When Marketing Automation Doesn’t Work

Don’t get me wrong.  I’m a fan of marketing automation.

I can’t imagine handling my email newsletter, my website, or my blog without automation.  Managing subscribes & unsubscribes, tracking opens & clicks, and scheduling posts manually… that would bury me.

And for companies that send out emails and track responses from thousands of prospective customers, solutions that automate those and other marketing functions are indispensable.  

But here’s the thing:  Marketing automation solutions don’t work by themselves.

In my work with software-as-a-service (SaaS) companies, I’ve seen marketing automation fail for a few reasons.

No “Bucket-o-Content”

Whether it’s referred to as “content marketing,” “inbound marketing,” or some other clever term, most marketing automation solutions rely on content: newsletters, blog posts, papers, infographics, videos, emails, presentations, press announcements, etc.  

Content is the fuel that makes the marketing machine run.  It’s used to generate visibility, attract leads, nurture qualified opportunities, win new customers, and retain and up-sell existing customers.  Without it, the machine grinds to a halt.

But the fact is that most small or mid-sized SaaS companies don’t have a supply of content stacked up on a hard-drive somewhere, ready to be published.

And I know for sure that the monthly subscription to a marketing automation solution does not include a built-in supply of content.  

Somebody actually needs to produce this material.  And in a smaller company, finding that “somebody” who can regularly do that isn’t always easy.

No clear and compelling message

Oh by the way,  when we’re talking about content, just any content won’t do.

To do the job, it needs to be useful and attractive to the audience and articulate a compelling and consistent message.  Bad content is worse than no content.  (See "Content:  More isn't always better.")

Of course, companies can contract out writing assignments or hire video producers.  There are plenty of skilled professionals available to develop content.

But those folks can’t work in a vacuum.  They need guidance.  They need to know the target audience, and the solution’s key features, benefits, and advantages. 

No matter how good they are at their craft, if they don’t know the basics - who should buy the product and why - they’ll have a tough time putting together effective messages.  

To produce effective marketing material, a company first needs to know what it wants to say.  Clear content requires clear thinking. 

And that’s another item not included in the marketing solution’s monthly subscription price.  

The system needs to be managed

Marketing automation solutions don’t run by themselves.

Someone within the company needs to drive the solution.  They need to structure the work flow, segment the prospective customers, set up the tests, queue up the content, collect and analyze the results, and do all the other work that’s needed to make automation work.  

Without careful thought and intelligent oversight, marketing tools will automate lots of functions, but not help the business.  They’ll just do dumb things a lot faster.

All that set-up and management is sometimes a lot tougher than many of the marketing automation vendors let on. 

Sure, the vendors will offer training and support.  But if you’re a small company, don’t underestimate that resources required. 

And to repeat myself, those are resources not included in the monthly subscription fee.  


I don’t mean to deter SaaS companies from adopting marketing automation solutions.  Used smartly, they can definitely improve efficiency and keep customer acquisition costs under control.  (See "Customer Acquisition Ain't Cheap.")  They can let smaller companies market more like big companies.  

But make the commitment with your eyes wide open.  To work well, marketing automation may cost more than you think.


 

3 Ways to Waste Your Marketing Budget

I’ll admit it. 

Over my long career marketing all kinds of technology solutions, I’ve run a few marketing campaigns that flopped: events that attracted no real prospects, email campaigns that generated no serious leads, promotions that drew no response from prospective customers.  

It happens.

And I’m pretty sure that I’m not alone among my marketing brethren.  In fact, if we're trying new ideas and taking a few chances, from time to time some program is bound to fail.

But these occasional duds usually won’t doom an entire marketing effort.  While they’re nothing to brag about,  a program or two that just fizzles won't sink a company.

What's really dangerous are the big mistakes. 

Three in particular can do serious damage to a company’s overall effort to attract customers:

Not measuring

If you’re not measuring the results of your marketing campaigns, you have no idea if they’re working or not.  

Your decisions on which programs to fund and which to cut need to be based on data:  how many leads, qualified prospects, and paying customers did a campaign yield.  

I know there are hazards to attributing a new customer to a particular campaign, but that doesn’t mean you just throw up your hands and give up on measuring entirely. (See "Marketing numbers can lie.")

Making funding decisions based only on a few anecdotes or seat-of-the-pants impressions - “it looked like steady traffic at our booth,” or “we got a few nice comments on our cool video” - is a mistake.  

Unless you’re carefully analyzing results, you could be wasting your marketing budget on one failed program after another.  

No end-to-end plan

SaaS buyers often follow a long evaluation and purchase process, interrupted by other priorities.   If your marketing plan doesn’t span that entire process, prospects will get stuck, or they’ll leak out of the pipeline. 

Spending lots of money on programs that build visibility and drive visitors to a website, for example, won’t work unless they’re followed up by efforts to convert those visitors into legitimate leads and paying customers.  

The same goes for marketing programs that convert leads into customers, but aren’t followed by efforts to bring those new customers on-board.  (Link “How to lose customers in the first 90 days.”)  

Any single program, no matter how matter how many “views,” or “opens” or “contacts” it generates, cannot stand on its own.  It needs to be connected to a well-structured, multi-step process - something that covers the entire customer evaluation journey.  Otherwise, it could simply be a waste of money.  

Remember, the goal of customer acquisition efforts isn’t “views,” “opens,” or “contacts.”  The goal is long-term paying customers.

Poor messages

SaaS buyers are usually busy people, and you don’t have a lot of time to make your case.  (See "Your prospect has a day job.")

There's precious little time to clearly and consistent present what they need to know about your solution:

  • Who should buy it?
  • What problem does it solve and how severe is the problem?
  • Why is it better than alternatives… including doing nothing?

If prospective customers can’t grasp the answers to these questions within a minute or two, then whatever time and money you’re spending on marketing is probably wasted.
 

  • You’re paying for SEO, adwords, or PR to drive people to a website… but visitors won’t wade through multiple pages to figure out why they should be there.  
  • You’re sending out emails and promotional offers, but prospects don’t know why they should learn more about your solution. 
  • Or you’re showing up a trade shows, but nobody walking by your booth has any idea why they should stop and ask for more information.

More than the marketing budget is at risk

Any marketer is bound to run programs or try new tactics that don’t deliver.  It goes with the territory.   

But a marketer that makes one the three big mistakes - inadequate measurement, lack of an end-to-end plan, and ineffective messages - risks wasting a big chunk of the marketing budget.  

And in SaaS companies, sales and marketing costs usually account for the largest single expense. 

That means that spending money on poor programs can do more than just waste your marketing budget.  It can bring down an entire company.

 

 

Don’t put your SaaS marketing plan on auto-pilot

Imagine that last year I had somehow managed to put together a perfect marketing plan: a perfect message and a perfect mix of tactics delivered perfect results.

If that actually happened (not likely, but use your imagination), this would be my first thought as I put together this year’s marketing plan:  Let’s do the same thing again.  

If it worked last year, it should work this year too.  Why do anything different?

That would probably be a mistake, and here’s why:  Things change.

New tactics

Like music or clothes, marketing tactics used to reach prospects come in and out of fashion.  What worked last year might not work this year.

I remember when clever dimensional mailers were in vogue.  For example, you’d send a single walkie-talkie to a prospect, and offer to send the second one if they called to schedule a demo.  I haven’t seen that kind of promotion for awhile.  

More recently, marketers have come to rely on webinars, white papers, blogs, and other content to attract leads.  Even if theconcept of content marketing still works, the particulars usually need to be tweaked over time.  The topics and formats that worked one year might not draw the same response the next year.

