SaaS Marketing is Not a Numbers Game

"If we just dump enough names in the top of the funnel, some paying customers are bound to come out at the bottom of the funnel!"


This approach to customer acquisition - sucking in as many suspects as possible - is costly and inefficient.  In other words, it's a very bad fit for software-as-a-service (SaaS) companies.

For one thing, collecting all those names isn't free.  Adword campaigns, website optimization, list purchases, or any other tactics you might use to attract possible leads cost money.

And then cultivating those contacts - qualifying and nurturing them into legitimate opportunities - costs even more money. 

Working on bad leads actually costs money; it doesn't make money.  (See "When Lead Generation is a Bad Thing.")

Low yield doesn't work for SaaS

This "strategy" - pull in as many names as possible and then hope that at least a small percentage of them eventually convert to paying customers - creates a tremendous strain on the SaaS business model.

On the expense side of the equation, it means substantial sales and marketing costs that are incurred up front.

On the revenue side, it means small and uncertain income collected over a period of time.

Relative to expenses, revenues are too low and too slow.

Timing vs. quantity

The goal is not to get as many names into the top of the funnel as possible. 

Instead, companies should be trying to get the right names into the funnel and move them through it as quickly as possible.

SaaS success requires turning "suspects" into paying customers as quickly and efficiently as possible.  The goal is to shorten the conversion cycle.

SaaS customer acquisition is actually a timing game, not a numbers game.

Accelerating the SaaS Purchase Process

Inbound marketing can be very cost-effective, but it can also be slow.

Inbound marketing relies on prospective customers making contact with vendors.  That's the other way around from traditional marketing, where vendors try to make contact with potential customers.

What that means is that by the time the vendor engages with a prospective customer, that prospect is already fairly far along in the evaluation process.  They're already familiar with the vendor and the solution.  In other words, they've qualified themselves.

That’s perfect for software-as-a service (SaaS) vendors.  They can focus their sales and marketing activity on well-qualified prospects.  

That fits well with the SaaS business model which demands that companies spend their sales and marketing resources wisely.  (See"SaaS companies can't afford to sell")

Finding customers in the short term

But it’s not so perfect for SaaS vendors in a hurry.

While inbound marketing makes sense - and the process usually works over time - it can be a long journey.  The prospective customers move at their own pace, not the vendor's pace. 

If you're a SaaS vendor that needs to close business in the short term, you need to add in some other tactics.  Inbound marketing may not have the instant impact you need.

Friends & family

There’s a reason most vendors’ early sales are to friends & family.  These folks already have some connection to the vendor.  They might be a previous employer, an investor, or former colleagues, for example. 

Vendors looking to quickly sign on some early customers should focus their efforts on these friends & family. 

These folks are already familiar with the vendor, which means they’ve already passed through the early stage of the evaluation and purchase process.  They're more likely to buy the solution in the short term.

The early adopters

In most markets, there is usually a cadre of early adopters, folks that are actively looking for innovative solutions. To gain a competitive advantage and bolster their credentials as market leaders, they are more willing to try technology solutions before they become mainstream. 

If you're looking to close business in the short term, seek out these early adopters.

Where do you find them?  Look at the press announcements for vendors selling solutions that are complementary to yours.  See who’s speaking at relevant conferences.  Find out who's publishing a blog that describes their experience using new technologies.   

Leverage the early adopters

One of the reasons early adopters want to be out front is that they like being known as innovators.  They want others to take their advice and follow their lead. 

So once you've secured one of these folks as a customer, enlist their help to find others.  They tend to have a wide sphere of influence.  They post, they speak, they network.  And they’re often willing to help.

Don’t abandon inbound marketing

Do keep one thing in mind:  While you’re focused on closing a few deals in the short term, don’t forget about inbound marketing.  That's what you'll need to attract the prospects that will fill your sales pipeline over the medium and long-term. 

These are the customers that will get you “across the chasm” and help you establish a sustainable revenue stream. 

Yes, it may take them some time for these prospects to get to know you, assess their needs, and evaluate how well your solution fits their requirements and budget.  (See "Winning SaaS customers requires patience.")

But when they do eventually get there, they’ll be well-qualified and ready to seriously evaluate your solution.  You just can’t rush the process.

What makes junk mail junky?

The junk email I get about replacement windows, oil change coupons, and life insurance doesn’t really bother me.

Somehow I got on a list of millions of people who own a house, own a car, and can still fog a mirror. 

These emails go out in bulk and luckily my spam filter traps most of them. 
Are you talking to me?  Really?

What does bother me though is the inappropriate email I get that isn't sent out by the millions.  It's the ones that come out from a real person who somehow thinks I'd really be interested.

I get several of these every week from PR people who want me to talk with their client who’s been named “something or other of the year,” or who thinks I ought to do a blog post on “Promotional Products Work! Week,” whatever that is. 

A few weeks ago, someone sent me a press announcement about changes to tax law in Idaho.  Huh?

These emails are friendly enough, and I’m certain that a new tax law in Idaho is very interesting to someone… but not to me.

Anyone who's spent any time trying to figure out what I would really be interested in would know that.

I’m not asking folks to do a lot of work here.  Thirty seconds on my website or LinkedIn profile will tell you everything you need to know.

Junk email is bad for SaaS marketing

So other than a rant about junk email that finds its way to my inbox, what does this have to do with software-as-a-service (SaaS) marketing?

For one thing, this kind of inaccurate marketing costs time and money.

Some marketing or PR person spent at least a little bit of time putting together the note... though obviously not enough time to figure out whether I’d really care about whatever it is they're promoting.

And if they follow up the note with a phone call, it’s even more time-consuming and more expensive.

If you're using poorly targeted email to market a SaaS solution, you're wasting time and money.  And the SaaS business model doesn’t leave much room for that. (See "SaaS customer acquisition: Feed it or starve it?")

Junk mail costs trust

The bigger cost though is credibility and trust.  And for SaaS businesses, that means a lot.  

