Driving SaaS Revenue with Inbound Marketing
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John McTigue, EVP of Kuno Creative, and Paula Pollock, CEO of Pollock Marketing Group, joined forces to discuss the marketing challenges of Software as a Service (SaaS) companies, presented inbound marketing solutions and showed industry examples. They showed both successful and unsuccessful cases and drew inferences from their marketing strategies. They also shared stories from their own Saas client experiences. If you are an owner, manager or investor in a Saas company or you provide marketing services to the SaaS industry, these slides are for you! * Business planning - commitment to marketing * Marketing strategy - thinking it through * Brand awareness and time-to-market * Competitive edge and differentiation * Content, context and conversion * Freemiums, trials and subscription conversions * Customer acquisition cost and life time value * Reducing churn and cancellation rates
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Driving SaaS Revenue with Inbound Marketing
- 3. What is SaaS? Thanks to Wikibon !
- 4. Thanks to Wikibon !
- 5. What Can You Do With SaaS? Thanks CloudTweaks !
- 6. What’s the Big Deal? Thanks CloudIT !
- 7. Thanks David Skok – SaaS Economics - http://www.forentrepreneurs.com/saas-economics-1 / SaaS Marketing Challenge #1 – Planning
- 9. SaaS KPI’s & Inbound Marketing Goal: LTV > 3X CAC Thanks David Skok – SaaS Metrics http://www.forentrepreneurs.com/saas-metrics/
- 10. Inbound SaaS Strategy What You’re Overlooking And What to Do About It
- 13. “ They’re nice enough people, they just haven’t thought it through.”
- 14. Price Point
- 16. Know Your Target
- 17. 3 C’s of Post-Click Strategy Context Content Conversion
- 18. Context
- 20. Content: Purpose-Driven Design of Experience
- 21. Content: Purpose-Driven Design of Experience
- 22. Content: Purpose-Driven Design of Experience
- 23. Content: Purpose-Driven Design of Experience
- 24. Content: Purpose-Driven Design of Experience
- 25. Conversion
- 26. Conversion
- 28. Examples Early - Growth - Mature - SaaS Stages
- 29. Early Stage
- 30. Early Stage
- 31. Early Stage
- 32. Early Stage
- 33. Early Stage
- 34. Early Stage
- 41. Mature Stage
- 42. Mature Stage
- 43. Mature Stage
- 44. Mature Stage
- 49. Questions? Slides are available here: or here…
Editor's Notes
- So what is SaaS? As you can see in this infographic from Wikibon, SaaS stands for Software as a Service, and you are indeed using it right now via the Cloud. GoToWebinar is a great example of a SaaS application. It’s been developed, delivered and supported exclusively online. There is no software on a disk to install and no single server housing the software. The sales and marketing process is by and large online as are most of the support functions. Business and consumers like this model because you only pay for what you use, it’s easy and fast to deploy, you can pay with a monthly subscription, it’s relatively easy to support and requires less in-house infrastructure and staff.
- The other big advantages of delivering software via the cloud include anywhere, anytime access, improved reliability and security, more free choices and software that’s updated automatically. While the concept of SaaS and Cloud Computing isn’t new – after all Amazon, Google, Salesforce, IBM and many others have been using it for years – this is one of the fastest growing sectors in the world and SaaS is rapidly gaining ground in replacing traditional on-premise software across the board in small businesses and enterprises as well.
- What can you do with SaaS? Pretty much anything you can imagine. When I first saw this cartoon on the left, I Google “homework as a service” and sure enough, there’s a company called MyMathGenius.com that will do your math homework for you and a service called writemypapers.org that will write papers for $10 a page. You might want to check your home computer to see if Junior’s improved report card is actually on steroids. So with all of these apps available via the cloud, have we made the lives of our IT folks easier, or have we eased them out the door and saved ourselves a bunch of money? I’m not going to debate that point today, but it is a very hot topic to say the least.
- We’ve talked about the benefits of SaaS and Cloud Computing. Now let’s take a look at the business impact. It’s estimated that the market for SaaS will soar to $100 billion by 2014, and it’s tripled in the last year or so. Not bad in a global recession. The other important thing to note is that the market is now growing equally well among small and large companies. Previously SaaS has seen a slower adoption rate among larger companies because they typically have huge investments in on-premise software, greater need for integration with in-house systems, greater need for security and lots of resistance from the IT department. The economy itself seems to be winning the argument as all companies seek better ways to communicate and work while reducing infrastructure costs. So there’s a huge upside and a seemingly unlimited market for SaaS, what’s the problem if any?