It’s often worth allocating a portion of the marketing budget just to try some new tactics.  It’s possible that something you’d never tried before - or never even heard of before - will somehow grab the attention of prospects.  A few years ago, who would have guessed podcasts would be so popular?

And, by the way, keep in mind that some marketing tactics that were once out of fashion can come back into fashion.  I’ve worked with companies that have had success recently with a well-done direct mail piece, sent via snail mail, to reach a well-defined audience.

New competitors

Marketing plans will often need to be adjusted when new competitors come into the market.  In particular, your messages may need to be tweaked to better highlight the advantages of your solution vs. the new competitor.

To respond to a new vendor competing on low price, for example, your website, collateral, and other marketing material might need to call out the advantages of your more complete feature set or your expert customer support team.

In general, I advise companies to stick with the same messages, telling the same story again and again and again.  It takes a long time for a message to sink in with your prospects, so repetition is a good thing. 

But it’s also a good idea to periodically review the message - perhaps once per year - and tweak it.

New concerns and new expectations

Over time, the things prospects care about are likely to change, and the marketing messages will need to change as well.  

In the earlier days of software-as-a-service (SaaS), for example, lots of prospective customers had concerns about SaaS and cloud computing, and they needed to become more familiar with the basics.  “SaaS primers” that included a glossary of terms like “ subscription pricing,” “multi-tenancy,” and “SSAE 16” were a necessary part of the marketing collateral library.  

Most folks are now familiar with SaaS and this material isn’t often needed. (See "Customers Don't Really Care About SaaS.")

Customers’ expectations also change over time.  Things like mobile capabilities, for example, that earlier buyers may have never thought about, may now be at the top of their priority list, and your marketing plans need to present them more prominently.

New kinds of buyers

In some cases, marketing plans need to be adjusted to suit new kinds of buyers.  As markets mature and solutions become more widely adopted, a company may find it’s selling to more mainstream buyers. 

Unlike early adopters, these buyers may have more concerns about support or ease-of-use.  They may also follow a longer evaluation and purchase process, which a revised marketing plan needs to fit. (See "Pivoting from early adopters to mainstream buyers.")

 

Look, if there are pieces of your existing marketing plan that are working well, keep doing them.  But don’t revert to the same plan year after year by default.  Always ask yourself, “Does this still fit?”  

Chances are there have been changes - new tactics, new competitors, new concerns and expectation, and new kinds of buyers - that you’ll want to adjust for.  You can’t afford to put your marketing plan on auto-pilot.  


    

 

Pivoting from early adopters to mainstream buyers

If your software-as-a-service (SaaS) solution is relatively new to the market and you’ve already managed to bring on a group of early customers, congratulations. 

That’s usually solid proof that your product works, somebody’s getting value from it, and people will pay for it.  No small feat.  

But before you go overboard celebrating, I’ve got a bit of bad news:  It gets more difficult from here.

Sure, signing on that first group of paying customers probably was tough.  But signing on 10, 20, or 50 times that number... that's even tougher.

A new kind of buyer

Why does customer acquisition get more difficult?  

Here's why:  you’re now selling to a different kind of buyer.  You’re not just selling to early adopters anymore.  You’re now marketing and selling to mainstream buyers.  

Yes, these mainstream buyers may be in the same industry and they may need a solution to solve the same set of problems.  

But they follow a different evaluation and purchase process.  And your marketing and sales plans need to adjust.

A longer sales cycle

When they evaluate new solutions, particularly those that are critical to their business, mainstream buyers tend to proceed more deliberately.  Unlike many early adopters, who are usually eager to try something new, these folks won’t jump right in. They move forward step-by-step.  

Your marketing plan needs to follow this more deliberate process.  Plan to stay in touch with these prospects over an extended time, and implement programs to carefully nurture them along, one step at a time.    

Trying to rush things along is a bad idea.  For example, don’t expect prospects to jump from their first visit to your website and go directly to a one-on-one demo.  Not many will get your first email and immediately contact your sales rep.

They need more time to get more comfortable with you and your solution before they’re ready to talk with you directly.     

Need more proof

Mainstream buyers need to see more proof that your solution works as advertised.  They want to know that organizations similar to theirs have had success.  Unlike early adopters, they’re not interested in being the first of their colleagues to try something.  

To satisfy their need to see proof, your marketing programs should include a healthy dose of customer success stories, references, and other ways to show that your solution really does deliver the benefits it promises.

Not interested in tech wizardry

Mainstream buyers usually aren’t wowed by cool technology.  They just want a solution that helps them run their business, and they don’t care a lot about what’s under the hood.  (See “Don’t talk techie to SaaS buyers.”)  

They’re especially interested in how easy your solution is to learn and to use.  No matter how sophisticated the underlying technology or how long your list of features, these prospects know that if they can’t figure out how to use your solution - or train their employees to use it - it’s worthless to them.

Talking on and on about your platform, your proprietary algorithms, and your impressive feature list is more likely to distract, overwhelm, or confuse them than it is to impress them.

Rely more on support

Unlike the more adventurous early adopters, the next round of buyers tend to need more help to implement the solution.  Your ability to get them up & running quickly factors heavily in their evaluation.  

Show them your on-boarding and training process and highlight your customer support capabilities.  Show them they’ll be working with a company that understands their business and won’t just leave them on their own to figure stuff out.   

Marketing pivot

Many of the companies I work with gotten themselves through the first stage of growth.   By word-of-mouth or direct contacts, they’ve managed to attract a cadre of early customers.  

But to ramp up beyond that, they need a “marketing pivot.”  They need to adjust their initial messages and tactics to fit a different kind of buyer. 

You may find yourself in a similar spot.  You need to reach beyond the early adopters to attract the broader pool of mainstream buyers.  That’s where you'll find the opportunity to accelerate growth and build a sustainable SaaS business.

 

Winning new customers may be easier than keeping them

I talk with a lot of new customers about how and why they bought a software-as-a-service (SaaS) solution. Here are the kinds of things I hear:

  • “We didn’t spend a lot of time with the free trial.  We just subscribed.”
  • “With such a low monthly cost and no long-term commitment, we figured if we didn’t like the product, we’d just drop it.”
  • “We didn’t spend weeks looking at demos and trials; we just bought it.  Once we used the solution for a couple of months, we figured we’d know whether we wanted to keep paying for it.”

It’s not that these companies didn’t evaluate the SaaS solution seriously.  In fact, often they were considering it to manage a critical part of their business.  

But they didn’t want to spend time looking at slick demos or inputting lots of data into a free trial - data that they’d lose when the trial expired.  

Just do it

They took a different approach:  Just buy it and try it.

After all, subscription pricing is one of the great advantages of SaaS solutions over traditional on-premises software.  Monthly fees are much lower than up-front license costs, deployment expenses are lower, and often there’s no long-term commitment. 

For customers, it’s just easier to evaluate and buy SaaS solutions.

That’s good news for SaaS solution vendors, too.  

Solutions that are easier for customers to buy are also easier for vendors to sell.  Converting prospective customers from “opportunities” into “paying customers” is faster and simpler.

But there’s a catch

But it’s not all good news for vendors.

For most SaaS companies, they need a customer to stay for at least several months, even 2-3 years, to recover the cost of acquiring that customer.  If the customer leaves too early, the vendor will actually lose money, not make money.   (See “Acquiring Customers Ain’t Cheap.”)

For the SaaS sales and marketing team, this means even when they’ve brought in a new customer win, their work’s not done.

Now they need to convert those new customers into committed users.  Success requires more than converting prospects into paying customers.  It also means converting new customers into long-term customers.