Remember, SaaS marketers are selling a promise, not a product.  They are promising to deliver some benefit over the life of the subscription. 

Before they buy anything, the prospective customer needs to trust that the vendor will deliver on that promise.  (See "Winning customer trust.")

Establishing that kind of trust first requires that the vendor spend a little bit of time finding out about the prospective customer.
  • What kind of tasks are they responsible for?  
  • What challenges do they face?  
  • What kind of solution might help them succeed? 
How do you find that out?  Ask.  (See "Listen to your SaaS customers," March 2014)

Wrong mail to the wrong person = wrong result

When a SaaS marketer sends out an email to a prospect before they know anything about the prospect, they’re off to a bad start.  It’s tough to start a relationship with someone when you haven’t bothered to find out anything about them.

All you’re likely to do is waste time and money and annoy the prospective customer. 

Rather than respond to your email, the prospect is likely to wonder:  “What in the world was this person thinking?!”

Winning SaaS customers requires patience

"Eighty percent of success is showing up."  — Woody Allen.

For most companies, buying a software-as-a-service (SaaS) solution to address a critical business need isn't a decision they take lightly.

Evaluating a solution to support HR, CRM, finance, marketing, or any other important part of the business takes a good amount of deliberation.  It could involve a demo or a trial.  There might be several people involved in the decision.  It could require a series of meetings or presentations.  In other words, it takes time.

And time is in short supply.  Prospective customers don't have a lot of it.

What's urgent for you isn't necessarily urgent for the customer

While you, a SaaS vendor, thinks your solution is the most important priority, the customer has other items on their to-do list.  And the particular problem your solution is addressing just might not be at the top of the list right now.

That doesn't mean they don't have a problem that you can solve.  It doesn't mean they don't like your solution or your company.  And it doesn't mean they've already bought a solution from some other vendor.

It just means they're not ready to evaluate your solution and make a purchase decision right now.

Two options:  Push or Wait

So what's a SaaS vendor to do?

One option is to push.  That is, try to move the problem and your solution higher up on the priority list.

Create a greater sense of urgency and convince the prospective customer that every day they delay, they're losing money, losing customers, exposing themselves to risk, or some other bad outcome.  (See Practical Advice on SaaS Marketing newsletter: "Turn 'nice to have' into 'need to have.'")

Another option is to wait.

But waiting doesn't mean sitting on your hands and doing nothing. It means staying in front of the prospect, so that when they are ready and able to spend the time to evaluate solutions, you'll be there.

Guidelines for waiting

Waiting isn't easy, especially when your company has sales goals to meet.  But there are a few guidelines to doing it effectively.

Be consistent:  Staying in front of a prospective customer requires a long term commitment.  It can easily take a prospect many months before they fully engage on an evaluation of your solution.  And you'll probably not know precisely when that moment arrives.

That means you need be in front of them consistently... maybe not once every week, but certainly at least once every month.  A "one and done" approach won't work.

Educate your prospect:  The most effective way to stay in front of prospects is to provide something useful for them.  Publishing an insightful white paper, a blog post, benchmark data, or some other valuable content reinforces your credibility and makes a positive impression.

By the way, keep in mind that just because someone's on your contact list isn't an invitation to harass them.  A high "opt-out" rate will tell you've crossed into "spammer" territory.

Keep costs low: All of this effort to stay in front of prospects while you wait patiently isn't free.  It's part of the customer acquisition costs that make the SaaS business model so challenging.  (See "How to cut customer acquisition costs.")

But there are ways to keep the costs under control.  Email newsletters, white papers, and blog posts, for example, are fairly inexpensive to distribute.  On the other hand, on-site visits from sales executives are expensive and probably not the most efficient way to stay in touch with prospects who are not yet ready to fully engage.

This stuff does work

I recall work I did with one particular vendor to assess whether this "stay in front of prospects" strategy really works.  We looked at the deals we had won and worked backwards to examine the entire life of the relationship with the customer.

In most cases, we found that the process extended over many months and involved at least ten "touches" with marketing material.   That is, we got in front of the prospect ten times over the period: sent a white paper, invited them to a webinar, delivered a blog post, etc.  All that activity happened before the customer seriously engaged in an evaluation of the solution and began working closely with a sales person.

Believe me, I know patience isn't always easy.  But if you're selling important solutions to enterprises, plan for it.  It's just the way the process works.

SaaS Marketing Requires Focus

There's a guy in my town who advertises himself as "The Bulkhead Man."  What he does is install the entryways that go from the outside of a house into a basement.  Most are heavy steel doors that are mounted onto the concrete foundation.  Here's a photo of mine, partially obscured by a very healthy holly bush.

I assume "The Bulkhead Man" could probably handle a lot of other construction projects around the house: build a deck, hang new cabinets, replace siding, whatever.  He could rightly call himself a "contractor" or "handyman." 

But that would be a bad idea.

Then he'd be just another guy in the long list of other "contractors" and "handymen" who advertise in my local paper.  His ad would be stuck in with about two dozen others, instead of being the one and only "bulkhead man."  

Companies want solutions for their particular problems

If I needed a new bulkhead, believe me, "The Bulkhead Man" is the guy I'd call.

And I'm probably like most people in that way.  Most of the time when we're looking to fix something, we're looking for someone with particular expertise, a specialist in delivering just exactly what we need.

This same logic applies to people searching for business solutions.  They're usually not looking for something that can "do anything for anybody."  They're looking for a solution to their particular problem.

How can software-as-a-service (SaaS) companies can take advantage of that logic?  One word:  Focus. 

Focus lets companies build visibility and a reputation as experts in their particular niche.  It lets them distinguish themselves from the pack.

When someone searches for solutions like theirs, they rank at the top of the list.  When someone sees them at a show or receives an email from the company, they pay attention.  "Hey, these folks have something that's exactly what I'm looking for!"

