Establishing data truth to drive acquisition, conversion and retention in SaaS marketing
This is the first in a series of content exploring the fascinating world of SaaS and SaaS Marketing. We will be investigating topics around data intelligence, tracking and visualisation as well as the common pitfalls SaaS marketers experience when starting out.
We will be looking at some of the guiding principles and strategies to consider when expanding your SaaS business internationally and discussing the tenets and trends of the industry moving into 2020 and beyond.
For such a snappy acronym, SaaS maps out an increasingly vast business. The subscription software model has conquered the global workplace in the past decade, and Software as a Service describes a multitude of cloud-hosted apps in an industry whose revenues Gartner expects to grow to $85.1bn this year.
What SaaS publishers know is that a SaaS marketing campaign is unlike any other kind. In a fast-moving world, the stakeholders with a say in any new SaaS investment are not simply IT bosses – they are scattered throughout a company, across different teams and external agencies, requiring intelligent and dogged targeting.
From a sales perspective, prospects come in a complex array of conversion types and nurture flows, and these leads follow their own complex set of terms as they slide down the funnel: MQLs (marketing qualified leads), SQLs (sales qualified leads), and more to come.
SaaS often depends on giving away the product, at least for a trial period. The free model comes in numerous different shapes and sizes, and SaaS publishers need a careful strategy to turn the ‘free’ into revenue. The sales cycle can be rapid, too.
In this difficult marketplace, the reassuring news is that, while SaaS marketing campaigns are as varied and unique as the products they are designed to sell, they also obey certain simple strategic rules.
Assuming that the SaaS product you’re marketing is a killer one – because that is the most important part of all – successful SaaS marketing boils down to three fundamental steps:
SaaS products are usually researched and bought online, and publishers need to understand the mechanisms that turn their prospects into clients. The website is the hub of the SaaS marketing strategy, and it must be a finely tuned, relentlessly tested acquisition engine, leading the visitor from idle curiosity through to whole-hearted commitment. Which offers or content deliver the most efficient path to conversion? How best to nurture prospects through to trial? The answers lie in testing, iteration and the kind of insight an experienced SaaS marketing partner provides.
However brilliant a visionary of the SaaS product, for a business to be viable, SaaS publishers need to understand the true cost of a newly acquired lead (cost per lead: CPL) and ultimately, the cost of the newly acquired customer (cost per acquired customer: CAC). Given the highly trackable sales funnel, SaaS publishers have a golden opportunity to draw up sophisticated attribution models that answer fundamental questions about the precise cost of making a sale. Correctly built campaigns, that deliver on all such KPIs, are a science but can be mastered to achieve successful growth.
Retention is the essential stage that turns all that acquisition and conversion work into profit. Gartner research suggests that 80% of future revenue for a SaaS publisher will come from around 20% of current customers. Just a small increase in retention can have an enormous effect on profitability.
So retention brings its own set of KPIs: what is the average lifetime value (LTV) of a customer? What is the average churn rate? How do we ensure that we are correctly calculating the LTV:CAC ratio to ensure we are setting the right CAC targets? Once all these metrics are established, publishers can be clear on exactly what they can profitably afford to pay for a customer, knowing the true value of that customer over time.
SaaS marketing requires seamless agency-client teamwork…
For a business and its SaaS marketing agency to work well together, internal and external stakeholders need to recognise and understand all the agreed metrics and figures and build their joint efforts around them. They need to share a well-defined approach to lead scoring, expectations and timelines. Only then can they be sure that investment is efficient, sustainable and correctly optimised across channels, and that long-term growth will follow. Ongoing optimisation will ultimately drive down wastage and poor MQLs, increasing the quality of new ones and reducing churn.
…and it requires forensic attribution
While acquisition, conversion and retention are the three pillars of SaaS marketing, attribution is the essential prerequisite of a successful SaaS campaign. The key is in multi-touch attribution (MTA) – tracking every step along the funnel, from an ad impression to a click or engagement, then to the point of trial and all the way through to sale.
If marketers don’t put effective tracking in place from the very beginning – which means possessing the ability to attribute every single point on the sales journey – their subsequent SaaS investments may well be in vain. Once they have however, and with the correct KPIs in place, they are primed to navigate and ultimately master the science of SaaS marketing.
The agency and the client must establish a source of data truth from the outset. Only then can we establish trust in the data and make the right decisions for the business and the campaign.
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