Their responsibilities now include helping with on-boarding, training, expert guidance, or whatever else it takes to convert a new buyer into a committed user.  To fill that role, I’ve seen marketing teams add all kinds of “post-sales” activities to their programs:

  • Host webinars for existing customers to pass along advice on using the solution more effectively  
  • Publish customer success stories that share best practices
  • Support online forums where customers can share ideas with their peers
  • Communicate with customers on new features that they should be taking advantage of
  • Establish a “VP of Customer Success” role with responsibility for keeping existing customers happy.

(For more thoughts on effective on-boarding, see “Get SaaS customers off to a healthy start.”)

Another step in the customer acquisition process

I know this isn't the best news for sales and marketing folks - adding more work to the customer acquisition process.  As if it wasn’t tough enough already to build visibility, capture leads, convert them into qualified opportunities, and finally into paying customers.  Now you need another step: retaining new users.

Sorry, but that’s the cost of SaaS.  It may be easier to win new customers, but it’s tougher to keep them.

5 ways your SaaS marketing plan could go wrong

Sorry, but I've got bad news:  No matter how hard you’ve been working on your marketing plan, it still might go wrong.

That’s usually not for lack of effort.  It’s just that software-as-a-service (SaaS) marketing is difficult.  It’s different than marketing traditional on-premises software and it’s easy to make mistakes.

I review the marketing programs of lots of SaaS companies and I see the same kind of mistakes over and over.  

This isn’t an exhaustive list, but here are 5 errors that are especially common.

Ineffective message

Sometimes it’s not at all clear to the prospective customer what you sell, who should buy it, and why.  Most SaaS buyers are too busy already, and they won’t spend lots of time trying to figure out that stuff by themselves. Most won’t wade through lots of technical jargon about your platform, your patented algorithms, or whatever other sophisticated technology you have under the hood.  (See "Don't talk techie to SaaS buyers.")

Most SaaS customers care about what your solution does, not how it works.  Focus on your benefits and advantages, not just your features, and spell out the costs of “doing nothing.”  Explain that putting off fixing the problem comes at a significant cost.

If you can’t clearly and consistently explain your value to the prospect, all the time and money spent on attracting leads is wasted.

Distracted buyers

Most SaaS buyers are busy people.  Besides trying to carve out a few minutes to evaluate your solution, they’re handling HR, Finance, Marketing, Sales, or whatever other function they’re responsible for during their day job.   They’re often distracted by other, more pressing priorities.  (See "Your prospect has a day job.")

Getting over this challenge means an effective marketing plan needs to do at least two things:

Make it easy for the prospect to see the value in your solution very quickly.  When you do get a few moments of their attention, make the most of it.  Whether it’s a free trial, a demo or a video, don’t make them travel down a long and lonely road before they get to an “AHA! moment.”

And second, stay in front of the prospect for a long time.  Eventually many of them will regain their focus and they’ll resume their search for a solution…and you want to be on their radar screen when they do.

Promoting in the wrong places

Some marketing plans promote the solution in the wrong places.  The prospective customers are looking in one place… and the solution is being promoted somewhere else.

As intriguing and popular as Facebook, Pinterest, twitter, or Instagram are, they might not be the place where your prospective customers are looking for solutions.  (See "Looking for customers in all the wrong places.")

Many of the B2B SaaS vendors I work with find a much more valuable audience at “old school” venues, like local business groups or trade publications - maybe not as cool, but much more effective.

Gaps and bottlenecks

Most B2B SaaS purchases aren’t impulse buys.  The buyer usually travels along a multi-step evaluation and purchase process, and marketing needs to be right alongside them.   

The marketing activity needs to cover the entire journey, from first getting attention and capturing a lead, to cultivating it into a qualified opportunity, closing, on-boarding, and retaining a paying customer.    

A plan with gaps means prospects get lost or stuck somewhere along the journey.  (See "Why drive-by marketing doesn't work.")

I’ve seen companies that do wonderful work attracting attention and generating traffic…but then have no efficient mechanism to convert “traffic” into leads.  Other companies sign up lots of new customers… but then lose them after a few months.

Gaps and bottlenecks in the process waste money and slow down the process of winning and keeping paying customers.

No attention to existing customers

When I marketed on-premises software, I only paid attention to existing customers on two occasions:  When I saw them at a user conference or when I needed a customer success story.  That’s it.  

That won’t work for SaaS.  If your marketing plan stops at the point when a prospect becomes a paying customer, you’re going to have a problem.  (See "Your existing customers are prospects too.")

The SaaS business model requires that customers stay around for awhile, at least long enough to recover your customer acquisition costs.  Renewals are essential.  To put it another way, churn kills.

Which means that you need to keep marketing to existing customers.  They need to be reminded regularly of the value your solution brings to them.  That’s marketing’s job, and it should be part of your plan. 

Out of date with customer concerns

Buyers change over time and your marketing plan should change as well.  You can’t automatically use the same messages and tactics year after year.

Over the course of three years, one of my clients has seen their market rapidly mature.  Instead of the adventurous buyers they used to attract - people willing to fearlessly try new technology - they are seeing mostly “mainstream” buyers - people that need more hand-holding and reassurances that they’re doing the right thing.

The only way to detect a change like this is to stay in touch with your customers.  That way you can make the appropriate adjustments.  

You can’t put the marketing plan on auto-pilot.

 

There are plenty of other hazards that SaaS companies run into in promoting their solution - lack of focus, inconsistency, under-funding, and others - but if you can avoid these 5 big problems, you're off to a good start. 

 

Don't talk techie to SaaS buyers

No matter how wonderful your proprietary algorithms, the priceless virtues of your state-of-the-art platform, or the brilliance of whatever other sophisticated technologies you’ve got under the hood of your software-as-a service (SaaS) solution, here’s an unpleasant truth:  Lots of your customers don’t really care.

Most of your them only want to know what your solution does, not how it works.

In fact, sometimes all that techie talk just goes right over their heads.  They're experts in whatever field they're in, but they don’t necessarily have a technical background. 

Limited IT input

After all, one of the key attractions of SaaS is that it usually requires no technical background.  The buyer isn't responsible for on-premises hosting, deployment, on-going maintenance, or periodic upgrades, so the folks in IT with a technical background play only a limited role in evaluating solutions.

When IT does have a role in evaluating SaaS solutions, it’s usually in a secondary, review capacity, not in the lead.  They need to ensure that the solution adheres to certain standards for security, reliability, and performance, and that it can be integrated with other applications. 

And if those issues are likely to come up at some point in the purchase process, you’ll certainly need some marketing material that addresses them.

But that kind of technical detail usually won’t have much impact on the people who take the lead in the evaluation and purchase process.  These folks typically have responsibility for a particular business function:

  • It’s a sales manager that needs to manage deals in the pipeline
  • It's a recruiter that needs to track applicants
  • It's an accounts payable manager that needs to process invoices, and so on.

Speak in the decision-makers' language

Don’t talk techie to your buyers.  Instead, you need to talk to them in the language of a sales manager, a recruiter, or an AP manager.  (See "Your customer has a day job.")

If they’re in a particular industry, you need to speak the language of their industry.  Hospital administrators talk about patients, real estate managers talk about properties, and commercial bankers talk about borrowers. 

You need to show that you understand the unique needs of their particular industry.  They’re the ones buying and using your solution.

Talking techie to them is a waste of time.  In fact, it may get you routed to IT, a place you don’t want to be.  An executive selling SaaS solutions to healthcare companies told me recently that when their sales people get passed to IT, he knows the opportunity is heading toward a dead-end.