Focus on a problem, a customer, a geography, something

A SaaS company can focus on a particular problem or task.  For example, "our solution is specifically designed to help eCommerce companies more quickly and accurately update the inventory they present online."

Or it can claim that its solution is developed for a particular kind of customer, as in "this product is built for companies with teams of 5-40 customer support reps."

A company could even claim a specific geographic specialty.  For example, "our solution is designed to help public school administrators meet the unique reporting requirements of the State of Florida."

If you think about it carefully, you may find other ways to identify your particular market segment.  Contact me if you need help.

Focus isn't easy

Believe me, I know it's difficult to narrow in on a specialty and there's lots of temptation to present yourself as "we can do anything for anybody." 

I talk with a lot of companies that are rightly very proud of what they've built, all the things it can do, and all the markets it can serve.  "Yes, it solves that one problem well... but wait.  It does so much more."

My advice in most cases: focus.  Or at least take on a carefully selected handful of well-defined segments.

Focus is especially important if you're competing in an established market with a few 800-lb gorillas.  In the market for CRM solutions, for example, if you get head-to-head with companies like, they'll easily out-spend you with their vast marketing and sales budget.  You'll be buried.

Focus is essential to the SaaS business model

The key to survival in the SaaS world is getting your money's worth from what you spend on customer acquisition.  (See "Marketing Spend;  How Much is Enough?") Once you've spent money on developing your product, sales and marketing expenses are likely to be among your largest on-going expenses.   For your business to thrive, the return on that spending - the long-term customer value - must exceed the acquisition costs.

With focus, a company can distinguish itself from competitors, make itself easier to find, attract more leads, and close more business.

What does that means in terms of the "customer acquisition cost (CAC)/ long term customer value" (LCV) formula?  If the company spends $1 on sales and marketing, it's got a better chance at earning back much more than that in long-term customer value.

Don't just be another company that does everything that everybody else does.  Be the one and only "bulkhead man."

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License. Images obtained via

When marketing gets creepy

A company I'll call "" is spying on me.

They know I've wandered onto their website and watched a video demo of their product.  I didn't provide my name or email address.  But somehow they think they have permission to contact harass

Perhaps "harass" isn't exactly the right word to describe the email that arrived a few minutes after my visit to their site.  It addresses me by name and mentions that they know that I've checked out their video.

Maybe "creepy" is a better word.

Nothin' for nothin'

Companies can contact me when I've asked for something from their website, like a white paper.  I actually expect that.  It's a fundamental principal of inbound marketing.  You give me something of value, and in return I give you an opportunity to connect with me.

Done well, this mutually valuable exchange can be a vital part of an effective customer acquisition strategy.  It can help companies earn credibility and move prospects along a path toward purchasing a solution.  And it can be designed and executed to fit within software-as-a-service (SaaS) companies' business model.  (See "SaaS companies can't afford to sell," November 2012) 

But when I've not explicitly provided my name and contact information, as in the case of my anonymous visit to "," the company has not earned the right to contact me.

A productive relationship doesn't start with stalking

In fact, their intrusive email completely soured me on the idea of learning more about the company.  I have not the slightest interest now in taking them up on the invitation "to arrange a short meeting to answer any questions you have and to show you how's easy to use patented technology can help take your marketing to the next level." (Name changed to spare public embarrassment.)

If by "take your marketing to the next level" you mean that my company too can use your technology to identify visitors - who thought they were anonymous - and try to establish a trusting and productive relationship with them... no thanks.  That sounds worse than spam; it's stalking.

Look, I'm not naive about what marketing technology can do.   I know you can use clever solutions like these to track all my comings & goings on a website, count my downloads, and even discover my name and email address.

But just because you can do it, doesn't mean you should do it.

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License. Images obtained via

Making free trials work: 3 tips

Lots of software-as-a-service (SaaS) companies offer free trials.  But in even the best cases, only about a modest portion of the free trialers actually convert into paying customers.

In fact, many times the free trialers don't even try the free stuff.

People download the trial, but then they get distracted.

Or they don't have the time to use it.

Or they don't have the data they need to get started.

Or they decide it's a hassle.

Or they lose interest.

Or whatever.

Totango calls these folks "accidental trialers:"  prospective customers who sign up for a free trial and then do nothing.

After a few weeks, the trial expires - a complete flop for both the prospective customer and the SaaS provider:

The prospect gains little experience with the product and misses the opportunity to see how it might be helpful.

The provider has little opportunity to convert the free trialer into a paying customer.   They've invested in finding and cultivating a prospect, but they can't close the deal.

How can SaaS providers avoid this?  How can they get prospects to actually try the free trial?

Tip 1:  Don't make the trialer work too hard

Just because your solution is free doesn't mean your prospective customer's time is free.  If you ask them to do lots of work - track down data, configure forms, set-up work flows - they're likely to bail out.

Instead provide completed templates, default settings and benchmark data already filled in.  The trialer, of course, can make changes, but they're not starting from a blank page.

Tip 2:  Don't overwhelm the trialer

You're proud of your solution - every bell and whistle of it.  And your paying customers may grow to love every bell and whistle too - eventually.  But your free trialers probably aren't yet ready to see every single feature and function, and they may be overwhelmed by a walk-through of the entire product.

At this stage, it's better to focus the prospect on accomplishing a few simple, common tasks.  Show them how easy the solution is to use and how quickly they can achieve worthwhile results.  Get them as soon as possible to an "Aha!" moment.

Tip 3:  Offer help

Even with the simplest, most intuitive solutions, the prospect might need some guidance.  These folks aren't dense; they're just busy.

Give them a guided tour through the trial, a step-by-step guidebook, a recorded tutorial, or one-on-one coaching.

Yes, helping free trialers can be expensive.  But remember, you've already spent time and money to get prospects this far in the purchase process.

Spending more to push them one final step - and convert them from trialers to buyers - might be a worthwhile investment.

