How is SaaS Marketing Different From Traditional Marketing?

Post by
Chris Mitchell
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Published:
September 3, 2020
Last Updated:
September 4, 2020

SaaS products can dramatically impact business efficiency, productivity and revenue in the medium and long term. 

Let’s take Salesforce as an example, the world’s most-used CRM. Implementing these types of systems means a significant change in company culture and processes, where every salesperson needs to learn and understand how to use it, and each corporate level of the company may have special requirements and functionalities depending on their duties. Asides from that, multiple systems integrate into it to give users a better understanding of company performance.

If you were to migrate to another system, it’d take a significant amount of time to migrate all the information from that system to avoid losing vital information, and it would also require uploading it to the new system to get it in place, and adapting your business to those new features.  

Of course, not all SaaS products are as complex, and impact your company in the same way. Deciding to implement a new CRM system would be a completely different conversation than implementing, for example, an online video editing software, where the risk is lower, a small group of people will be impacted by this decision, and you can unsubscribe easily from the service at any moment.

Is The Sales Funnel Different In SaaS Companies?

It’s safe to say that SaaS companies generally use a different, more specialized funnel called the AAARRR funnel, or pirate funnel, which focuses on the entire lifecycle of the lead and also focuses on what happens after the initial purchase has been made, versus the traditional funnel, which is more acquisition focused. 

The AAARRR funnel - based on the abbreviation of each one of the stages - is different from the traditional marketing funnel because it is more focused on not only generating a lead, but on retaining and monetizing that customer, which are all processes that happen after the initial purchasing process has taken place. 

Let’s take for example a SaaS company which offers free or “freemium” services in their activation stage to be able to get leads to test that system or to be able to really use it, but with some limited functionalities. The conversion, or purchase, would happen when they upgrade to a premium account. But retention rates and marketing towards current customers is extremely important, since these companies generally start gaining return on investment a few weeks or months after they’ve acquired a license or user.

Examples of these systems could be: Trello, the project management system, or SharpSpring, the Marketing Automation and CRM software.

SaaS Buyers Are More Sophisticated and Empowered Than Ever Before

It’s normal for potential SaaS buyers to do the research online by themselves, looking through web pages and forums before contacting sales (depending on the service offered, a sales person may not even be involved). According to Forrester, 74% of today’s B2B buyers conduct more than half of their research online before reaching out to a sales representative.

This means that providing quality content and having a great online reputation becomes very important for their research. Being able to provide a quick response to leads also becomes relevant as it provides them with a glimpse of what customer service may be like after their purchase. In complex B2B SaaS purchases, the average buying group can be as many as 6-10 people. It’s important to have content that answers the questions each of these people have when evaluating the purchase.  

The Saas world has really exploded in the past years, according to G2 crowd, in 2018 there were over 34,727 software products listed across 745 vertical industries. This means that the competition between them is increasingly more aggressive and ad spend needs to be constant and aggressive to be able to compete.

SaaS Buyers Face Unique Challenges Compared To Average Non-SaaS Buyers

Privacy concerns are also a huge issue. Being cloud-based means depending on the solution’s data security and their policies and procedures to avoid the spread of confidential information. That’s why it’s important for companies to do their research when purchasing Saas products that handle sensitive data.

Implementation complexity is a key component that potential buyers analyze when replacing or buying a new SaaS product. This may involve multiple team members across different areas of the company or hiring external specialists. Incorrect implementation may lead to data loss, process downtimes or incompatibilities.

Pricing models can really vary from one solution to another: they may charge based on company size, number of users, frequency of payment, functionalities, or even a combination of all of these. Some SaaS products may get more expensive as time passes, and more users, functionality, and other aspects are needed. This makes the decision making process complex for companies, as they may have different needs and requirements in the future.

All these are challenges that need to be taken into account when creating a marketing strategy for these products to ensure that target buyers have all of the content available to educate themselves about their problem and decide if your solution is the best fit for their situation..

How SaaS Companies Can Overcome Customer Acquisition Challenges With Sophisticated Buyers

  • SaaS companies should be constantly creating quality content for leads to consume throughout their buying cycle, to be able to answer fundamental questions, and adapt to every stage of the buying process.
  • SaaS companies need to provide excellent customer service and be available to answer the prospects’ questions as quickly as possible.
  • In such a competitive atmosphere, SaaS companies need to be constantly improving their systems, listening to their prospect and customer’s needs and benchmarking the competition.
  • Companies need to be able to answer their lead’s concerns honestly, and be able to tackle their questions in a helpful and frictionless way.

How Are The Goals and KPIs Different In SaaS Compared To Traditional Marketing?