Focus on business goals

Instead of hearing about your super fantastic technology, the people buying your solution want to hear about how you can help them reach their business goals.  What can it do to:

  • Boost revenues
  • Cut costs
  • Satisfy customers
  • Retain employees
  • Or attain other business goals.  

Of course, your technology is behind all of that.  It’s what makes your solution go.

But the primary evaluators and decision-makers don’t always need to look under the hood.  Talk to them about what your solution does, not how it works.

 

 

Do your customers know what you're selling?

Sometimes marketing pros focus on the wrong things.  

When there’s a problem attracting prospective customers, marketers usually look first at their lead generation programs.  They ask questions like:

  • Is our email campaign targeting the right people? 
  • Is our website visible to search engines?  
  • Are we participating in the right events? 
  • Are our social media campaigns working?”

And sometimes they will, indeed, find that certain lead gen programs aren’t working.  

Or they’ll find bottlenecks or gaps in the process and they’re losing prospects somewhere in the evaluation and purchase journey.

A message problem, not a program problem

But oftentimes the problem is more fundamental.  The problem is not with any particular program;  the problem is with the message.

The prospective customer simply doesn’t know what the vendor is selling.

They come to the website, read the email, or see them at an event... but they can’t figure out what problem the vendor's solution might solve for them.

They might find a long list of features and even an extended discussion on how the solution is built.  But they won’t get an easy answer to a couple of simple questions:

What is this solution, and what problem does it solve for my business?

How does this happen?

Most companies start out with good answers to these fundamental questions.  In fact, often the solution has been built with the precise intention to solve a particular problem.

One client of mine, for example, started life as a landlord, struggling to manage all the details of managing rental property.  They couldn’t find a cost-effective solution, so they decided to build their own.  Buildium has now been adopted by more than 12,000 other property managers.  And it’s clear what problem they solve for their customers.

But too often this original simple idea - “let’s build a solution to a solve an urgent problem” - gets lost.  Or at least it gets covered over by lots of technical details.  

The messages about the product no longer focus on “what it does.”  Instead, they're all about “how it works.”  A prospective customer needs to work too hard to understand what the solution is and why they might need it. 

And anything that makes the prospect work too hard is usually a bad thing.  These folks don’t have a lot of time to spend trying to figure out whether a particular solution is something they can use.  They have day jobs.  (See "Your prospect has a day job.")

Fixing the problem

The good news is that this problem is fixable.  In fact, when clients call me to ask me to help them acquire customers, I first look at their messages:  Is it clear what they sell and why someone should buy it from them?

Sometimes a few tweaks can help, but sometimes a complete overhaul is in order.

There are a few different ways to develop a clearer, more effective message that better describes the solution:

  • Have an outsider look at they messages, especially someone with an expert eye who’s seen a lot of them.  (Drop me a note if you'd like to talk.)
  • Ask existing customers to explain why they bought the solution and why they find it useful.  
  • Listen to the most effective sales person present the solution to a prospect.  Often they’ve developed a simpler, more compelling message than the “official” version.
  • See how direct competitors present themselves.  While it’s important to distinguish a solution from competitors, it’s worth seeing which elements are working for them.

Create a messaging guide

And once you’ve crafted a concise, clear and compelling value proposition and messages - something your prospective customers will quickly grasp - it’s important to write it down.  

I often do this in the form of a “Value Proposition and Messages Guide.”  (See "To deliver a consistent message, you need a script.")  This is something that you can cut and paste from liberally as they prepare websites, email, white papers, or any other marketing material.

When marketing professionals are struggling to generate more leads, qualify more opportunities, and nudge people toward a purchase, sometimes the problem is in the programs. They’re not run well or they’re poorly targeted.

But often the problem isn’t with the programs; the problem is with the message.  Prospective customers simply can’t figure out what exactly you sell and why they ought to buy it. 


Copyright ©2016 SaaS Marketing Strategy Advisors, Inc.  All rights reserved.

Your prospect has a day job

Just because you may be spending all your time to market and sell your solution, doesn’t mean your prospect is spending all their time evaluating it.

These prospects have other things do to.  In most cases, the person looking at your software-as-a-service (SaaS) solution isn’t assigned full time to evaluate and buy new software for the business.

Instead, they're accountants working in Finance, recruiters working in HR, or sales managers trying to hit their quota. Or if you sell into a particular vertical market, they might be property managers dealing with tenants, consultants working with clients, or dentists treating patients.

Evaluation is an on-again, off-again process

Rarely do they have days or weeks to pore over every feature and function.  And their research is often interrupted, so they can only focus intermittently.  One minute they’re carefully considering your solution, and the next minute there’s something more pressing that’s grabbed their attention.  

Even when they sign up for a free trial, most prospects will only spend a couple of hours actually trying out the product.

It's not that they don't care.  They know the solution may be critical to their business and that making a bad choice will be painful.  The problem is that they simply don't have a lot of uninterrupted time to do a thorough evaluation and make a purchase.

With so little time, in fact, they often end up doing nothing.  When I talk to “lost prospects,” many of them aren’t really “lost” at all.  They’re just “on hold” and haven’t made any decision at all yet.  

I’ve learned a few lessons on how marketers can reach busy prospects like these.

Stay in front of prospects over a long period

Because your prospects can only focus on your solution in a bit of time here and a bit of time there - and you’re not really sure when exactly when that bit of time will be - you need to stay in front of them over a long period.  When they’re ready to refocus on finding a solution, you want to be top-of-mind.

By the way, when I talk about staying in front of your prospects, I’m not saying deluge them with spam.  Educational material on best practices or industry trends will usually make a better impression than a stream of promotions.  And of course, offer an easy way to opt out.  (See "Content:  More isn’t always better.")

Provide a clear path for them to take the next step  

In your communications, make it easy for the prospect to signal that they’re ready to take the next step.  Provide a form, put up a “Chat Now” box, or post a toll-free phone number.  Lead scoring and other techniques can help you know when prospects are ready, but sometimes they’ll just tell you themselves.

Do it cost-effectively

To make this “stay in front of them for a long time” approach work, you need to keep your costs under control.  SaaS companies need to pay close attention to the cost of acquiring customers.  Staying in contact via email, newsletters, and webinars might be more cost-effective than other means.  Save the more expensive outbound calls for prospects who have already signaled that they’re ready to talk directly with someone.

Be ready when they’re ready

When prospects do signal that they’re ready to talk about a purchase, make sure you’re ready too.  Someone should be available to quickly answer the email, pick up the phone, or respond to the “Tell me more” form.  The window of opportunity is open for only a short while.  (See "SaaS buyers are quick to buy.")  If you drop the ball here and ignore prospects that are eager for attention, that’s frustrating for them and a lost sales opportunity for you.

Selling solutions to busy people is a challenge, and for most SaaS solutions, you’re always selling to busy people.  I’ve found, in fact, that when a prospect does have lots of time on their hands, they’re usually not very a good prospect.

 

 

 

 

To deliver a consistent message, you need a script

Here’s the easiest way to waste your marketing budget:  spend money to promote your message… before you know what your message is. 

Until you’ve developed a compelling and consistent value proposition, there’s no sense in broadcasting anything out to the world.

Unfortunately, I see this all the time: a beautifully designed website, a well-produced video, or a clever email campaign that doesn’t clearly convey the company’s message.  They make the prospective customer work way too hard to figure out what’s being sold and why they might buy it.

And to make matters worse, often each of these marketing deliverable tells a different story.  It’s tough enough to make an impression on a prospect; it’s almost impossible if you deliver a different message every time you get in front of them.

Without a consistent and compelling message, none of your marketing programs has any impact.  The money spent on search engine optimization, paid search, email campaigns, webinars, events or whatever else you do to promote your company is wasted.  And in the software-as-a-service (SaaS) world, wasting the sales and marketing budget is a quick ticket to failure.  (See "Bad leads cost you money").