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SaaS companies can't afford to sell

Most companies offering a software-as-a-service (SaaS) solution can't afford to sell it. 

I'm talking here about "selling" in the traditional sense:  finding prospects and convincing them to buy a product or service. 

In some cases that's done with experienced sales executives working their Rolodex (or its electronic equivalent).  Or it might be sold by a team of inside sales reps making cold calls from a purchased list. 

The best of these sales efforts may follow "solution selling," "SPIN," "customer-centered selling" or some other sophisticated technique.  But it still involves the vendor's salesperson reaching out to a potential buyer.

Selling is expensive

For most SaaS companies, however, these techniques are too costly. 

For one, those experienced salespeople are expensive.  Paying these folks to find and woo potential buyers, often with a sales support engineer in tow, means travel expenses, a decent draw, and a hefty commission. That's beyond the resources of many SaaS companies, who depend on future subscription revenues to pay for current sales expenses. (See "SaaS customer acquisition:  Feed it or starve it.")

(A notable exception to this would include SaaS companies like Workday, which offers talent and financial management solutions for large enterprises.  Selling these complex, enterprise-wide systems does indeed require experienced and expensive salespeople.  But unlike most SaaS companies, the large subscription fees can support that kind of sales model.)  (See "Customer acquisition spending: Lessons from Workday.")

Besides the cost, this approach - trying to find potential buyers, many who aren't really looking for a solution, and methodically coaxing through to purchase - just doesn't work as well as it once did.  With information so easily available, most prospective customers can do much of their research  before they even talk with a sales executive.  The sales exec comes in only near the end of the process, not the beginning.

Rely on "buying," not "selling"

So if SaaS companies can't afford traditional "selling" to grow their business,  they'll need a different approach.  They need to rely on "buying."  

That is, they need to attract prospects who are actively looking to buy.   The goal isn't to sell them your solution.  The goal is to attract them to buy your solution.

Perhaps an analogy can illustrate the difference.

"Selling" is like sending a brave hunter out onto the plains to stalk a large beast.  The hunter wanders for days or weeks over many miles, tracking the prey, and finally gets close enough to bring it down with a well-aimed spear.

"Attracting buyers" keeps the hunter in the village.  Instead of trekking for miles and days, he digs a water hole, provides a salt supply, and lets the wind carry the scent of this lovely feeding spot across the plains.  When the beasts gather around the watering hole, our brave hunter tosses a net over them.

Let prospects find you and move themselves toward a purchase

Attracting buyers means making your company and your solution visible to your prospective customers.  Build a watering hole where they can find you when they're searching. 

Make it easy for them to find you, and you won't need to rack up mileage or pound the phones trying to find them.

Once the prospects do find you, don't sell them; educate them.  Help them understand how to make an informed decision.  Be a resource.  Make them smarter. 

Earn credibility and trust.  Let them see what value your solution can deliver for them.  Show them how others have used it successfully.

And then provide a way for the prospect to "buy."  Give them an easy way to move themselves toward a purchase at their own pace

With certain more complex SaaS solutions, a salesperson may be needed to negotiate pricing, work through terms, or configure the precise package of services.  But in many cases, the prospective customer can take those steps without much help.

There's no need to push, no need to cajole, no need to "sell."

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License. Images obtained via

When lead generation is a bad thing

Most marketers are fixated on generating leads. It's not uncommon, in fact, that their compensation is related to how many leads they bring in.

This fixation on leads is particularly true for us software-as-a-service (SaaS) marketers. Cost-efficiency and a high return on marketing expenses are critical to a successful SaaS business model. (See "Ten Essentials of SaaS Solution Marketing.")

But generating leads isn't always a good thing. You can get too much of a good thing. Here's how:

Unqualified leads

Leads that consist of people that are unqualified - that is, they have no real need for your service - aren't worthwhile leads. The fact is these leads don't make you money; they cost you money.

Think about it. You're spending money on SEO, pay-per-click, PR, webinars, or other marketing programs that bring people to your door. But if those people have no need for your service and no compelling reason to purchase anything, the money you spent to attract them has been wasted.

That's not to say that 100% of leads should convert into actual buyers. But most leads should at least be potential buyers.

One clear sign that you're generating unqualified leads is a low ratio of qualified opportunities-to-leads. It indicates that few leads convert into real opportunities and eventually paying customers.

Here's a second sign. In an organization that sells through a sales force, you'll hear about "worthless leads" loud and clear from the sales people. You won't even need to check the ratios!

Leads that get stuck in the pipeline

If you've spent all your money and effort bringing leads in the door, much of it will be wasted if there's no process in place to nurture those leads into opportunities and paying customers. Those leads get stuck in the pipeline.

To get them "unstuck" requires building a system that moves prospects through the complete acquisition process - from initial interest to lead to qualified opportunity to purchase to renewal. Generating leads is only the first step.

Again, tracking the leads-to-opportunities-to-paying customers ratios is one way to identify a pipeline problem.

Remember: Generating leads isn't the goal; paying customers is the goal.

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

Don't waste marketing money: all thought, no action

I pulled up behind a step van at a stop light and read on the back door, "Need a spark? Call Mark. Mark Olsen, Electrician"

OK, it's not Shakespeare. It's not even Ogden Nash, but kinda catchy. I thought it could work for other tradesmen too. "Sprung a leak? Call Dominique." "Need concrete? Call on Pete."

(OK, it was a long light.)

The silly tagline did part of its job. It got me to think.

What it didn't do is get me to act.

Why not?

There was no phone number. No 1-800-SPARK-ME, no 1-800-POWER-UP, no nothing.

Here I've been invited to "call Mark," but haven't been given an easy way to actually do that. He got me to think, but not do. Mark the Electrician never closed the circuit. (Sorry.)

SaaS marketers can't afford to waste time and money

SaaS marketers sometimes make the same mistake - not closing the circuit, not connecting thinking to doing. And for SaaS companies, where maximizing the impact of every marketing and sales effort is critical, this kind of mistake wastes precious time and money.

