Software now lives in the cloud. Worldwide, the Software as a Service (SaaS) market is expected to be worth $112.8bn by 2019, according to an IDC forecast.
With online software due to account for almost a quarter of all software spending, that means a lot of marketing to a lot of potential new customers. So how will vendors do it?
From the surface, they already are. Hundreds of SaaS software providers swallowed the best-practice casebook years ago, and are singing from the same strategy hymnsheet – freemium is the way to find and convert new customers.
But enterprise SaaS is very different from the approach most cloud software takes. While most vendors deploy their freemium strategy selfishly, implementing a hard in-or-out stance, the real key to effective SaaS marketing is to provide genuine business value to all customers, at every stage.
It is only value that will attract, up-sell and retain your customers. That’s why vendors need to unlearn their conventional approach. Let me explain.
1. Top of the funnel
Before you can gain a customer, you must first acquire a prospect. Deploying advertising through channels like Google and social media is a standard practice. But, once you have a prospect’s attention, don’t sell them hard – instead, give them something useful.
The best approach is to help them see the challenges, limitations and problems with their current ways of working, which perhaps go unseen day-to-day, and to educate them on a new, better way of doing things.
The value you must provide, through content marketing, is to give your audience a framework for re-thinking their work, and seeing an alternative solution in the abstract. Later, when you have gained prospect’s respect, you can begin moving from the abstract to the specific – selling them on the specific advantages of your product within the competitive set, leading a prospect to sign up as a user.
2. In the service
So you’ve signed up a freemium user – now is when the real work begins. At this point, many companies give users two options – a time-limited free trial of the whole feature set, or to pay up to take full advantage. But this hard break means you are likely to lose the majority of your prospects within 14 or 30 days.
Given that the cost of acquiring prospects is way higher than the cost of retaining them, your imperative should be to keep your users in your ecosystem, even if they are not yet paying, long enough that they can gain real product value, and see virtue in levelling up.
A great way to do that is with a perpetual, feature-limited open gate that allows them to gain actual value and productivity. But, once they are inside, you need to monitor and proactively respond to their actions. Identify the five in-product action milestones free users should have hit, and by what date from sign-up, to determine who is getting value and, therefore, is a viable prospect to upsell to a base tier.
When I was at Twilio, we analysed the actions of our biggest 50 enterprise customers, to identify what key actions they took in the first two weeks before paying up, giving us a template for those milestones. But, if users are not progressing through the stages you identify, it is time to present them with either educational materials or direct outreach.
3. Premium up-sell
The best way to move a customer, whether free or paid, up through the payment ranks is to create a tiered service structure. You want to cap the value they get from your product at routine intervals, either by volume (in which case, they can upgrade by up-sell) or by features (which will require a cross-sell).
A nice tip to ensure customers are kept happy is to help them get more value from their current outlay. Getting in touch to advise on steps they could take to increase value-for-cost is a great way to ensure they maximise return before going up a tier.
But intervening to arrest usage stagnation is an important action. Your systems should be monitoring SaaS customers to check for usage. If you see they are failing to return or progress, send an email campaign to inspire them with new platform usage ideas, case studies and how-tos. But also consider reaching out using personal emails – try to understand what customers are trying, but struggling to accomplish.
Big digital services like Uber and Netflix adopt this approach well. If you take an Uber twice a week and then suddenly less, the company will message you. What is the equivalent approach for your business?
4. Retention stage
Gaining customers is not the end. The biggest risk to your SaaS business is customer churn. As Geoffrey Moore’s book, Crossing The Chasm, makes clear, a decline in customer activity may be something you simply have to live with. Oftentimes, customers will sign up to a SaaS for a mid-length duration, accomplish a problem and move on.
Your goal is to fight against the flatlining of customers’ on-platform activity, to keep them engaged at every stage of their customer journey.
Automate your systems to keep tabs on every customer action, on which features they are using. When you add a new feature, tag users based on whether they are using it or not – and send custom messages based on their classification, whether it’s “How is that new feature working out?” or “Did you miss our new feature?”.
Personalising messages that keep customers part of your universe is the key. If you can see that a customer didn’t set up some aspect of their account, prod them about it. If they haven’t entered the data that you know is more likely to give a customer more value in the long term, suggest it. And you can even reintroduce the same content marketing assets that you used to snag customers in the first place, as a reminder of the value they should be getting.
SaaS marketing isn’t rocket science, but it is certainly more complex than a binary free-or-paid equation. Rather, it is a multi-staged journey that begins before a customer has got out their credit card and can end long after. The key is to give customers what they want.