What should someone buy your product?

Here’s the good news:  the problem is fixable.   But it does require work.

For one thing, you need to think hard about what your value proposition really is.  Who should buy your solution and why?

Hint:  it is not just a list of features, no matter how long or technologically sophisticated.  

The value proposition needs to clearly specify:

  • The target market:  The target audience should know “Is this solution designed for me?”
  • The key features and benefits.  “Does this solve my problem?  Why would I spend money on it?”
  • The advantages over alternatives.  “Why should I buy this solution from you?”

Write it down!

But once you’ve thought through a compelling value proposition, you’re not finished yet.  There’s an important second step:  Write it down.

You should prepare a written document.  When I work with clients, I call it a “Value Proposition and Messages” document.  Sometimes they call it a “Messaging Bible.”  It comprehensively addresses all the key issues:  target market, key features, benefits, and advantages.  And it’s all in a single place.  

Depending on your market and solution, the full “Value Proposition and Messages” document could run more than a dozen pages.  However, it should also include a one-page “boilerplate” description and a concise one paragraph version that can be added on to press releases or email signature lines.

Required reading

Before anyone prepares any marketing material - website copy, white papers, videos, whatever - they should first consult this document.  That way, they’ll know exactly what messages they are expected to convey.  They won’t be making it up as they go along.  

Of course, the value proposition can be adjusted over time as conditions in the market change.  But it’s not something you want to be constantly tinkering with.  Get the messages right, and then use them over and over and over.  Consistency is a good thing.  

Working from a single written document makes it easier to be consistent from one marketing deliverable to another.  Everyone is working from the same script.  The website, videos, and webinars, all sound like they’re from the same company, promoting the same solution.  Wherever and whenever a prospective customer sees you, they get the same message every time.

 

Nothing simple about SaaS benchmark metrics

There are lots of simple questions about SaaS that don’t have simple answers.  Here are a few I hear all the time:

  • How much should I spend on sales and marketing to acquire customers?
  • How many leads do I need to attract?
  • What’s the right leads-to-paying customer yield?
  • What’s an acceptable level of attrition?

There are certainly plenty of surveys and published benchmarks on SaaS metrics that try to provide guidance.  Just do a Google search on "SaaS conversion funnel."  

And some of the rules-of-thumb you'll find can be helpful.  For example, it’s tough to make the SaaS business model work when attrition exceeds 10 percent.

Use caution with rules of thumb

But you should be careful not to take these SaaS benchmarks as gospel.  Just because they apply to some SaaS businesses doesn’t necessarily mean they apply to yours. 

Though some survey may show, for example, that 50 percent of leads should convert into paying customers, it’s easy to imagine a scenario where a business could succeed with only a 20 percent conversion, or at the other extreme, a scenario that requires an 80 percent conversion.  

Focus on CAC/LTV and payback period

Ultimately all that matters is this:  Can you earn back more than you spend to acquire a customer, and how long does it take to do that?  

It’s all about the average customer acquisition cost (CAC)/long term value (LTV) ratio and the payback period.  (I've written about this in "Acquiring customers ain't cheap" and elsewhere.  David Skok and others have also written about the topic at length.)

Realistically, a successful SaaS business cannot afford a CAC/LTV ratio that's greater than 1.  You cannot invest $1 in sales and marketing expenses and get 75 cents in return.  If you put one dollar in and three dollars come out, that's good.  One dollar in and ten dollars out is even better.  In any case, the LTV must exceed the CAC, eventually.  

The payback period tells you more precisely how long “eventually” is.  The longer the payback period, the deeper your pockets need to be to sustain the business.  SaaS companies that can recover their customer acquisition costs in less than one year, for example, need less capital than those that require three years.

No single "right" answer

Working within those guidelines however, there are plenty of ways for a SaaS business to succeed.  A company with a high subscription price and long subscriptions can afford a high customer acquisition cost.  It could succeed despite low conversion rates and high attrition.  For them, a lead-to-paying customer yield of 10 percent and attrition of 20 percent, for example, may be sustainable.  Obviously, there’s an opportunity to operate more efficiency, but a high LTV can cover a lot of sins.

At the other end of the spectrum, a company with lower subscription prices and shorter subscription terms needs to be much more efficient with its customer acquisition spending.   To succeed, it may need to hit a lead-to-paying customer yield of 40 percent and attrition below 5 percent.  For them, operating at optimum efficiency is critical for survival.

By the way, if your company finds itself at either of these extremes - or somewhere in the middle - give me a call.  I may be able to help you get more from your investment in sales and marketing.

I wish there were simple answers to some of the basic questions... but there really aren’t.  There’s no “right” level of spending to acquire customers, no “right” leads-to-paying customer yield, and no “right” level of attrition.  It all depends on your particular business and your particular market.

 

Content: More isn't always better

When it comes to content marketing, more isn’t necessarily better.  If one blog post per month is good, it doesn’t always follow that two posts will be really good.  In fact, it might be worse.

Don’t get me wrong, I’ve seen content marketing work.  It can be especially effective for software-as-a-service (SaaS) companies that need to keep customer acquisition costs under control. 

If you provide good content - blog posts, newsletters, white papers, webinars, infographics, etc. - prospective customers are more likely to find you.  And that’s usually a lot less expensive than you trying to find them.

Quality vs. quantity

But effective content marketing work doesn’t mean pushing out a deluge of content.  

For one thing, producing good content isn’t easy.  I mean “good” in the sense of “useful to the intended reader.”  You want them to find value in the material.  Prospective customers should be impressed with your expertise, not your word count.    

Some folks can crank out useful content day in and day out, but unless you’re Dear Abby, it might be better to give yourself more time to pull together your thoughts before publishing.

Over-burdening your audience

Also think about content from your readers’ perspective.  Even if you do have the skill and bandwidth to crank out lots of content, do they have the bandwidth to read it?  

Remember, in the SaaS world, the person you’re targeting is usually a very busy person.  Besides evaluating solutions for their business, they have another full time job.  While they’re thinking about HR software, they’re also running the HR department.  While they’re considering marketing automation software, they’re running marketing campaigns.  Or while they’re evaluating, financial management solutions, they running Finance.  It’s not like they have all day to read, watch or listen to everything you push out during the course of a day or a week.  

A few thoughtful pieces are far more valuable to your prospective customers than a non-stop barrage.  There is big difference between helpful content and spam.

 

Looking for customers in all the wrong places

When asked why he robbed banks, Willie Sutton explained “because that’s where the money is.”

Not that marketers are bank robbers, but the same idea applies to finding prospective customers.  If you want to get their attention, you need to go where they are.

If you’re at the wrong place, it’s unlikely prospects will see you.

This idea certainly sounds logical.  In fact, it may sound blatantly obvious.

So why do so many companies ignore it?  Why do they spend time and money on marketing activity that doesn’t get them in front of prospects?  

It’s not that they have money to burn, especially if they’re software-as-a-service (SaaS) companies.  For these companies, spending too much on customer acquisition costs is a ticket to failure.

Infatuation with shiny new objects

One reason I’ve seen companies spend money to be in the wrong place at the wrong time:  an infatuation with novelty.  They’re mesmerized by new marketing tactics and channels.  

Right now, most of the new and novel techniques are intended to generate visibility online.  Companies are spending a ton of money, for example, on search engine marketing and social media marketing.  I’ve seen companies posting multiple blogs post per week, regularly updating their Facebook pages, pushing out a steady stream of tweets, and doing lots of whatever you’re supposed to do with Pinterest.