We pay good money to reach the right prospects - execute a search engine marketing program, run an email campaign, host a webinar.

We successfully capture the attention of a prospective user, present a compelling value proposition, invite them to contact us.

Missing the next step

But then after all the up-front work and expense, we miss the next step.

We don't offer a clear path for the prospect to do something: call us, sign up for a free trial, download a paper, subscribe to our newsletter, whatever.

That's money wasted, prospects squandered, revenues lost.

The problem often comes from forgetting about the overall goal of the customer acquisition process, namely to acquire customers. (See "SaaS marketing, baseball and the batting order.")

Instead we fixate on a single portion of the process: build a beautiful website, host an inspiring webinar, deliver a clever tagline.

But that's just part of the process. They get prospects to think.

Now we need to make it easy for them to act.

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

Free trials don't always make sense

Free trials are one very popular technique for marketing software-as-a-service (SaaS) solutions, especially for relatively inexpensive ones. Think Constant Contact, contact manager, or Carbonite.

But before you take the leap and offer your own free trial, think carefully.

Free trials can't work without follow-up

For a free trial to work, it needs to be part of a overall customer acquisition plan. A free trial without a well-constructed follow-up effort to convert the free trialers into paying buyers isn't worth much.

You should also have a plan for people who tried but didn't buy. They should be part of your target audience for on-going marketing programs.

Free trials do cost money

With a free trial, you are essentially extending the sales cycle by the length of the free trial. Most buyers won't pay you until they need to. That will require more working capital.

Depending on your infrastructure and hosting platform, it will cost you money to host and deliver your solution to free trialers. The cost of computing and storage may be low, but it's not free.

If your solution requires support to get the free trialers up and running, in the form of telephone or chat help, or online tutorials, factor those costs into your calculation.

For some applications, a free trial could essentially give away all the value of the solution. If it's a solution that helps manage a task done once per year, for example arrange the annual user group conference, why would the prospect actually pay for the solution once that task is done?

Does a free trial really show the value?

Consider whether the free trialer will truly see the full benefit of your solution during the course of the free trial. If you're helping them manage a process that takes 6 months, for example, the trialer might not see much value in a 30-day free trial.

Just because a trial is free doesn't mean that the prospective customer will put in the time to learn how to use it. In fact, if it's not immediately obvious how to use your solution, a free trial might actually deter prospects from buying it. "Free" does not compensate for a poor product that's difficult to learn. (See "If it's hard to use, it's hard to sell")

"Free" might not really matter

A trial might show prospects the solution's features and functions for free, but it won't necessarily address concerns about security, reliability, deployment, and integration. For buyers within large enterprises, these other issues may be more important than price.

Alternatives to a free trial

Before you automatically opt for a free trial, think about alternatives:
  • A "sandbox" demo would allow the prospective customer to work with the software in a controlled environment. It might provide access to all functionality or it might limit the user to certain features. For example, it might not allow printing or emailing reports.
  • Videos could be used to show off the key features of the solution, explain how it would be valuable to the prospect, and demonstrate how easy it is to use.
  • A money back guarantee would allow someone to purchase the solution and, if they are not satisfied, cancel their subscription after some period of time to get their money back.
  • A no-obligation contract would allow a paying customer to cancel their subscription at any time without penalty. They are under no long term commitment.

With these alternatives, prospective customers can get some experience with your solution. And you might avoid some of the downsides of a free trial.

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SaaS solutions for business are not an impulse buy

I don't know who first thought to put gum, candy and Slim Jims next to the checkout aisle, but it was a stroke of genius. While I'm standing there waiting to unload my shopping cart is the perfect time to tempt me to toss in a few inexpensive items that aren't on my list. I give in to the impulse.

Software-as-a service (SaaS) solutions for businesses are not gum, candy or Slim Jims. People do not buy them on impulse.

Most business software is bought after careful consideration. Sometimes it requires input from several decision-makers. Even buying a relatively inexpensive SaaS solution - if it's important to the business - usually takes time and follows a deliberate evaluation process.

A long term purchase process requires a long term sales & marketing process

Your marketing and sales process should match this deliberate evaluation process. If it requires several weeks or months to make a purchase decision, build a customer acquisition process that extends over several weeks or months. If a decision requires buy-in from people in several roles, build a process that reaches people in each of those roles.

Who hasn't heard a story like this? A gung-ho marketing team posts a compelling white paper on its web site. Dozens download the paper daily, providing their email address to do so. The happy marketers call those email addresses "leads" and shove them off to sales folks.

The overwhelmed sales people sort through this pile - gmail addresses and all - desperately trying to find a speck of gold among the dross. Good luck with that.

Getting from "downloader" to buyer is not a one-step process

A lot of these white paper downloaders probably are prospective customers... but not yet. They're still at the front-end of their decision-making process, just getting familiar with the options available to them. They have a long way to go before they're legitimate leads or qualified opportunities.

Next step for the "downloader" might be to look at the experience of others with this product and with alternatives. They'll want to hear customer stories. Then they may need to go through a technical assessment to answer questions about security and reliability. Next perhaps they'll download a trial or work with a freemium version if one's available. And after that... well you get the idea.

Don't waste expensive sales talent

Marketers should build a nurturing process that keeps prospects engaged and committed throughout this entire, multi-step process. Emails, webinars, white papers, blogging, customer stories or events might all be part of the program. Try some out and see what works best for you.

Be careful not to push the names of prospective customers over to sales executives too quickly. You don't want expensive sales people to do all the work to move "downloaders" into "qualified leads." You'll have a tough time keeping your customer acquisition costs under control, and you'll end up with an ugly finger-pointing marketing vs. sales battle. Who has the time or stomach for that?

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

Where to start with SaaS marketing

So you say you want to launch a software-as-a-service (SaaS) solution. And you need to find some customers.

So where do you start?

