What Makes SaaS Digital Marketing so Different?

SaaS (software as a service) is an amazing business concept that capitalizes the idea of users not really owning a license but being able to use it while they’re subscribed. 

It has unlocked a huge portion of potential users who would either not be able to afford the service (or find it too expensive) and turned them into paying customers. Keep in mind that these people would, most likely, never even consider paying for the product. 

The model is incredibly scalable and since you’re capitalizing on the part of your target audience that would otherwise be completely unavailable, what you’re actually doing is making money out of thin air.

Now, in order to promote your SaaS business, you need a different kind of marketing. You see, SaaS marketing is simply digital marketing aimed at businesses with a SaaS business model. This begs the question – what makes it so different? Let’s find out!

1. Focus on customer lifetime value

While there are no return customers without first-time customers, with SaaS, you need to simultaneously pay attention to the task of attracting new customers and keeping your current customer base.

You see, your key objective and the way you see every lead is through their customer lifetime value. The key objective is to make them increase their overall value.

To make the long story short, you’re working on establishing a long-term relationship. 

There are just two ways to do this:

• Convincing them to switch to the more expensive plan: This first task is simple and straightforward; you’re supposed to convince them that they’ll get a better value from a more expensive plan. This can be done by promising better features or by promising a proportional discount.
• Convincing them to subscribe for longer: One of the ways to secure their longer stay with your platform would be to convince them to pick a longer duration of subscription. Some platforms choose to offer you a sizable discount (per month) if you pay for a longer duration in advance. For instance, a month could be $30, three months $60 ($20 per month), and a full year could be $144 ($12 per month).

In both of these cases, your marketing team needs to closely collaborate with the sales department.

2. Emphasis on customer churn rate

The churn rate is the rate at which your customers are canceling subscriptions, and you need to take this very seriously. First of all, this makes you shift your online marketing focus a bit. This is why SaaS marketing is unique since it puts most of its focus on its existing customer base.

Just make sure not to make the mistake of misanalyzing the situation. What we mean by that is that some businesses have a model where the first month is free, but the subscription gets renewed, and people get charged after that.

So, while some may not understand your value proposition requiring you to rethink your overall strategy, many people just cancel the subscription before the renewal date because they never intended to pay for the service to begin. Others forget about it and cancel immediately after they are charged. These people fall under the same category. They didn’t stay with you because they liked the service more than people from the previous category – they just forgot.

You see, one of the things that market analysis teaches us is that some people will never become paying customers. No matter how hard you try and how good your marketers are, they’ll have a hard time convincing a person with no hair that they need a comb. 

It’s important to differentiate between three groups:

• People who need your services
• People who are willing to pay for it
• People who are willing to pay what you’re charging for it

Until you understand this, you’ll always be sidetracked by your inaccurate analysis of the churn rates and their causes. This is just one of the reasons why your pricing strategy and your marketing usually go hand-in-hand.

3. Customer acquisition cost

It’s so difficult to estimate the customer acquisition cost against the customer’s lifetime value. You see, with regular purchases, you have the exact amount of money that it takes for the break-even point. 

For instance, if you’ve spent $10 to convert a single person, as long as they buy the value that’s higher than this $10, you’re in the green. With SaaS marketing, what you’re actually dealing with are months instead of just dollars. You don’t need them to return X times or for their order value to exceed Y amount. Instead, you need to keep them for Z months before it’s paid off. The cost to acquire customers can vary drastically based on the platform, for example email CPMs are extremely different from paid search CPMs. 

In other words, you have to wait a while longer in order to see if your marketing investment actually paid off. Not only that but due to the nature of the subscription and the fact that they can cancel it at any time, it’s even harder to keep track of these things.

Additionally, prioritizing email security through measures like DMARC compliance, end-to-end encryption and multi-factor authentication ensures the protection of sensitive customer data, bolstering trust in your platform.

The key metric to focus on is the MRR (monthly recurring revenue). This is what the world of SaaS is all about. 

In other words, cost control is somewhat more difficult. 

At the same time, it’s not just about the acquisition either. You also need to consider the customer onboarding and add the costs included here into the mix. Here, the industry is a huge factor. For instance, with streaming services, all you have to do is show them the platform, and they already know how to use it. However, what if this is the tool that actually requires a while to master and a lot of tutorials and learning materials prepared by your team? This is not going to be cheap. 

Wrap up

In other words, in order to understand SaaS marketing, you need to understand the SaaS business model as a whole. The point lies in keeping your customers subscribed for the longest time possible and on the most expensive plan that they are willing to buy. 

While analytics are a bit more complex, when it comes to SaaS cost analysis and projections, you’re usually focusing on the MRR instead of analyzing each individual subscriber. 

In other words, when it comes to marketing, you’re approaching each customer separately but when it comes to the financial analysis, you approach it as a whole. 

Nebojsa is a seasoned professional in the SEO and link-building industry with significant expertise and a history of leading successful teams. With a keen focus on client satisfaction, our team at Heroic Rankings has built a reputation for hard work, high standards, and consistent results.