The quick but thorough guide to SaaS marketing best practices

I get it. You’re trying to grow a profitable software-as-a-service business. And it’s hard.

Luckily, you’ve come to the right place. We’ve helped a number of SaaS companies grow into successful acquisitions. We’re WebMechanix, one of the top digital marketing agencies in the DC-Maryland-Virginia corridor. And we’ve been in business for 10 years, servicing dozens of mid-level B2B software-as-a-service companies.

We’ll show you what works in the real world to boost your company to greater size and profitability. Here are some top lessons learned on SaaS marketing best practices.

There’s SaaS advice based on theory alone, which probably won’t work well. There’s also advice that’s too complicated. Even with healthy rounds funding, companies can find it hard and overwhelming to identify good advice. This article will solve your SaaS problems (like growing MRR and retention) by with digestible best practices. Let’s begin.

A refresher on the basics

This probably goes without saying, but, MRR stands for monthly recurring revenue and it’s the primary metric that investors, bosses, competitors, and you should use to measure performance. You can identify the MRR of each month by simply summing up all the revenue you earned from customers that month.

You should always be asking how you can increase this number. Other than customer acquisition, you can improve this number sustainably in a variety of ways that we’ll cover here.

Fluctuations in MRR do happen from month to month and quarter to quarter, so you should focus on long-term results and trends in addition to short-term metrics. Consider how your efforts today are impacting your results three or ten years from now. Often, what you are reaping now is a product of what you did years ago.

Saas marketing tips

Now that we’ve caught up on the basics, let’s dive into some specific tips to market your software.

Keep retention top of mind (even more than customer acquisition)

Forentrepreneurs, a website ranked as one of the top websites for entrepreneurs by Forbes, found that it’s four times cheaper to upsell—and nine times cheaper to retain—existing customers than to acquire new customers. Customer acquisition usually gets all the attention. But retention is often more important.

Your retention rate, the percent of customers retained from month to month as measured in dollars or number of customers, must be top of mind. This is where the bulk of your profit comes from. You should be able to recite the monthly retention rate if your boss asked you right this second. According to Tomasz Tunguz, a venture capitalist at Redpoint, the median monthly churn (the percentage of customers each month who cancel) for enterprise SaaS marketing is 0.75%, and the annual churn is 10%.

Acquiring a customer only tells you… that you have acquired a customer. You don’t know how long that customer will stay. A customer can stay for a single month or a decade. Your ability to improve retention dictates the profitability of your acquisition costs.

Don’t make the common mistake of spending most of your time trying to acquire more customers if customers aren’t staying long. That’s a huge sign that there’s something wrong with your product in providing recurring value to customers. Fix the leak first.

“The way management treats the associates is exactly how the associates will then treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertising. Satisfied, loyal, repeat customers are at the heart of Wal-Mart’s spectacular profit margins.” – Sam Walton, Made in America

So, that begs the question: How do you retain customers longer?

As Walton mentions in the quote above, how you treat your employees directly trickles down to how your employees treat your customers and how long customers stay subscribed to your software. But you’re probably wondering if employee care matters for a B2C SaaS, since employees don’t have as much human-to-human contact as a brick and mortar store does. Well, a SaaS often still has customer support representatives and live chat.

So, make sure you hire the best and treat them well. Even the programmers that stay behind the scenes impact your product, which in turn impacts how your customers respond.

Sometimes, improving retention comes down to learning more about what your customers want. Just ask them. Run surveys, ask customers in person, find out how you can delight them, and identify what is causing them to leave.

A conversation on the phone can be a hundred times more valuable than a text answer in a survey. You will be able to dive into a customer’s inner psychology and figure out why they purchased a product and what turned them off.

Find ways to keep re-enforcing the sale. Send emails reminding subscribers of all the new updates that have happened or will happen to keep them excited. Set up a marketing automation campaign through a service like HubSpot to automate the process. Don’t stay silent and hope customers forget their subscription—people are smarter than you think, and they’ll figure it out.

Be conservative with estimates, so your acquisition costs don’t break the bank

Identify the average lifespan of a customer (e.g., 13 months) and the average lifetime value of a customer (e.g., $1,200). You can never be a 100% sure of these values because many factors are influencing your estimates. An unexpected innovation by a competitor could drop both values by 20% the next day. A directory you don’t know about could be boosting your brand recognition for a temporary period.

That said, the more you can do to increase the chances that your numbers are accurate, the better off your business will be. Try to be conservative in your estimates—otherwise, you may be shocked when the real values smack you in the face and turn out to be a lot smaller than you thought. For instance, one might estimate the average customer stays for 18 months and is worth $500 based on the data, so he or she spends $450 to acquire each customer. A single change in the market or a wrong estimate could tip that person into being unprofitable.