- Let’s take a quick look at some of the challenges facing a new or recently conceived SaaS company. In this diagram I’ve adapted from David Skok’s excellent series of articles on SaaS economics. If you haven’t read these articles, I highly recommend them. For the purposes of this overview webinar, I’m breaking down the evolution of a SaaS company into three stages. Your looking at revenues vs time here. During the startup stage your average SaaS company is facing some daunting challenges. You’re spending much more than you’re making on product development, sales and marketing and overhead. Assuming you’ve raised enough cash to get going, you must work hard to drive up sales before the funding runs out. Assuming your marketing strategy is working and there aren’t any major disasters to overcome, you reach break even and start to enter the Rapid Growth stage. Here it’s essential to grab market share as quickly as possible so that your competitors can’t get a toehold and start to syphon off sales from you. Assuming you win that battle, eventually you become a mature SaaS company with a lot of monentum. Your rate of growth from here on depends on your ability to capture new customers and hold onto them as long as possible.
- Let’s break this down a little further and see where inbound marketing can really pay off. In the startup phase, you’re really concerned about driving new sales as quickly as possible to overcome the net deficit or what David Skok calls “the cash gap”. You need to increase brand awareness in a hurry, get your product to market and generate a ton of leads. Lead generation is crucial in the startup stage. You’ll probably be using some kind of “freemium” plan or free trial to get them hooked, then follow-up with inside sales to convert leads to customers. Companies with a so-called “touchless” model in which pretty much everything is done online benefit from having to invest less in sales and support, but most SaaS companies are looking at a pretty big cash gap during startup. Getting customers to pay in advance for a year’s subscription is a good way to reduce the gap as well as finding creative ways to raise money, such as writing and selling a book. We’ll cover more about the role of inbound marketing here shortly. During the rapid growth stage, you have some momentum already. Now you need to capture the market through aggressive marketing while at the same time reducing the cost to acquire a customer (or CAC) and reducing customer cancellations or churn. Inbound marketing can really help you in both respects. Our goal is to raise the lifetime value or LTV of a customer (or the gross margin of each customer over time) while reducing the cost of acquiring new customers or CAC.
- Here’s another great chart from David Skok’s articles. The challenge facing SaaS entrepreneurs and investors is a balancing act between the forces of customer acquisition costs and lifetime value. As you can see on the left, inbound marketing and social media are important in driving down CAC by reducing cost per lead and increasing conversion rates. The trick is overcoming the costs of your sales team and any advertising or other outbound marketing you need to do to build brand awareness. On the other side of the scale, you want to increase customer satisfaction and reduce churn to increase LTV over time, and inbound marketing is great for that too. We’ll see some examples shortly. Now I’m going to turn it over to Paula, and she will talk about inbound marketing strategy for Saas companies, Paula?
- No matter our target, price point, funding, time in business - Sales and revenue come down to one thing that we all have in common. We’re All Looking for Nuts!
- Wag the Dog and why it’s relevant
- High or Low Credit card or purchase order
- Sales Cycle: Depending on the complexity and price point of your software service, your sales cycle can be Common Saas sales models: basic: mostly automated and paid with a credit card for immediate download with minimal human contact, or average: automated, but has well-defined options to talk with a sales person; paid, limited trials complex: where online is one of many campaigns used to convert marketing-qualified leads; sales people engage at the point where they become sales-qualified leads Marketing-qualified leads: prospect who is interested but needs convincing Sales-qualified leads: lead that has met the criteria that justify a salesperson’s engagement
- If this guy is searching for nuts, this might be overkill. Although, he could shoot down an entire oak tree. This is the place where the problems begin. Initial Target – thinking you can bypass all the teams and go directly to the decision maker, Multiple Targets – targeting both end users and Sales Cycle Escalation – If you have an average or complex sales cycle, having a well-planned process to escalate your marketing-qualified leads further up your cycle will warm them into becoming sales-ready leads with more predictability.
- Context -
- Market Segmentation Traffic Source (Ad, Keyword, Email, Link) or Behavioral Profile Who are these people? What problem are they looking to solve? What roles are participating in the decision? (B2B) What stage are they in their buying process? Seasonal , events, campaigns affecting the actions
- What do they want? What is their logical next step? What is your goal for them? Effective User Flow
- Segmentation needs to be “thought through” Traffic Source or Behavior Profile
- Number of Choices Frictionless Decision Payoff for Choice
- Navigation (Format inspired) Full, contextual, path-driven, escape
- Persuasive Content Rational, Emotional, Social Is the content beneficial even to those not converting? Customer testimonials Trustmarks (big client logos)
- Offer Goal Inspired, scarcity (limited time?) Layout: meaningful, timely? Imagery: affective, cohesive? Brand standards? Copy: accurate, persuasive? Interaction: compatible, fluid? Video, Social features load speed very important!!!