If you're like a lot of folks, your first thought will be about a web site, search engine optimization, and adwords. Or maybe a webinar series or a social media campaign.

Any of these tactics might work in your customer acquisition plan, so they may be the place you end up... but they're not the place to start.

Why not?

Think a step ahead for a moment.

  • If you decide to build a new website, what will you say?
  • If you want to implement an SEO or pay-per-click campaign, which keywords will you target?
  • If you opt to host a webinar series, what topics will you cover?
  • If you want to blog or tweet, what about?

The place to start then: Figure out what you want to say and who you want to say it to.

To be more precise:

1. Who needs your solution?

2. What problem do they have that you can solve?

3. And why is your solution better than alternatives?

Until you can answer these questions with confidence and clarity, you're not ready to start.

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

SaaS Marketing Lessons from ShamWow!

I've never bought a ShamWow!, but I love their TV ads. The hyper-enthusiastic pitchman, Vince, tells me precisely who should buy the product, what it does, why I desperately need it, and how to buy it... all in 60 seconds!

And what's true for super-absorbent towels is often true for software-as-a-service (SaaS) solutions. Sixty seconds may be all the attention you're likely to get from a prospective customer in your first encounter.

If a prospect finds their way to your website, blog, booth, Twitter feed, Facebook page, press announcement, outbound call, or whatever other form of marketing communication you use, figure that they'll give you about a minute to introduce yourself.

Use that time wisely.

Who should buy the solution?

First make it clear who should be using your solution. Explain, for example, that it's for" K-12 school administrators in Michigan," "property managers with less than 1000 properties" or "auto loan processors." The more specific, the better.

I know companies hate to narrow their market, but something that claims it's "useful to everyone," usually isn't appealing to anyone in particular. (See "Please don't sell me stuff I don't need")

What is the solution?

Give the prospective customer a "handle" to quickly grasp what the solution is. Put it into a recognizable category, for example, "it's a document back-up system," or "it's an inventory management solution." Of course, your solution is better than everybody else's in the category, but first you need to get the prospect thinking about the right category.

Once you get them in the right ballpark, then you can differentiate, as in "we're like Groupon, but much less expensive for merchants to participate,"or "we're a marketing advisory firm that specializes in SaaS for enterprises."

Why do you need this solution?

In classic marketing-speak, this refers to the axiom: "Talk about benefits, not features." Pitchman Vince tells me that ShamWow! will save me time and money cleaning my car, my boat, or my house. There's no mention of how it works or what it's made of, except to say that it's engineered to soak up lots of liquid.

Technology companies, SaaS companies included, often fall into the trap of rambling on about their technology - lots of talk about architecture, platforms, development languages, etc. that describe how the product works. Better to focus on the problems it fixes. At least in their first exposure to a product, most customers care about what it does, not how it works.

Why do you need to buy it from me?

Tell the prospect why they need to buy the solution from you. Explain why yours is better than alternatives. For SaaS solutions, the advantages are often that they're less expensive, easier to maintain, lower risk, easier to use, and faster to deploy. (See "SaaS advantages in a volatile market")

Don't focus only on product advantages, narrowly defined. In subscribing to a SaaS solution, the customer is buying into a long-term relationship, a promise that you'll reliably deliver a service over the life of the subscription. So talk about your reliability, security, and customer service. (See "Winning customer trust.")

And don't forget that the alternatives aren't always other automated solutions. The competition may well be home-grown Excel- or paper-based solutions.

How do you buy it?

Provide a clear path to action. ShamWow's directions - "Call now. Operators are standing by"- may not work for most business-to-business solutions. But your website should make it crystal clear what you want the visitor to do: "Download this paper," "Sign up for a free trial," "Contact us for a demo."

Selling an enterprise SaaS solution is usually a multi-step process. During the first engagement with a prospective customer, you want them to take the next step forward in the process. Make it very obvious where you want them to step.

Other ShamWow! techniques have already been adopted

Though you may not have thought much about lessons from ShamWow! for marketing a SaaS solution before now, some techniques have already been embraced. "Sign up now. Get two months free. No credit card required," isn't much different than "Buy now and we'll give you two mini-ShamWows at no extra charge!"

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

What do you mean by "marketing?"

I'm not always sure what people mean when they say "marketing."

PR agencies sometimes call themselves "marketing agencies." So do some graphic design firms. Even the outfits that sell tchotchkes - the stuff you give at away at tradeshows, annual sales meetings, and holiday parties - call themselves "marketing firms."

It can be hard to tell what "marketing" is or what it's supposed to do.

Here's how I think about it: Marketing's job is to help acquire and retain customers.

Marketing supports the entire customer acquisition process:
  • generating awareness
  • building interest
  • attracting leads
  • nurturing leads into qualified opportunities
  • converting opportunities into paying customers.
And in the case of software-as-a-service (SaaS) companies, marketing is also responsible for helping to retain and renew existing customers.

Don't squeeze marketing

Yes, it's a broad scope of responsibility. That may explain why folks sometimes squeeze "marketing" into a narrower role.

For example, they call it "marketing," but they're really only talking about building visibility, and the sole focus is on search engine optimization or social media.

Or they call it "marketing," but the primary focus is on establishing credibility and thought leadership. These companies tend to rely heavily on webinars, white papers, and speaking at industry events.

Or they call it "marketing," but their entire task is to generate leads.

Of course, each one of these activities is part of the marketing function, but they are not all of it. And if companies focus solely on one isolated element, they may fail to achieve the overall goal: acquiring and retaining customers.

How can you tell when a company is confused or doesn't recognize marketing's broader role?

Counting the wrong things

For one, you'll see them counting the wrong things. If the primary assignment of marketing is to build visibility, they'll tend to focus on metrics such as "impressions," "followers" or "likes."

Counting these things might be important, but only if they're connected to the overall goal. How many impressions are required to generate a lead that can be nurtured into a qualified opportunity and eventually converted to a paying customer?