We all want to keep our cost as low as possible. But what’s a good benchmark? As a rule of thumb, your cost per acquisition (CPA) should be less than 1/3 of the lifetime customer value.

Define and communicate a good value prop front and center

Slack founder’s memo: “Just as much as our job is to build something genuinely useful, something which does make people’s working lives simpler, more pleasant, and more productive, our job is also to understand what people think they want and then translate the value of Slack into their terms.”

To stay competitive in the modern SaaS market, clearly define and display your value prop front and center. Figure out what makes your software different and better than other software.

Being different doesn’t mean that customers will give you cash for the value you’re offering. Figure out what customers would be delighted to pay for, and you will find solid ideas for how to differentiate.

Here are some ways you can stand out from competitors and delight your customers if you work with product development and management:

• Have a lower price.
• Add more features to your software.
• Focus on a specific customer type.
• Offer customer support with more in-depth technical expertise.
• Make the user interface more comfortable to use and more convenient.
• Show industry experience for a specific niche, like entertainment, B2B, or healthcare.
• Position your company inside an ultra-specific niche, such as B2B SaaS for associations.

Once you figure out your value proposition, explain it concisely to prospects in places they’ll be. Your homepage is one of the best places you should display that value proposition, as it’s where most of your new prospects will first visit online. People have short attention spans. If you can’t explain your solution to the average person in a way he or she can understand in a few seconds, it’s too complicated.

HubSpot does a good job explaining its value prop—it’s an easy-to-use, highly-customizable CRM, customer service and marketing automation platform, all in one.

Understand the difference between B2B and B2C

The B2B SaaS industry is different from B2C because it has:

• Lower churn.
• Higher prices.
• Less competition.
• Longer sales cycles.
• More specialization by industry.
• A different measure of success (leads rather than sales).

Pro B2B tip: to get more leads and retain customers longer, offer a dedicated account manager to communicate with and help customers during at least their first month of use.

WebMechanix excels in the B2B SaaS space. We’ve worked with B2B software companies of varying sizes and found that each has different marketing methods that are most effective, such as brand marketing versus search advertising. Each company is different, but there’s often overlap.

As a SaaS digital marketing agency, we recommend building communication flow and alignment between the marketing and sales team because it lets you:

• Improve ROI.
• Test different tactics.
• Move and pivot quickly.
• Focus on one big metric (X leads at X cost every quarter).
• Hit the ground running when people leave or enter the company.

Have basic conversion rate optimization principles in place

One of the best uses of your time to improve the performance of your website is implementing CRO best practices. Most websites in the SaaS space have room for improvement because they focus more on traffic acquisition than optimizing the conversion of existing traffic. But they’re leaving money on the table by neglecting conversion optimization—they’re letting sales from existing traffic slip right through their fingers.

There has been plenty written about CRO on the web. The information is out there; you just have to implement it.

Introduce additional features and benefits

Adding services to your software builds your brand perception and entices more people to stick with what you offer. Layer on more services based on what the customers want. Here are some service ideas:

Integrations

Customers often use lots of different tech tools alongside yours. Adding convenient integration between the tools your customers use and your software is a fantastic way to entice people to try out your software and stick to it. People love convenience. I mean, think of how well Slack integrates with so many apps.

You can set up integrations for:

• Email, social media, and other communication channels.
• Digital design tools.
• Project management tools.
• Campaign production services.
• Advertising management services.
• Database information and storage.

Just be careful to make each integration easy to set up, working, and useful. Some companies make the mistake of adding integrations but leaving them so clunky that they’re more of a pain than a benefit. Start with integrating the solutions that are most popular to your customers and work your way down.

Exceptional customer support

According to American Express Open, U.S. consumers are willing to spend 17% more to use businesses with excellent service.

Most companies overestimate the quality of their customer support, so they don’t do anything to improve it. There’s always room for improvement, and there’s a massive opportunity to get a leg up on your competition by doubling down on a service that customers will always care about and competitors neglect.

With SaaS, you’re selling a service just as much as you are selling a product. Therefore, it’s essential to overdeliver with customer support by adding a human touch when troubleshooting any issues that come up—because let’s face it: they will eventually.

Many software companies lack any personalization or extra touch to show they care about each individual. Adding personalized care doesn’t mean you have to send expensive gifts. A little extra human touch can go a long way. For example, you may find out from a customer’s Twitter that they are huge fans of Slack or HubSpot. Sending a quick email about HubSpot news or a Slack update as it relates to your product can show that you care and that there’s a human on the other end.