I won't dismiss these things out of hand, and neither should you.  But if your customers aren’t paying attention to these social media channels, most of your work there is wasted. 

If a prospective customer is looking for a SaaS solution that’s critical to their enterprise, something they’ll be spending thousands of dollars on, are they really going to be looking for it on Facebook?

There are some products and markets where a social media campaign is a perfect way to get in front of prospects.  But they’re not always a good fit for enterprise SaaS solutions.     

And by the way, while marketers are fixated on new tactics, they’re probably overlooking some tactics that may be old, but may be much more effective for them.  I’ve worked with clients that have found that participation in well-selected trade shows or USPS mailings- yes, snail mail - can attract lots of qualified opportunities.

Don’t know where the prospects are

Here’s another reason companies look for prospects in all the wrong places:  They just don’t know the right places.

Marketers can make all kinds of guesses about their prospects’ thought processes.  And some of these guesses are fairly sophisticated and involve deep demographic and behavioral analysis and the development of detailed “buyer personas.”

But sometimes all this analysis doesn’t give much guidance on precisely where you might find these prospects.  When they're considering a new solution, where do they go, what do they look at, and who do they talk to?

When I work with clients to build an effective customer acquisition program, I often talk with prospects and I simply ask these questions. 

Sometimes they’ll talk about searching online, but often they’ll mention a particular trade show or publication.  And sometimes I hear of totally unexpected sources.  I’ve worked with a client whose customers have found them through state-mandated licensing classes.  Another client found that one particular independent newsletter writer was virtually required reading for people in their market.

Once we figure out where these prospects go when they’re looking for a solution, it’s a lot easier - and less expensive - to get in front of them. 

Why Drive-by Marketing Doesn't Work

So you’ve just shipped your new software-as-a-service (SaaS) solution, and for sure you’re eager to tell the world:  get out a press announcement, roll-out a search engine marketing campaign, sign-up for industry events, and whatever else you can think of.

Here’s some advice:  Slow down.

As tough as it is to resist the urge to do something, hold off a bit before going full blast with all this marketing activity.

And if you’ve already started, hang on and take a deep breath.  You may have already found that all this activity isn’t delivering the results you were expecting.  The hodgepodge of tactics and the drive-by approach is taking up lots of time and costing money, but at the end it’s not generating much business.

When SaaS companies find themselves in this bad spot, there’s usually two culprits to blame:  

  1. A poor message
  2. No plan.

The prospect doesn’t really care how your solution works

I’m sure you can do a great job explaining how your SaaS solution works and what each of its functions do.

But the prospective customer has other issues on their mind, such as:

  • Who is this for?
  • What problem does it solve for me?
  • Why is it better than alternatives?

It doesn’t really matter how well you execute on a search engine marketing plan, direct mail, or other tactics.  Without a well-thought-through value proposition and messages that answer these questions, the prospective customers won’t respond.  They really don’t care.

Activity without a plan doesn’t move you forward

Just because you’re scrambling to execute on all kinds of marketing activities doesn’t mean you’re making any meaningful progress in the right direction. 

Effective customer acquisition requires a well-structured plan.  It needs to walk through each step of the evaluation and purchase process:

  • Build visibility and generate leads
  • Convert leads into qualified prospects
  • Close prospects into paying customers
  • On-board customers
  • Retain and upsell

Drive-by marketing is unlikely to get prospects through this entire process.  Instead you’re likely to be stymied by bottlenecks and gaps.  Perhaps you’ll generate a huge volume of leads, but find yourself with no mechanism to convert them to prospects, or you'll close a steady inflow of new customers, but have no way to make them successful and retain them.

You can experiment with a whole range of marketing tactics.  There are no hard and fast rules about what might work for your particular audience.  But without a compelling value proposition and a well-structured customer acquisition plan, you may be just wasting time and money.

Competing in a crowded market

First a confession.  Every once in awhile I get a call from a SaaS company looking for help with their value proposition or customer acquisition plan, and my first thought is “Are you kidding?!” 

The company tells me that they’ve developed a wonderful solution with a boatload of impressive features.  But... they're selling into a market that’s already crowded with other vendors. 

Just what the world needs - another HR or CRM or email marketing or <fill in the blank> solution.

Finding an unmet need, a hole waiting to be filled

But on second thought, I think maybe it’s not so bleak after all.  Maybe we can make the case that the world does, in fact, need another solution.  

The challenge is to figure out a way to present this new solution as something different and better than the other choices that are already out there.  We need to determine if there's an important unmet need in the market that this new solution can fill.

Sometimes being late is an advantage

By the way, sometimes there’s an advantage to being a late-comer to the market.  

The early entrants have already done much of the missionary work educating the market.  Customers are already familiar with the category.

Having had more experience with other solutions, the customers may better understand their needs and preferences. It’s easier to determine what’s really important to them

A late-comer can also learn from the experience of the established vendors and avoid their mistakes.

Tough to differentiate on features or price

Sometimes, companies’ first inclination is to try to differentiate themselves on features.  “Our solution has this function and the others don’t.”  

Unfortunately that’s hard to pull off.  For one, getting prospects to carefully evaluate all their choices feature-by-feature can be tough. 

Besides, since SaaS companies can develop and deliver new functions fairly quickly, it’s hard to sustain this advantage for very long.

Others will consider positioning themselves as the “lowest price” solution.  There are ways to make this approach work, but it can present challenges, especially when competing against larger, more established vendors that have deeper pockets and can match the low prices.

Lots of options to look different and better

But there’s no reason for SaaS companies to limit their differentiation options to just features or pricing.  

They could, for example, decide to position themselves as the vendor providing the best support or expert guidance.  

Or they could highlight the fact that they specialize in a specific industry or market, and they better understand the needs of those particular users.  

Or they might consider making a virtue of their smaller size and claim that they are more attentive to each user.

Or… whatever other benefit that might be valuable to the prospective customer.  (Contact me if you need help figuring that out.)

If you’re competing in a crowded market, trying to stand out from the rest isn’t easy… but it’s usually not impossible.

 

Why your prospects are ignoring you

Trying to connect with someone while they’re scanning their Twitter feed, replying to texts, and staring at a full inbox, while desperately trying to meet deadlines for whatever deliverables are on their long to-do list isn’t easy.  But if you’re the poor marketing person trying to reach prospective customers, that’s exactly what you’re up against.   

And that’s especially true if you’re marketing a software-as-a-service (SaaS) solution.  That’s because the person evaluating the solution is often the same person that will be using the solution.  

The evaluator is the buyer

If you sell an HR solution, you're trying to reach the HR manager.  If you sell a sales automation solution, your audience is the sales executive.  If it’s a marketing automation solution, it’s the marketing professional.

When that's the situation you face, here’s the challenge:  All of these folks are busy.  They all have a full time job.  As much as you’d like to think otherwise, these folks have other things to do besides evaluating your solution.  

Gone are the days when an expert from IT may have taken the lead in finding and evaluating software solutions.  It's a lot different for most SaaS solutions; no one has that dedicated assignment.

If you're the marketing person, what that means is that you need to work extra hard to grab a slice of your prospective customer’s attention. 

Here are a few idea to help:

Easy to grasp message: Whatever it is that your solution does, you need to articulate the value clearly and concisely.  If you force the prospect to work too hard to figure out how you can help them, they simply won’t bother.   

Create urgency.  The prospective buyer needs to feel a sense of urgency about the problem that your solution addresses.  They need to know that every month, every week, every day that they put off solving the problem, their business suffers… badly.  Evaluating and purchasing a solution is not something they can afford to put off for long.

