Any SaaS provider knows that marketing for subscription software carries with it significant differences to other industries. Many of the overall concepts, such as inbound marketing and tracking success, can be applied – but they need to be adapted to successfully drive interest, conversions, and subscriptions.
Even within itself, SaaS marketing differs depending on your software. A B2C SaaS provider such as Spotify, for example, will market its product very differently than a large business subscription platform like HubSpot would. And yet, any SaaS marketing strategy includes 5 components that are necessary for success.
1. Attracting Leads with Free Trials
Perhaps more than any other industry, Software as a Service lends itself to the inbound marketing model, thanks to the proliferation of the free trial.
Signing up for a software that charges you regularly, whether it’s $8.99 per month for Netflix or $2,400 per month for HubSpot enterprise, is a significantly higher commitment than merely paying a one-time price. As a result, potential customers are much more cautious, and expect to have a good idea of how the software works before committing to it.
Enter the free trial, an opportunity for users to test out the applicability of the software for their needs for a limited amount of time. Providers, meanwhile, collect relevant contact information of all trial users as a condition for signing up, and generate leads as a result. In fact, free trials that are optimized for conversions are the single best lead generation method for SaaS marketers.
While the free trial is any SaaS marketer’s best tool to attracting quality leads and therefore dominates the industry at this stage, alternatives do exist. Some subscription software and apps use a freemium model, in which free use continues indefinitely – but with limited functions. Others rely on product demonstrations that never give potential users full access to the solution before they become current customers. But each of these two are only variations on the main idea: showcasing a limited version of your software is crucial to generating SaaS leads.
2. Nurturing Leads to Become Subscribers
Of course, leads matter little if they do not convert into paying subscribers. To get there, they need to be nurtured slowly toward the final goal, another inbound marketing concept that is perfectly suited to the SaaS industry.
Lead nurturing, at its core, follows a simple goal: by sending regular and relevant messages to leads in your database, you slowly establish your credibility so that when your audience is ready to become customers, your brand will be on their minds. And because SaaS lead nurturing is set off by a free trial, it can be even more focused and effective.
Unlike conventional lead nurturing, its SaaS alternative has a clear timeline: the duration of the free trial. Once a trial ends without action by the user, the likelihood of a conversion begins to diminish. But during the trial itself, nurturing emails can range widely, from tutorials on various software features to industry topics and trends that establish your brand as a thought leader on that topic.
Traditionally, lead nurturing is focused on regular email messages sent to your audience. But SaaS marketers can enhance the process by adding links to blog posts and webinars that accomplish the same goal with more in-depth topics. In addition, especially toward the end of the trial, building in a sales call can help establish a more personal connection that is often necessary considering the expected commitment on the customer’s side.
3. Retaining Subscribers for Maximum Value
Once your lead nurturing efforts have turned your leads and trial users into subscribers, the work of an SaaS marketer is far from done. Retention matters in any industry. But it is nowhere more important than in subscription software, where the true value of a customer does not come with the initial purchase but with regular payments through the subscriber’s lifetime.
In SaaS, a variety of strategies can help you increase your retention rates. CrazyEgg compiled a relatively comprehensive list of potential tactics, including:
- Raising your price to increase perceived value
- Following up on customer interactions
- Emphasizing engagement from the moment of subscription
- Continuing nurturing after the fact
- Offering software tutorials and tips
- Building a loyalty program to reward longtime subscribers
- Gamifying long-time subscriptions through goals
- Prioritizing quick responses to subscriber complaints
- And more.
All of these tactics have an underlying philosophy in common: the importance of building a relationship with your subscribers. Whether they are consumers looking to stream their music or business managers who need help with their company’s finances, they expect a more personal and frequent contact with representatives of your brands than they would for one-time purchases.
Realizing the commitment they make in signing up for long contracts and recurring payments, your subscribers need just as much – if not more – attention as potential customers. Understanding and embracing this fact can go a long way toward increasing your retention rates.
4. Cross and Upselling Opportunities
You can also increase your retention by offering new and improved versions of your software, or other offerings within your brand catalog. Offering more features within your subscriber’s existing software is also known as upselling, while cross selling refers to selling a new software package to existing subscribers.
You likely have a passing familiarity with both concepts, so we will not get into an in-depth explanation of each in this space. But what we will do is tell you just how crucial they are to helping you succeed in marketing your software.
Why do these concepts work? Because according to numerous studies, selling to existing customers carries with it a significantly higher chance of success than trying to sell to new customers. The cost of cross selling or upselling is low, but functions effectively to accelerate the profitability of your SaaS software over an individual subscriber’s lifetime. As such, it should be a significant part of your marketing strategy.
5. Tracking SaaS Success Metrics
No SaaS marketing strategy can be successful if you don’t know whether or not your efforts are actually working. That’s why SaaS marketers around the globe rely on a core group of metrics to help them track the success of their efforts. These include:
- Churn rate, or the rate at which your customers cancel their subscription. Churn rate can be calculated annually and monthly, and knowing the difference between the two is crucial to figuring out whether your subscribers are jumping off at a worryingly high rate.
- Average Monthly Revenue. Usually calculated per subscriber, this simply tells you how much each of your customers is worth in a given month, and allows you to better plan out your budget for that month.
- Cost per Acquisition, or the total cost it takes to get a new subscriber to sign up. This includes the costs incurred by both your marketing and sales effort, and you can calculate a working average by taking the entire cost over a given period and dividing it by the number of subscribers you gained that month. Cost per Acquisition is especially helpful in connection with:
- Customer Lifetime Value. As the name suggest, this is the average amount your subscribers are worth to you over the lifetime of their subscription. Calculate it by multiplying your average monthly revenue by the average duration your subscribers stay with you. This metric is the single best way for you to calculate the true worth of a subscriber, which allows you to determine just how you should spend your marketing dollars. Naturally, your CLV should NEVER be lower than your cost per acquisition.
Naturally, your metrics will differ based on your software and its price. To learn about the benchmarks you should aim for, visit this resource guide.
Does your SaaS marketing strategy include these five components? If not, you may need help in making your software as profitable as it could be. In that case, contact us for help in optimizing your subscription software and maximizing your profits.