Lead tossing

A second symptom is "lead tossing." A marketing group that is tasked and rewarded exclusively for generating leads, for example, will often accumulate a long list of names, phone numbers and email addresses which they periodically toss over to the sales group.

Whether or not sales can actually close any of those leads and secure a paying customer isn't marketing's concern.

Pig in the python

When marketing's role is too narrowly confined, you'll often see a "pig in the python." That is, a large number of prospects stuck somewhere in the sales funnel. For example, marketing attracts lots of website visits, but few visitors provide enough information to become a qualified lead. Or marketing generates a lot of trialers, but the company can't convert them into paying customers.

In these cases, marketing is performing one particular task very well, but the overall process is failing.

SaaS firms in particular can't afford to pay for ineffective customer acquisition. If the role of marketing is too narrowly defined and doesn't span the entire customer acquisition and retention process, it will be difficult for a SaaS business to succeed.

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

Old marketing tools in a new marketing world

I was talking yesterday with a friend who I know from the old days doing public relations. PR back then was about preparing announcements, backgrounders and glossy photographs, arranging press and analyst tours (usually under embargo), and pitching stories over the phone.

Moderate success was a few column inches and a color screenshot in a trade publication. Big time success was positive coverage in The Wall St. Journal or The New York Times.

Things change... but not entirely.

The new PR

I work with clients who still use PR to generate visibility. Now press announcements are heavy with keyword phrases and sprinkled with links, and we send along photos as a .pdf or .gif. They're sent on to bloggers and news aggregators as well as to the shrinking pool of journalists with more traditional publications. The press announcements are also "self-published" via the company's own blog, newsletter or website.

Live events still live

Companies still do live events, too. Though there are plenty of options for people to virtually connect, sometimes face-to-face contact is better. Though events can be expensive - exhibit space, booth set-up, shipping & drayage, plus travel expenses - they can be effective if you clearly understand where events fit in the overall customer acquisition process. Though you may only talk to a handful of prospects at a regional event, if 3 or 4 of them convert to paying customers, it may be a great investment.

Events have also been infused with newer, social media elements. Nearly all of them label themselves with a Twitter hashtag, and the online conversations about the proceedings are every bit as rich as the in-person presentations. Sometimes more so.

Outbound calls are "social selling"

Even outbound telephone calling has had a social media facelift. There's a new concept known as "social selling." In contrast to the traditional cold call, outbound sales people use social media to better target and prepare for telephone conversations.

Here's my point:

Don't rule out marketing tools that you think may be too "traditional." PR, events, and outbound telephone calling techniques have all been "social media-ized," making them more "modern" and more effective. Try them, measure the results, and see if they fit into your SaaS marketing mix.

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

Tired brains are bad for SaaS

Thinking too hard can tire out your brain.

Research has shown that our brains can suffer from "decision fatigue" after strenuous mental exercise. It's similar to the way our muscles get tired after strenuous physical exercise.

Experiments conducted at German automobile dealerships put prospective customers through a kind of mental decathlon. They asked them to choose among four choices of gearshift knobs,13 choices of wheel rims, 25 engine and gearbox configurations, and 56 color options. After being forced to make a string of decisions, the subjects/ customers succumbed to "decision fatigue" and opted for the default option. They lost much of their capacity to make choices.

Too many choices can be exhausting, and the customer quickly opts for the path of least resistance. That may mean choosing a default option or it may mean choosing to do nothing.

What applies to cars, applies to SaaS too

When prospective customers' brains are tired, it's more difficult to sell automobiles. It's also more difficult to sell technology solutions.

That's a special problem for SaaS solutions, when it's critically important to acquire customers quickly and cost-efficiently. Anything that impedes purchases is a SaaS business killer.

What hoops have you set up?

What kind of decisions do you force your prospective customers to make? How many hoops do you ask them to jump through?

Walk through the process yourself - from start to finish - and count how many decision points your prospects confront. Often we're asking them to navigate through a tortuous labyrinth of options,... even before they buy anything:

  • Which of our solutions is most appropriate for your company?
  • Which version is the best fit?
  • How many seats will you need?
  • Would you prefer the free trial or the freemium version?
  • Which payment plan works best for you?
  • How long would you like to subscribe for?
  • Would you like paper or plastic? (OK I don't actually see that one very often for SaaS solutions.)

I agree that there's a legitimate desire to steer the prospect to the best solution to meet their particular needs. But be careful to balance that against the real danger of tiring them out. And offer default options when possible.

Very few exhausted and frustrated prospects become profitable and satisfied customers.

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

Feeding the content monster

Marketers beware!

There's a ravenous beast on the loose in marketing land, and it's hounding us mercilessly - days, nights, weekends & holidays - with an insatiable craving. "Feed me. Feed me. Feed me."

This beast inhales tasty blog posts for breakfast, devours hearty white papers for lunch, and feasts on entire websites for dinner. And in between meals, it snacks on a bottomless bag of tweets.

The name of this voracious beast - the Content Monster.

Cost-effective marketing requires lots of content

Cost-effective marketing, the kind that's essential for software-as-a-service (SaaS) success, demands content... and lots of it. Paid search, email marketing, PR, and other tactics can be very effective at building visibility and luring in prospective customers.

To work, though, they need a steady diet of content: white papers, webinars, video presentations, tweets, blog posts, press announcements, newsletters, presentations, comments on LinkedIn discussion groups, and whatever other bons mots that we can concoct.

There's an insatiable demand for content - a monster that needs to be fed.

A couple of ideas about how...

Watch your customers

One great advantage of the SaaS model is that you can, and in fact must, pay attention to what your customers are up to. You can learn a lot from them. See what they're doing with your solution and understand how they are using it to improve their business. You can pass along your observations and insights that may be helpful to others.

One note of caution: Sometimes it's best to share these observations about customers anonymously or in aggregate so you don't violate any particular customer's confidentiality.

