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Not All of Your Tactics Will Be Change, But the Emphasis Will Shift
|While the SaaS business model is quite different from sales of perpetual software licenses, the marketing tactics are not entirely unique. SaaS companies still go to trade shows, have customer newsletters, and engage in direct marketing. The real difference is not in the tactics, but the emphasis on those tactics in the marketing mix. Here are a few guiding principles of how the buying cycle is different, and the resulting impact on the marketing mix.
Marketing Carries More of the Load – The new IT buyer may be 50 to 75 percent through the buying cycle before they are turned over to sales, according to Forrester and other sources. The new term for this is inbound marketing. In some cases, the marketing department will be responsible to creating the 100 percent of demand flow and the customer signup that turns into the sale itself. So, no more back seat to the sales department – marketing is in the driver’s seat.
Transactional Sales – Many SaaS products generally have a lower price point, or at least a lower-priced entry point. Vendors of this type of product need to think about large numbers of transactions, as opposed to the larger deal focus of enterprise software companies. Generally, SaaS companies are looking to sign up users for a trial or demo, and then move them toward a sale, as opposed to simply setting up a meeting for one of their sales people. There will be much more emphasis on online marketing and email nurturing, and a greater focus on optimizing the website for conversion.
Customer Self-Education – With more of the sale happening before a sales rep ever speaks to a prospect, or with no sales rep involved at all, more emphasis will be placed on materials to help the customer educate themselves during the sales process. Contrast this with the amount of time and energy spent on creating sales tools and conducting training. With the emphasis on customer self-education, more of the marketing mix will skew toward content marketing with the aim of educating the customer on a topic relevant to the product, as well as the company’s product. HubSpot, a SaaS marketing automation company, spends a lot of time and money creating educational content on marketing best practices. Blogs and online tools will increase in importance.
Customer Retention – In the conventional software model, the customer pays more up front to acquire a perpetual license, then pays a much smaller support and maintenance fee (usually 20 to 25 percent) after that. With SaaS, the customer renews at 100 percent of ACV every year, and your business model may depend on making back your CAC in years two or three. So, SaaS marketing teams are much more focused on renewals. Customer communication is that much more important a part of the marketing mix.
Online versus Channel Distribution – It used to be that software companies needed value added distributors and their resellers to scale. Now the Internet provides the scale. Partners will be sought for industry expertise or integration capabilities more so than for distribution reach.Note that as buyers of perpetually licensed, or on-premise, software are increasingly involved in the purchase of SaaS products, the emphasis seen in the SaaS marketing mix will no doubt have an influence on conventional software and hardware marketing, further blurring the lines
How about you? Experienced anything else different with SaaS marketing?