Talk business benefits, not technology:  Remember that your SaaS buyer typically is in sales, marketing, finance, HR, or some other non-IT role.  They care about solving business problems: closing more business, optimizing marketing programs, improving cash flow, filling open positions, or whatever it is in their job description.  

When you talk to them about your solution, you need to talk to them about business benefits, not just features and functions.  They care more about what your solution does and how it can help their business;  they don’t care so much about how it works.  

Be consistent:  To get through to these busy buyers, repetition works.  They usually need to hear your message over and over before it has an impact. 

If you’ve crafted an effective value proposition - something that is easy to grasp, creates a sense of urgency, and addresses business benefits - tell the same story everywhere.  The prospective customer should see it on your website, at events, in sales presentations, on webinars, in papers, and anywhere else you’re promoting your solution. 

Resist the urge to constantly tweak the message.  You may be sick of hearing yourself say the same words every time, but that's what it takes to get through to your prospective customer.

Bad leads cost you money; they don't make you money

I know this is hard to believe, but sales people occasionally complain about marketing.  And they usually moan about two things in particular:

  • Not enough leads
  • Poor quality leads

I've seen this a lot, so I can tell you how lots of marketing people react.   They focus on fixing the first item - generate more leads -  but pretty much ignore the second - improve the quality.

Why?  Usually because it's just easier and faster to crank up the lead volume:  spend more on pay-per-click, add a couple more events to the calendar, or push out more direct mail.   Voila!  More leads.

At some companies, in fact, the marketing team's compensation scheme may be tilted to encourage this.  They pick up a bonus for hitting some target number of leads.

A "suspect" is not a "lead"

Of course, if you've been through this kind of thing before, it's easy to see the fly in the ointment here.

The fact is that lots of these "leads" are not really "leads" at all.  Many are really just "suspects" or "contacts."  They're names of people that may be interested in buying at some point in the future... but not yet.  You know very little about them and they're not at all ready for a direct conversation with a sales person.

So what happens when we pass these "suspects" along to a sales person who then tries to get in touch with them?  Usually two bad things:

For one, the prospects are bothered and annoyed.  They don't pick up the phone, reply to an email, or give a call back.  Why would they?  I know when I get a phone call that starts with "I see you were just on our pricing page," that's doesn't make me feel warm and fuzzy.

Yes, I know there's all kinds of research that says you need to connect with a prospect within 5 minutes of their inquiry, and that may work when it's an inquiry from a qualified prospect.  But does downloading a white paper or signing up for a webinar really count as an inquiry from a qualified prospect?

How to waste an expensive resource      

Here's the other bad thing that happens when you chase down these unqualified prospects: you end up squandering one of your most valuable and expensive resources - sales people.

According to a survey conducted by Pacific Crest Securities, in software-as-a-service (SaaS) companies that sell through field or inside sales teams, sales expenses account for the largest portion of customer acquisition costs (CAC). 

 

CAC Composition: Sales vs. Marketing Cost % of CAC

 

For SaaS companies that need to keep customer acquisition costs under control - and by the way that basically means all SaaS companies - wasting sales resources is not a ticket to success.

Tossing "suspects" or "contacts" from the marketing team over to the sales team just causes more problems.  Where sales people were once complaining about sitting on their hands, without enough prospects to call, now they're complaining about wasting time trying to chase down people who aren't ready to talk to them. 

Cultivate "suspects" into "leads"

Many of these "suspects" need more time to educate themselves.  They're still at the beginning of their evaluation process and need to better understand the options available to them.  That takes time.  Remember, these are busy folks and often get interrupted by other priorities.

Using sales professionals to chase these suspects is too expensive.  Instead, SaaS companies should be cultivating them, nurturing them until they are ready. 

So what's this "cultivation" all about?  It's really just a cost-effective way to stay on a prospect's radar screen.  When the prospect does focus again on whatever the problem is that you solve, they'll have you and your solution at the top of their mind.

White papers, newsletters, webinars can all be effective cultivation tools.  (You should see what works best for your particular prospects.)  

The key is to find some way of staying in touch that's relatively inexpensive, educates the prospect, and most importantly doesn't require an expensive sales person. 

And whatever method you use, it should provide an easy way for the prospect to signal that they're ready for the next step... a way for them to raise their hand and indicate that they are now ready for a direct conversation. (Contact me if you need help with this.)

I doubt I have the key to everlasting peace, harmony, and love between sales and marketing.  But if you're in marketing and you hear complaints from the sales folks about leads, here's an idea: 

Think first about the quality of leads, before you think about the quantity... not the other way around. 

Simply tossing more suspects or contacts into the pipeline, without a way to cultivate and qualify them, wastes time and resources.  And it won't make you any more popular with sales.

5 SaaS Marketing Myths

With 150,000+ people jamming into Dreamforce earlier this year, I think it’s fair to say that this “SaaS thing” is for real.  Customers are definitely getting smarter about how to use software-as-a-service (SaaS) solutions, and vendors are getting smarter about how to sell them.

But even so, a few persistent myths on how to market SaaS solutions still linger.  Some ideas probably once made sense, but no longer apply.  Others never really made sense… but they seem to stick around anyway.

1.  SaaS is a differentiator

This certainly falls into the category of “It made sense at one time.” 

But touting that you’re “SaaS” in 2015… well, it’s just not that big a deal anymore.  (See "Customers Don't Really Care About SaaS.")

Of course, you want to say you’re a SaaS solution somewhere in your description, but highlighting “web-based” or “runs in the cloud” is not really necessary in the headline anymore. 

For one thing, it’s better to talk about the benefits of SaaS, not "SaaS" by itself:  rapid deployment, regular updates, fewer IT resources, etc.  

Moreover, in many markets, most of of your competitors are also marketing SaaS solutions.  In fact, prospective customers often just assume that any modern application is running in the cloud.  So saying you're "SaaS" just doesn’t make you stand out.  

2.  Free trials are essential

I remember talking to a group of aspiring SaaS entrepreneurs a few years ago, all of whom described their marketing plan like this:  “We’ll put up a free trial on our website.”

That idea didn’t make a lot of sense then, and it doesn’t make a lot of sense now.

Of course, free trials do work for lots of SaaS applications.  Bur not for all of them.  

Sometimes a free trial just isn’t the best way for the prospect to really see the value in your solution.  Maybe they don’t have time to put in the data that’s required, or maybe they don’t want to risk trying out an application across their entire organization.  (See "Free Trials Don't Always Make Sense.")

And of course, even if prospects do take advantage of the free trial, you still need to do work to convert the trialer into a buyer.  That usually doesn't happen by itself, especially for B2B applications.

Instead of defaulting to free trials, SaaS companies should think about alternatives, such as a money-back guarantee, a no-obligation contract, or maybe a “sand-box” where prospects can play with the app.  Heck, sometimes a good old-fashioned demo, conducted by a skilled sales support engineer, is the best way to show off your solution.  

3.  You can do marketing on the cheap

It’s absolutely true that marketing SaaS solutions comes with its own set of daunting challenges.  Among them is the “Wimpy” challenge, named for the character from the Popeye cartoon, whose signature line was “I’ll gladly pay you on Tuesday for a hamburger today.” 

That’s a decent description of how the SaaS business model works.  You get paid in the future for the sales & marketing expenses you make today.  It’s not at all unusual to take 2 or 3 years to recover the customer acquisition costs.  Which explains why it’s especially important for SaaS companies to be careful with their sales and marketing expenses.  

But that doesn’t mean SaaS marketing can be done on the cheap.  

