What is SaaS Marketing?

The abbreviation ‘SaaS’ stands for Software as a Service. A SaaS company provides an application that runs in the cloud and continuously provides additions and improvements to this software. The customer, therefore, does not buy the software but takes out a subscription to be able to use the software. As long as the subscription is running, you will automatically have access to all updates and new functionalities. This is why SaaS is sometimes called Software on Demand. The software does not belong to the customer: they only purchase it for the duration of the subscription.

As a SaaS entrepreneur, it is therefore essential to continuously work on customer relationships. After all, you don’t have much to gain from a one-time sale and everything to gain from a long subscription. That is what makes SaaS marketing different from the marketing of most other companies. SaaS marketings are the strategies and activities you set up to ensure that customers commit to your service for a long period of time.

Unique to SaaS Marketing

The fact that a SaaS company does not offer a physical product or a one-time purchase means that the marketing is very different from that of a ‘classic’ company. And that makes sense: if you sell a product to your customers, you can no longer improve your product after purchase. You basically have nothing more to tell your customer. It works differently with SaaS: if the customer finds that the user costs no longer outweigh the user experience, the customer can simply cancel the subscription. The income will therefore come to an end.

From the perspective of SaaS marketing, it is therefore essential to continuously work on demonstrating the relevance of the software. For new and existing customers.

Start researching your ideal customer profile

If you know exactly which customers fit into your ideal customer profile (or ideal customer profile, ICP for short ), executing your marketing strategy will yield much better leads and ultimately more paying customers. So start researching your ideal customer profile by:

• Find out what makes your solution unique compared to competitors.
• Map your target audience, for example, based on industry, a number of employees, specific technology (e.g. Pipedrive CRM users), etc.
• Determine who the decision-makers are and the influencers of the decision-makers.
• Discovering which pain points you solve for them or which ‘jobs to be done’ you make easier for them.
• What does it ultimately deliver to your target group, what is the end result?

4 ways to acquire new users for SaaS

It is not easy to move people from scratch to take out a subscription. That’s why most SaaS companies let their potential customers ‘taste’ their service in one way or another. After all, the best argument you have as a marketer for selling your service is the service itself. There are various ways to introduce people to your product in an accessible way. To find out what works best for your business, experiment with different methods. The method you choose also depends on the pricing model of your SaaS and the complexity of the software.

The freemium version

A popular way to get people to switch to a paid SaaS subscription is by offering a so-called freemium version of the service. This means that in addition to your paid service, you also put a free service online. This service is accessible to everyone. A freemium has enough similarities with the paid version to let people experience the relevance of your product but lacks enough functionalities to make people long for the paid version. An example of this is Dropbox where you can store data in their cloud.

The characteristic of the freemium model is that it is free and that there is no time limit: in principle, people can continue to use the free version without ever switching to a subscription. This is also the biggest disadvantage of the freemium model: it costs a lot of money to run a freemium and in practice, it is sometimes difficult to earn back on the users who eventually become paying customers. If you opt for the freemium model, it can therefore be good to consider whether you link another source of income to it. Think of income from advertising or selling other products that match the free version.

An additional advantage of running a freemium version is that you get a lot of exposure for your company. In addition, you get free access to a large amount of user data. You can then use that user data to improve your product.

Try it out for free

Instead of offering a stripped-down version for an unlimited time, you can also choose to offer your full service for a limited time. This way, future paying users can experience all the benefits of your SaaS for themselves. Usually, such a trial period lasts somewhere between 14 and 60 days. During that period, future customers can test whether your product meets their needs and whether they think your service is actually worth the money.

This method works particularly well if your service is niche and solves a very specific problem. The people who come to this are extra motivated to find out whether your service actually makes their life easier and willing to pay if it turns out to be the case. Many social media publishing tools and CRM systems use the free trial to acquire new customers.

Try it out at a reduced rate

Trying doesn’t always have to be free. If you have good service, you can charge money for the trial period. This can even enhance the perceived value of your service. You can choose to offer a trial week or trial month at a reduced rate. You may also be doing a pre-selection with this: the people who come to try your software in this scenario are already interested enough to even pay for an introduction. A switch to a paid subscription is then a bit less far away. For example, Ahrefs – a SaaS for SEO – offers a 7-day trial for 7 dollars.

Demos

Giving a demo is also a proven way within SaaS marketing to introduce people to a product. With a demo, you give potential customers the opportunity to come into contact with what your SaaS has to offer in an interactive way. That way you work on connection, trust, and remove any doubts. In short: you give people the opportunity to see if your service is the right choice. For example, you can use Google Meet, Zoom, or Teams. But you can also choose to organize webinars or set up 1-on-1 videos.

Measuring SaaS marketing Success

There are several metrics that you should keep an eye on to determine whether your SaaS marketing is effective and how your SaaS company is doing. Below are the most important KPIs:

• Visitors: The more visitors you have, the more new customers you will (hopefully) have. This depends on the:
• Conversion: With conversion, you measure what percentage of the visitors on your website do what you want them to do. You do not only want to look at the number of visitors who eventually take out a paid subscription but at every step in the sales funnel. This gives you insight into the number of initial leads that eventually convert step by step into long-term customers.
• Customer Churn: This is the number you use to measure how many customers cancel their subscriptions. This is an important metric for SaaS companies because it is many times cheaper to retain existing customers than to acquire new customers. As a SaaS company, you want to keep the Customer Churn as low as possible.
• Customer Lifetime Value (CLV): This figure shows how much a paying customer is worth to your company on average. You calculate this by multiplying the average subscription price by the average lifespan of a customer. Divide the total by the number of customers.
• Customer Acquisition Cost: This metric indicates how much it costs to acquire a customer. You calculate this by dividing your marketing costs over a certain period by the number of customers you have acquired with it. If you are just starting out, this amount will be high. The longer you’re at it, the longer you want this figure to drop.
• CAC-to-LTV Ratio: With this metric, you can see how the Customer Acquisition Cost and the Customer Lifetime Value relate to each other. The lower this number, the better. You will then spend relatively little marketing money for gaining value from your customers.
• Monthly Recurring Revenue (MRR): This is the total amount your SaaS company generates from all active paying customers per month. It does not include one-time payments. With MRR you can assess the financial health of your SaaS and project the future revenue based on the active subscriptions.

Start small, think big!

Of course, you want to conquer the world with your SaaS. Still, it is wise to start by conquering a niche. If you know exactly who your potential customers are and what problem you are going to solve for them, it is much easier to target them and positively differentiate yourself from competitors. From there you can grow. You have already gained credibility. In addition, you have to build up a decent cash flow to appeal to a wider audience and thus conquer a larger market segment.

Be creative with the use of marketing channels

As a SaaS startup, you don’t have an endless budget to invest in marketing. This means that, for example, you do not have large amounts of money for the use of paid advertisements. So you will have to make a lot of impact with a limited budget. Then think about:

• content marketing
• Search Engine Optimization (SEO)
• Guest blogs
• Micro-influencers
• social media marketing
• Email Marketing

By using these channels, you can also achieve great results without a large marketing budget. With the help of small experiments, you can already see if your marketing efforts are successful. And when you notice that an experiment is working, you can then scale it up.