- Call to Action Form, length, relevance, ease-of-use, progressive conversion this is the point where you decide if your target will respond more favorably to a multi-step process Button(s), position, size, color, language
- Fulfillment, subscription, shopping cart, check out Marketing Automation, CRM, Email Thank You page Follow Up Conversion this is the point where if you intend to continue brand building you can send further relevant content; we’re no longer Persuading we now assume a retention path that validates user decisions, offers assistance/further services, and upsells additional products
- Metrics Bounce rate, engagement, conversions CPA cost per action , AOV average order value , LTV lifetime value of a customer Segment knowing all of these by each of the segments you target, watch for trends Testing A/B, Multi-variate Context, content, conversion Refine your current process, or if results are not congruent with goals this is where you can test really big changes in any of these three areas without sacrificing your current momentum
- If you aren’t familiar with 37 Signals, you’re probably using one of their SaaS products and just aren’t aware of the company behind it. They sell the enormously popular productivity software suite Basecamp, Highrise, Backpack and Campfire. How they got started is nothing short of amazing.
- These guys pretty much invented SaaS, and you can see from the timeline on their website that they were indeed early adopters of much of what we now call inbound marketing and SaaS. We’ll focus on some of the cool ideas they had to get the company rolling, including creating a blog, writing their own software programming language and writing a book.
- 37 Signals started out as a web design firm in 1999 and started blogging about it ten years ago. There weren’t very many bloggers back then, certainly not companies blogging regularly. They talked about all aspects of web design, building a company, writing software, project management, you name it. This was the first blog I ever subscribed to and I still read their posts regularly today. With the blog they created a following of web designers, programmers, entrepreneurs and venture capitalists. In other words, they created a market before they even had a product. Then when they had a product, a great way to communicate with customers, spread the word and create customer loyalty.
- The next smart thing 37 Signals did was create a niche for themselves. They got fed up with the project management tools they were using for website designs, so they decided to build their own, and that was the beginning of Basecamp. They hired a very smart guy named David Heinemeir Hanson to build their tools, and what did he do? He got fed up with the programming languages out there at the time and created his own called Ruby on Rails. Ruby was so simple, elegant and easy to code with, it caught on like wildfire among the development community, and soon 37 Signals had a cult-like following in silicon valley and other geek centers around the world. So when Basecamp was released in 2004, there was a loyal following and customers waiting to buy it. They were also smart about picking their target market. Web developers working with the clients would insist on using Ruby code and Basecamp for managing their projects, so they would sign up all of their clients. Brilliant.
- Last but not least 37 Signals got smart about funding too. They had spent so much time and creative energy building their company and products, why not share that with other entrepeneurs? So they wrote a book called Getting Real and have sold over 30,000 electronic copies @ $19 a pop. That’s more than half a million dollars to help offset their early stage costs. Great strategy.
- What have they been doing lately? 37 Signals creates a lot of customer loyalty through customer profiles published on their website and through engagement via social media. What this does is reinforce the bonds between 37 Signals and its customers, it reduces churn, it fosters referrals and enhances the lifetime value of customers. 37 Signals was a pioneer in SaaS and has been a huge success due to its creative use of marketing and smart business development strategies.
- Next up is HubSpot. HubSpot sells inbound marketing software as a service. They started up in 2006 and have been growing rapidly ever since. We know these guys well since both Pollock Marketing and Kuno Creative are HubSpot partners.
- In fact, HubSpot was recently ranked by the Inc 500 as the 2 nd fastest growing software company in the U.S. and the 33rd fastest growing company overall. How do they do it?
- If you know anything about HubSpot or inbound marketing, you know that HubSpot founders invented the term inbound marketing, literally wrote the book on the subject and have by all accounts become the dominant player in the online marketing software industry. They have certainly cornered the market in the inbound marketing sector of online marketing. Like 37 Signals, they created a market for themselves. Another smart thing they did early on was to invite some of the top influencers in the market like Chris Brogan and David Meerman Scott to become advisors for HubSpot. These guys, along with thousands of brand advocates and customers have helped to generate a huge following and a profitable business for HubSpot since the early days.