Inbound marketing or content marketing, which puts “bait” in front of prospective customers will usually be more cost-effective than indiscriminate cold-calling, but good content isn’t free.  Even if you can push it out via social media or email for little cost, preparing compelling content - blog posts, papers, videos, email newsletters, whatever - requires time and/or money.  (See "Good Content Marketing Requires Good Content.")

And then of course, once you attract the attention of a prospect with your content, you need to cultivate and close that opportunity.  You may need an inside sales team, a channel partner, or even face-to-face meetings.   Again, none of those tactics are cheap, especially for B2B solutions.

4.  One clever “hack” is all it takes

I’m not a big fan of the term “marketing hack.”  Or at least, I don’t buy the idea that clever gimmicks will somehow unlock the secret of acquiring and retaining customers. 

Sure, I can appreciate a smart marketing tactic as much as the next guy, but looking for one, or even a handful of these tactics to do the job just isn’t a sound approach.

Acquiring and retaining customers is a long-term process.  Companies need to build visibility, attract leads, cultivate opportunities, close them into leads, and then on-board, retain, and upsell them. There’s plenty of room for clever, creative, even ingenious tactics, but marketing SaaS solutions, especially to enterprises, is a multi-step process.   

It requires a well-structured, end-to-end plan, and a lot of work to carefully execute it.  There’s a lot more to it than a few clever “hacks.”

5.  “Old” marketing tactics don’t fit SaaS

There’s plenty that’s new about SaaS technology and the SaaS business model, but that doesn’t necessarily mean that the way people evaluate and purchase solutions is new, too.

In fact, prospective customers in some markets still use “old” ways to find out about solutions.  They go to trade shows, get an unsolicited direct mail piece, or ask a colleague.  Just because these tactics may be “old” and they were established long before SaaS - even long before software - doesn’t mean they won’t work for SaaS solutions.  (See "Old Tactics Can Still Work for SaaS Marketing.")

Maybe they’re not as leading edge as social media, search engine marketing, or viral marketing campaigns, but don’t automatically rule them out of your marketing mix.  If that’s how your customers evaluate and buy solutions, do it.  (One way to know how customers evaluate and buy solutions… just ask them.) 

And don’t be afraid to try a new, or an old, tactic. If it works, do more.  If it doesn’t, try something else.  

 

As markets mature, marketing gets tougher

You’d think that as markets became more mature and people already understood what your solution does, it would be easier to promote and sell.  Not exactly.

Sure, you don’t need to do as much missionary work, educating prospective customers on the basics.  They’ve read enough or seen enough from others in their industry to know what your kind of solution can do.  Established solutions like ERP or CRM, for example, are broadly understood by now.

But while you’re relieved of the basic educational work, marketers face a different challenge.  As markets mature, the buyers change.  

Buyers are really busy

For one thing, these mainstream buyers often have less time and less inclination to investigate your solution.  Mostly they’re interested in how you can solve an urgent problem.  They don’t much care about how the product works.  

These folks have even less time to sort through your website, email, or other marketing material to figure out what you can do for them.  

If your early-adopter customers gave you 90 seconds to capture their attention, figure the mainstream customers will give you about half that time.  You’ve got about 45 seconds to hit them right between the eyes.

Not trail blazers

Marketers should also know that these mainstream buyers have little interest in being trail-blazers.  They’re happy to let the earlier adopters suffer through the learning experience of refining new, unproven products.  By waiting, these mainstreamers expect that by the time they adopt it, your solution is ready for prime time.

To appeal to this less adventurous buyer, marketers should be touting reliability and proven results, not leading edge technology.  The mainstream adopters mostly want to know that others have already had success with the solution.  Solid references and case studies carry more weight than technical spec sheets.

Listening for the change

To know when your market is shifting, you need to pay attention.  You’ll hear different kinds of questions from mainstream vs. leading edge prospects.  You’ll detect an even shorter attention span or at least less tolerance/interest in technical details.  You’ll see more people finding you through referrals and a greater reliance on customer references.    

You’ll detect this in discussions your sales people have with prospects.  You can also ask new customers directly about their evaluation process.  (FYI, contact me if you want help in conducting these interviews.)

If you’re not paying attention to changes in the market and a shift in the kind of prospects you’re addressing, you’re liable to find that your growth stalls.  Despite an expanding overall market, you’ll see your cost of customer acquisition going up, and the return on you sales and marketing investment going down.  Neither of those are a good thing for a software-as-a-service (SaaS) company.

 

Your toughest competitor… inertia

It's possible that the competition for your technologically sophisticated, software-as-a service (SaaS) solution is some other vendor's technologically sophisticated SaaS solution.  

Some markets are jam-packed with vendors peddling SaaS solutions, all scratching each others' eyes out to win deals. 

But while your battling tooth and nail with other SaaS vendors, don’t forget about the other competitor in the picture:  inertia.

In many cases, in fact, inertia may be your toughest competitor.

A high tolerance for "good enough"

Your target customer has probably been stumbling along for quite awhile, somehow managing to get by with a mediocre solution.  Depending on the department and the function, it probably consists of some combination of a spreadsheet, email, Word docs, and paper forms.  Sometimes Quickbooks or sticky notes are in the mix, too.

Of course, you know that that home-grown solution is less than optimal.  It’s awkward to use, prone to error, and inefficient. 

In fact, the prospect probably knows that too.  They're quite aware that the system they’re using now is really just barely good enough.  

But most companies have a high tolerance for “good enough.”

Only urgent problems get attention

Folks at the companies you're trying to sell to are busy, they have lots of other priorities, and they can only focus on things that need urgent attention.  If the problem you solve is way down on their list of priorities, you and your solution aren’t likely to get attention any time soon.  So the prospect customer puts off any decision to evaluate alternatives, replace the current system, and purchase something new.

It’s not that they’re buying a solution from some other vendor.  They’re simply not buying anything at all.

Delays really hurt SaaS companies

Delays like this are a particularly acute problem for SaaS companies.  

SaaS companies have incurred lots of costs up-front to get a prospective customer’s attention.  Adwords, events, inside sales, or whatever other tactics you use to attract prospects cost money.  To recover that investment in sales and marketing, companies need to convert those prospects into paying customers.  That’s how the SaaS model works.

When the prospects have no sense of urgency, no immediate need to buy, the sales cycle gets longer, and the SaaS companies collect no revenue.  That’s a problem.

And the longer the sales cycle runs, the longer the delay before there’s a purchase, and the bigger the problem.

Companies need much deeper pockets to fund a six-month sales cycle vs. a six-day sales cycle.

Subscription deferred is actually revenue lost

But wait, it’s actually worse than that.  Under a subscription model, revenue that’s deferred is actually revenue that’s lost.  

In the traditional license model, if a deal gets pushed out from January to April, the license fee is still received in full, albeit one quarter later.

But in the SaaS subscription model, if a purchase decision moves from January to April, that’s three month’s worth of subscription revenue that’s lost.  When those three months have passed, they’re passed.  It’s not possible to recover the subscription revenue for that quarter.     

What’s a marketer to do?

It’s not enough to trot our your impressive roster of features, benefits, and advantages. 

The first task is convince the prospect that they have a problem and that their existing system is not, in fact, good enough.  They need to see that every month, every week, every day that they ignore it, and try to get by with their existing solution, is badly hurting their business.

You need to point out, for example, that:

  • Their paper-based recruiting system is losing them great candidates and costing them hours per week. 
  • Their accounting solution is losing track of thousands of dollars and exposing them to liability.
  • Their customer support solution built with email and Word is infuriating customers.
  • Their inventory management system cobbled together with Excel and paper documentation is costing them lots of money in overstocks and shortages.

 Until they see that they have a problem - an urgent problem - they don’t care about your solution.