Since these products are mostly cloud-based, pretty much any activity can be tracked and measured. Reporting can make the difference when it comes to understanding your leads and their customer journey, getting to know your investment's ROI, and aligning sales and marketing processes to gain better efficiency. But it can also help you shape your process and how you sell your product or service.

Marketing automation processes based on different interactions with your leads and potential customers, make it possible to better segment and target them with the most relevant messages at the right time, by optimizing and standardizing lead engagement and sales processes.

What are some of the most important metrics for SaaS companies?

  • Monthly Recurring Revenue (MRR)
  • Customer Lifetime value (CLTV)
  • Customer Acquisition Cost (CAC)
  • Months to Recover Cost of Acquisition
  • Customer Churn Rate (CCR)
  • Customer Retention Rate
  • Leads by Lifecycle Stage
  • Leads to Customer Rate
  • Net Promoter Score (NPS)

How Is The Technology Stack Different In SaaS Companies Compared To The Tech Stack Needed In Traditional Marketing?

The main difference between the technology stack for SaaS companies and “traditional” companies is that they generally need to manage more complex systems that integrate internal and external processes, managing multiple clients at different stages of their lifecycle, and need to use multiple channels of communication and advertising that, when integrated, can really provide added value to the funnel. 

Depending on the Saas company’s size and complexity, it’s likely they’re going to use different products to complete their sales and marketing stack.  

Below, we’re going to use two examples to compare the difference in the marketing stack between a SaaS company and a more traditional service company:

  • A cloud-hosted program for graphic designers as a SaaS company.
  • A franchised barber shop, which is a service that needs to be done in person, typically a better fit for a traditional marketing strategy.

Internal Communication

SaaS Company

Saas companies usually rely heavily on developers (who are key to implementing new features and resolving bugs in the system), designers (who prepare the product’s visual workflow and esthetics) and project managers, who are responsible for overseeing the tasks and assuring the projects go according to plan. Depending on the size of the company, they may also need UX and UI designers, marketing teams and other additional resources. 

Tracking their tasks via project management systems is key, for which they’ll usually use systems like Asana, Trello, Basecamp, Monday.com, etc. They’ll probably also need to be in constant communication through chat systems like Slack, which nowadays in some companies can replace a lot of the email functionalities. Email is also vital for today’s communication, so they’ll need to acquire a domain and an email service. Some companies may use email suites like Google Suite, Microsoft 365 or Zoho Workplace, which provides other additional features like presentations and document creation systems.

Traditional Marketing Company

Tasks can also be tracked by project management systems and chat systems, but it’s likely that due to the nature of the company and the amount of people involved, they are more informal about processes and may use personal messaging apps, so their investment in these types of technologies will probably be lower. Depending on the resources available and their needs, they may use free domain emails (ex: @gmail.com or @live.com) or also invest in their own custom domain inboxes.

Webpage Management

SaaS Company

In a really competitive market, getting a relevant, easy to find webpage is key. That’s why they’ll probably need to use an advanced Wordpress website or a custom designed one, which will be more expensive than a company that does not rely so heavily on their website presence. 

This webpage will probably require Marketing Automation systems that will help them create landing pages to easily track their user’s stats. But we’ll get into this more on our next point.

Traditional Marketing Company

Their webpage may not be as important as their social media accounts, so their budget may not be allocated in creating custom, expensive solutions. They may use a site builder to avoid hiring a programmer/designer and being able to modify their webpage at their will. 

External Communication or Direct Communication With Clients

Saas Company

Their communication will probably try to be as complete and multi-channel as possible, making multiple touches through different channels to leads. To be able to create more integrated strategies, this type of company will most likely depend on a CRM and Marketing Automation solution, which they’ll later be able to integrate with other key solutions such as live chat systems, email marketing, survey systems, social media trackers, meeting scheduling programs, campaign tracking, video conferencing systems, etc. 

Traditional Marketing Company

External communication in this type of company may use CRM and Marketing Automation systems, depending on the size, budget and how they manage their customers. This could help them create reminders and schedule appointments. 

But the costs of these systems may be too high for the service they provide. They may use custom CRMs built for that specific type of company.

They most likely have email marketing systems and use Facebook or Whatsapp Messenger to talk and schedule their customer’s appointments. 

Proven, Data-Driven Marketing Techniques For Every Stage Of The SaaS Customer Lifecycle

Awareness

In this stage of the buying cycle, SaaS companies will be focused on gaining visibility and creating interest. They usually do this through advertising in specialized webpages, social media posts, creating quality content and presence in software forums. Depending on the budget they have, they may also be investing in paid search, to be able to target a specific segment of interest, and retargeting, to stay at the top of mind of the customer. At this stage, inbound marketing can play a huge role in generating awareness.

