the same product at different price points. The more heavily featured the iteration, the more it costs, and this allows a SaaS company a point of differentiation against its competitors.
Related: 10 Types of Marketing Models
Top channels for SaaS marketing
Bolster your SaaS marketing strategy by implementing any or all of these techniques:
Content marketing: Creating content that's relevant to your target audience illustrates the usefulness of your product and drives more traffic to your site.
Search engine optimization (SEO): Optimizing the content on your site for search engines can facilitate organic discovery.
Paid search: You might consider compounding your SEO efforts with paid search advertising, making your site and product more visible to a larger audience.
Referral marketing: Take advantage of your current customer base to expand your brand reach through recommendations.
Review promotion: Getting your product reviewed by trusted sources is another method of expanding your reach while building a positive reputation.
Choice limitation: Consider the tiers you offer to consumers. Offering too many options can confuse them about the distinguishing qualities of each tier.
Price transparency: Knowing the price of a product beforehand helps consumers make an informed choice. Facilitate their journey by being transparent about your prices.
Trials and demos: Resolve confusion or indecision about your product by allowing consumers to use it cost-free for a specified period. Using a product can foster an affinity for it, thereby encouraging conversion.
Simplified processes: Sometimes, consumers decide to buy a product but stop short because of a confusing sign-up or finalization process. Make the experience as easy as possible by simplifying all such processes.
Promotions: Use promotions strategically to persuade leads and direct conversions to other products that might interest them.
How to implement a SaaS marketing strategy
Here are some steps you can follow to implement a SaaS marketing strategy:
1. Identify your target audience
The first element of any successful marketing strategy is determining who your ideal customers are. To identify your target audience, ask yourself what sorts of people or businesses benefit from using your software. Then specify their pain points and preferences by developing customer personas — semifictional archetypes that represent key traits based on research, observations and analytics. Customer personas often include:
Demographics: Consider factors like age, sex, geography, education level and socioeconomic status.
Business background: Ask yourself what industries your customers work in, what job titles they have, how large their company is and what their career path might be.
Values and goals: Determine what your customers desire, fear, believe and aspire to in their personal and professional lives.
Influences and sources: Where do your customers get their news and the information that influences their decisions? Also, where do they find new products and what types of marketing channels are they privy to?
Motivations and challenges: Ask yourself what motivates your customers and what challenges may prevent them from purchasing your product. This can help you identify how your software can help them.
Here's an example of a customer persona:
Dayton O'Reilly is a 28-year-old white man who lives in Seattle with his girlfriend. He works for a successful marketing agency and makes $100,000 per year. Dayton enjoys staying up-to-date on technology trends, aspires to start his own marketing agency and gets his news from social media outlets and technology magazines.
2. Choose your marketing channels
Once you've identified your target audience, select which marketing channels are the most appropriate for your software. Some of the channels you might consider are:
Billboards and external signage
To ensure campaign visibility, refer to your customer personas to identify channels they'd use. If your customers spend most of their time online, you'd likely do well to push your campaign on social media rather than through print media.
3. Develop your content
The next step is to determine what marketing content you plan to create for your software. It's important to vary your content because different types of content appeal to different consumers at different stages of the sales funnel. Some examples of content you could use in your campaigns are:
Social media posts
4. Determine your metrics
Before you launch your first SaaS marketing campaign, consider what metrics you can use to measure your degree of success. With these metrics implemented, you can more easily calculate the return on investment for each campaign, identify areas for improvement and continue to optimize your campaigns to produce better results over time. Your metrics may vary based on which marketing channels you choose and what your objectives are. Some common metrics to consider are:
Number of people reached or cost per person reached
Number of engagements or cost per engagement
Number of views or cost per view
Number of clicks or cost per click
Number of landing page views or cost per landing page view
Number of conversions or cost per conversion
Customer retention rate
Number of active trials
Number of followers gained on social media
Customer acquisition cost
5. Generate brand awareness
New SaaS marketing campaigns typically run brand-awareness ads to introduce the software to potential customers at the top of the sales funnel — those who fit the SaaS company's customer persona but may be unfamiliar with the specific brand, software or services. Establishing a social media presence, solving customer pain points and developing a good SEO content strategy are some of the keys to reaching these customers.
6. Provide value
In the next phase of your SaaS marketing campaign, focus on providing value to your customers. At this point, they're likely in the middle of the sales funnel, which means they're aware of your product but remain unconvinced about purchasing it. Some content you can use to provide value and generate interest in your software are:
Longer educational videos
Downloadable guides or worksheets
At this point, focus on metrics such as the number of engagements on a social media advertisement, the number of clicks back to your website and the number of landing page views.
7. Capture leads
Capturing leads means convincing potential customers to purchase your software. By this point in your SaaS marketing campaign, your potential customers have likely engaged with the content you've created. To motivate their choice, create advertisements that provide high value to your leads but also require a commitment from them. Examples of content you might use for these advertisements are:
A free trial or demo version of your software
A free subscription to a weekly digital newsletter
A membership to an online message board or community
A series of webinars or online courses
To allow access to such premium content, you can require your leads to share their contact information. If they sign up, it shows they're interested in your software, and it allows you to send them other marketing materials that can persuade them to purchase your product.
8. Build customer relationships
SaaS marketing continues even after you acquire a new customer, as SaaS companies rely on subscriptions and upgrades to increase their revenue. Continue to provide value to your customers by offering additional premium content, and provide high-quality service by listening to their feedback, responding quickly to their questions and helping them troubleshoot issues. Such measures can help you build stronger relationships with your customers, improve the quality of your software, increase product referrals and retain your current customer base.
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