These days, too many companies rely on automated messages to service some or all their customers’ problems. Even when there is a live representative, the wait time is higher than desired, and the knowledge and ability to solve each problem is limited. Solve problems so that customers don’t have to call in the first place, and offer increased customer support hours and shorter wait times.

Add tiers and bundles

Tiers offer different levels of your solution for your customers. They help you sell more software, since some people are willing to spend a lot more than others if you give them a pricier (and therefore valuable) purchasing option. Tiers add a comparison factor to the purchasing decision so that the conversation in their head changes from whether to purchase to which package to purchase.

As mentioned, you can add a variety of services to your software as a package deal. People are more enticed to purchase something when it’s bundled together with other bonuses.

Finally, a Tiers page offers a way of quickly comparing options by making the page visual, concise, and digestible.

Do marketing the smart way

Forentrepreneurs found that SaaS companies who spent more on sales and marketing (as a percentage of revenue) grew faster than those who spent less (with the median being 35%). Make sure you are strategic with your message, market, and media.

Your message should be compelling to the audience you are targeting. So, you must have a thorough understanding of the psychology of your audience to identify what will catch prospects’ eyes and motivate them to provide their contact information.

Your market is the audience you have chosen to target. Sometimes, software businesses target the wrong people because they make false assumptions about their target audience. Surveys and research will help you determine the right demographic segments and profiles of your audience. From there, you can use data to test to see which grouping provides the highest ROI on PPC platforms.

Your media are the methods you use to transmit your message to the market. These can be anything from print advertisement to a thread in a Facebook group or a five-second Instagram story ad.

Go where your audience is

Find out everywhere your ideal audience hangs out because that’s where you want to be to get the highest return on investment. Here are a few places that work well for the software industry:

• Blogs
• Quora
• Reddit
• LinkedIn
• Directories
  • Capterra
  • G2 Crowd
• TechCrunch
• Facebook groups
• Software review sites

By continually looking out for new online platforms, you get there before your competition while advertising costs are still low. As of this writing, software directory advertising and SEO are a must (e.g., on Capterra or G2 Crowd).

Master SaaS email marketing

Email marketing is a fantastic tool for getting sales. Email is a HUGE driver of growth for large SaaS with big databases because you can nurture prospects and customers based on granular demographic data, which helps win them over or retain them through personalization.

Here are some best practices to generate a substantial amount of extra traffic and conversions:

• Send blog recaps.
• Send frequent email campaigns.
• Package posts into an eBook offer.
• Collect more email addresses through ads, resources, offers, and giveaways.
• Give a flood of value with informative content before you ask for anything. No one likes to be sold immediately.

Always maintain a HIGH level of communication between you and your customers or prospects. Point out the features they aren’t using and showcase how valuable those features are. Give them relevant news about the industry. You can even automate more of the process than ever before with a chatbot or a CRM system (like HubSpot) — but make sure to keep a human touch, as mentioned earlier.

Use content marketing to acquire and retain

Google Analytics tracking is shallow. You can only pick up the last source a user visited before the conversion point or click.

The modern user’s customer journey is typically complex and consists of many steps. He or she can follow a blog for three months, watch a Facebook live video, follow their Twitter, join the email newsletter, find you again through search, open five tabs to compare choices, and finally purchase through a paid ad. It’s usually not one touchpoint that convinced him or her.

Therefore, you must improve your SaaS inbound marketing efforts. Build supplementary content that delivers entertaining or educational value, showcase how your software’s better than others, and create content that increases prospects’ trust of your brand.

But in this competitive world of content, how can you stand out so your message pierces through, grabs a prospect’s attention, and persuades them that your software is worth it? Here are a few options:

• Use live webinars.
• Use credible stats.
• Turn your content into lists. Listicles do well.
• Use power words in your headlines and display ads.
• Study and model the most shared content in your industry with a tool, like Buzzsumo.com.
• Use videos or infographics to show success stories or innovative ways of using your product.
• Blog about something game-changing or unique. 37 Signals blogged about how they consulted while building software and how they were progressing. At the time, doing both was unusual.

Conclusion

The most common focus for SaaS is growing your MRR, but the trick is not to lose the customers you have.—what’s most important is extending how long customers stay and getting those retention numbers up to something you can’t wait to brag about.

If you follow these best practices, you’ll be able to acquire and retain customers better than you have before. The world of software is always changing, but these timeless tips will always help you build and grow a profitable software-as-a-service business.

What’s your biggest issue when it comes to improving your SaaS digital marketing? Let me know in the comments, and I’ll try to help.