Content marketing is generally an important asset to help gain organic traffic.

What are some of the metrics usually measured at this stage?
Impressions, new website users, returning website users, Click Through Rate, social media results, etc.

Acquisition

Acquisition, in the AAARRR model, is the first interaction with a user. It happens when the lead shows initial interest by interacting with content or the webpage and provides some initial information in exchange. It captures the prospect in the database as a “lead” (which allows to start a targeted communication) and nurtures the potential client to the next stage, by helping them evaluate if the product is the right fit. 

Marketing efforts have to be targeted towards creating trust, better relationships, and making the decision-making process shorter. SaaS companies use content marketing to help accelerate the sales process by providing the customer with a deeper understanding of product, benefits, and related topics, giving the brand a sense of authority on the subject and drilling deep into their customer’s fears and questions.

This acquisition can be in the form of a downloadable asset, like a whitepaper, a free guide, newsletter subscriptions, etc.

What are some of the metrics usually measured at this stage?
New leads, Marketing Qualified leads, Sales Qualified Leads, content downloads, Subscriptions, etc.

Activation

This stage of the pipeline usually consists of the lead’s signup for a free trial or demos. These techniques reduce the lead’s insecurities and help move leads through the pipeline to the next stage.

The main benefits of free trials is that leads who reach this stage are mostly high value and qualified leads, who have already provided you with enough information to start a nurturing campaign and they are learning on their own terms about your service, reducing sales efforts and making follow up questions more likely to be at high-level. 

Marketing’s next goal is to drive them onto a paid service which generally provides them with more benefits regarding features and assistance. 

This is where sales really needs to provide targeted and consistent messages. To be able to do that, marketing automation is key, since it helps them build a strong database, with actions based on triggers, interesting moments, and multi-channel communications based on the leads’ characteristics. 

What are some of the metrics usually measured at this stage?
New trial signups and demos, interactions, lead to sign-up conversion rate, etc.

Revenue

The revenue stage is when the lead passes from a trial or freemium version to a paid service. The most important things marketers need to understand about this stage is that their work doesn’t stop here.  

What are some of the metrics usually measured at this stage?
Customer Acquisition Cost, Average Deal Size, Trial to Paid conversion (SaaS).

Retention

The retention stage is more about making sure the client is happy with the service you are offering, analyzing their engagement and finding value in your product and, later focusing on upselling and cross selling.

Marketers must continue to gain information about how the system is used, and research how to provide a service that the user will want to continue to purchase. This stage of the process is important because acquiring a new customer is several times more expensive than keeping an existing one. 

The best way to retain customers is by offering a positive experience, relevant content and continuous value, like email alerts for new features and products, training and learning material, events and promotions.

What are some of the metrics usually measured at this stage?
Monthly Recurring Revenue (MRR), Customer lifetime value (CLTV), Net Promoter Score (NPS), Customer Churn Rate, Product Usage etc.

Related read: Why Should Marketing Be Involved In Customer Success

Referral

The referral stage of the buying process is about getting your customers to be advocates of your product. For this to happen, they must be very satisfied with your solution and therefore willing to promote it to others.

An active promoter would be a person who responds with 9 or 10 (in a 1 to 10 scale) with how likely they are to promote your product or service in a Net Promoter Score or customer feedback survey.

These strategies tend to be cheaper since your own customers will be the ones “accelerating the sales process” for you. They’ll provide (generally) qualified leads with relevant, unbiased, credible information about their experience. 

Referral Marketing, or sometimes considered as Word of Mouth, can also be incentivized through important discounts and benefits for the referrer.

What are some of the metrics usually measured at this stage?
Referrals, Social Shares, etc.

In Conclusion

Every company and type of industry has their own specific characteristics and requirements. Marketing is all about understanding every part of the selling process: it’s target audience, it’s product/service, it’s selling cycle, etc. The companies that better adapt and cater to these specific needs are the ones that are guaranteed to have a better success at creating leads and better return of investment.

At Intelus, we specialize in working with SaaS companies. You can reach out to us for a free 30-minute consultation to learn more about how to close the gap on your revenue goals, and grow your SaaS company faster. 

Sources:

https://www.saastock.com/wp-content/uploads/2020/02/SaaS-Marketing-eBook.pdf

https://neilpatel.com/blog/how-saas-marketing-is-different/

https://getcodeless.com/saas-marketing-strategy/


How is SaaS Marketing Different From Traditional Marketing?

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