Re-purpose your content

When you explore one substantial idea, make the most of it. Push it out through multiple media. An extended discussion covered in a white paper can also be presented as a webinar, which can be publicized via a press announcement. Bits of it can be doled out in a newsletter and through blog posts. Like an efficient and cost-conscious chef, let nothing go to waste.

Revisit good ideas

Just because you explored an idea once, doesn't mean your can't revisit it. If a topic was well-received 18 months ago and it's still relevant now, examine it again. Update it with a new angle, squeeze out a new insight, or garnish it with a fresh example.

OK Content Monster, you can go off and digest this tid-bit for now. I'm sure you'll be looking for more soon.

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

SaaS marketing, baseball and the batting order

I recently read "Three Nights in August," a wonderful book about the "game inside the game" of baseball. The author, Buzz Bissinger, shadowed St. Louis Cardinal manager Tony La Russa through a three game series against the Chicago Cubs. Bissinger chronicles in detail the manager's thought processes and decision making through 27 innings.

It's not a story about dramatic home runs, sparkling pitching, or spectacular defensive plays. It's more about how La Russa decides when to put on a hit-and-run, who to intentionally walk, and when to go to the bullpen.

Which players and in which order?

A portion of the book describes La Russa putting together the line-up for each game. He analyzes who's hit well against the opposing pitcher, who's injured and needs rest, and which pitch hitters he wants to match up against certain relief pitchers late in the game.

Among these decisions, La Russa gives a great deal of thought to the batting order- who bats where in the line-up. It's a complicated process: who can take a lot of pitches and work a walk, who can steal a base, who can bunt, who can hit for power, who's right-handed, left-handed, a switch hitter, etc.

The challenge for the manager is more than just putting guys up at the plate who can hit. The goal is to construct a complete line-up, in the right order, that produces runs. It's runs, not hits, that win games.

Don't get lost in individual tactics

I hope I haven't lost the non-baseball fans among you, because there's a lesson in here for software-as-a-service (SaaS) marketers. It's about the customer acquisition and retention process.

What matters isn't just the performance of individual marketing programs or campaigns. What matters is whether the overall process produces long-term customers.

There's a tendency to focus too narrowly on individual pieces of the customer acquisition funnel or even more tightly on particular tactics:
  • Does this individual keyword draw more traffic?
  • Does this particular white paper attract more leads?
  • Does this version of the email convert more trialers into buyers?
Given all the sophisticated marketing analytics tools available, it's easy to see how marketers can sometimes get buried in the numbers.

Yes, you need to know which tactics are working and which are not. I encourage SaaS companies to try different things, measure their performance and make adjustments. Marketers trying to do their job without metrics will struggle.

Certain tactics fit certain roles

But it's also important to know the particular role of each tactic and each campaign. Some programs, for example, are designed to build visibility early in the buying process. Others are designed to retain existing customers. These are two different objectives calling for two different kinds of campaigns. If your goal is to reduce attrition, implementing a pay-per-click campaign, no matter how well-executed, probably won't help you.

It matters what happens before and what happens after

It's also important to know what activity precedes each individual marketing tactic and what follows it. Understand the entire customer acquisition and retention process from building initial visibility and attracting leads, through to converting leads into opportunities and into customers, and then retaining and up-selling existing customers. There's not much value in generating lots of leads from prospects if you have no process in place to convert those leads into buyers.

To go back to the baseball analogy (sorry I can't resist), there's no point in stealing a base and getting a runner into scoring position, if the batters behind him can't drive in the run.

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This work by Peter Cohen, SaaS Marketing Strategy Advisors is licensed under a Creative Commons Attribution 3.0 Unported License.

Marketing numbers can lie

I barely passed an accounting course in college. The only thing I remember was a joke about "debits by the window and credits by the door."

I didn't understand the joke then, and I'm still confused by T accounts now.

Thankfully, in a stint as a bank credit analyst, I did finally gain some fluency with business numbers. I learned to cope with, if not exactly love, current ratios, inventory turnover, and return on equity calculations.

This experience with numbers can come in handy in marketing.

Measure, measure, measure

There's plenty of room in marketing for creative designers and copy writers. But if you're managing a marketing group, you'll also need to know your way around a spreadsheet too. Measuring is a big part of the job.

Marketers, and software-as-a-service (SaaS) marketers in particular, can't afford to make decisions based solely on gut feelings or anecdotal evidence. They need hard, quantitative data:
  • Which marketing programs are driving the most traffic?
  • What keywords are producing?
  • What's the free trial-to-purchase conversion rate?
  • What's the return on social media?
Proceed with caution

Yes, gather and analyze quantitative data, but proceed with caution. Be careful in how you measure and what you measure.

One common measurement flaw is assigning a lead to one particular source. and other systems have wonderful mechanisms to identify the source of each individual lead. It will tell you tell how many leads were generated by each source. And using that data, you can calculate the cost per lead per source and then make decisions on which programs to continue funding and which to stop funding.

The problem is that identifying a single source for any particular lead isn't really as simple as that. The fact is that over the course of the purchase process, most business customers are likely to touch your company through multiple sources, not just one.

The first contact may be through a keyword search, but later they'll read your newsletter, download a white paper, attend a webinar, and perhaps meet you at a tradeshow. How do you identify which single one of these activities is the sole "lead source?"

Leads are just the start of the process

The focus on leads and lead sources can also distort your view of what programs are really having an impact on your business. "Leads" are only the entry point in the sales pipeline. "Leads" need to be nurtured into "qualified opportunities" and then converted to "closed wins" in order to generate revenue.

If your entire focus is on counting "leads," you may be missing the bigger picture. Besides calculating "leads per campaign" and "cost per lead," marketers should also be tracking "cost per qualified opportunity" and" cost per closed win." You may find that campaigns that generate few leads actually produce many qualified opportunities and paying customers.

Remember, the goal of marketing isn't "leads," "followers," "friends," or "contacts." The goal is revenues.

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