It’s challenging for any company to go from offering a market-worthy product to maintaining the steady growth of the business. For Software-as-a-Service (SaaS) companies, this transition can be quite daunting.
Marketing an abstract product that is constantly evolving and has a lot of competition? That’s certainly a challenging task if there ever was one.
Why SaaS Companies Should Build a Marketing Plan
SaaS companies have to contend with a lot of matters that affect their growth. There’s the fast growing competition that saturates the market. In fact, research predicts that SaaS is expected to expand at an annual growth rate of 22%.
This fast-paced growth provides customers with loads of choices. And as a marketer, you have to be one step ahead of the pack. How do you convince customers that your product is valuable? That it’s worth the price?
Aside from customer acquisition, retention is also a huge concern in SaaS. How do you convince your users to stay and renew their subscription?
Sure, a marketing plan doesn’t fully guarantee that bad results won’t happen. But it’s better to be prepared than to operate arbitrarily. With a well-conceived plan, you can make better-informed decisions about the company’s resources.
Core Steps to Building a SaaS Marketing Plan
There are a number of actionable ways to create an effective marketing strategy and help your business achieve success. These include:
1. Goal setting
The first step in a marketing plan is to set clearly defined goals. This way, everyone can work towards identifying an operational framework that will reach your goals.
For SaaS companies, marketing teams are tasked with generating leads, planning the sales-funnel journey, and driving revenue. Set the goals by establishing a target based on your funnel metrics and revenue-growth sales.
Once set, create a service-level agreement between the marketing and sales teams. Work backwards, checking the amount that marketing is responsible for based on the gross revenue.
From there, calculate how many marketing-qualified leads are needed in a given timeline and what percentage are qualified leads and customers. Such metrics allow you to determine quota and quota-attainment percentages.
Going through this process shows all team members how many visitors and leads are needed to hit the goals. It’s a big part of your inbound strategy.
2. Defining the target audience and buyer persona
Identifying your target audience and buyer persona gives you information on how to acquire new customers. The target audience refers to a specific group of people most likely to buy your products or services.
The buyer persona, meanwhile, is a representation of who your actual buyers are, based on the characteristics of your target audience. Defining the buyer persona entails analyzing what their goals are, what influences their behavior, how they make decisions, and more.
Knowing your target audience is crucial for business. It’s a huge waste of time and resources if you run a marketing campaign without really knowing who your buyers are. According to CB Insights, the top reason why startups fail is because their product had no market need.
However, watch out for these pitfalls: engaging the wrong audience, as well as targeting too narrowly or too broadly. You’d end up wasting your marketing budget on people who can’t afford the product or are simply uninterested.
It’s best to first analyze your customer base to learn who they are and why they are your customers. Describe demographic factors like age, location, occupation and income level, etc. Psychographic data like personality, attitudes, interests and hobbies, and values are also helpful in shaping the buyer persona.
You can also research your competitors’ customers and study why your product and marketing strategy are not attracting those buyers. This way, you can refine your approach to engage more leads.
While marketing budgets vary, mostly from specific goal setting metrics, there are industry standards for calculating marketing budgets. Since the SaaS business model is designed to acquire and retain customers, companies typically spend more on marketing compared to other businesses.
Experts have different beliefs when it comes to budget. Some suggest that SaaS companies invest 80% to 120% of revenue into sales and marketing, while others recommend using 40% of the annual recurring revenue as marketing spend.
An analysis by New Breed Marketing shows that a large percentage of companies are investing considerably in marketing, with a median of 28% of the projected growth rate. And the numbers are worth it: those that invest 35% or more gain higher growth rates as well as diminishing returns.
These benchmarks provide a good starting point for your company in defining the marketing budget that meets your goals. Of course, you’d have to identify a more specific amount that is based on results from tactics and channels you’ve used, cost per lead/customer, and sales process.
To estimate your marketing budget, you should assess Customer Acquisition Cost (CAC), or how much you spend on winning a new customer. Further ensure profitable procedures by carrying out test campaigns.
This way, you work within your budget limits, and at the same time see if campaigns are effective or not.
4. Choosing the right strategy and tactics
Once your goals and budget are determined, you can then decide which strategy and tactics are suited to your product.
Content marketing is one strategy that works wonders for SaaS. It allows for low-cost customer acquisition, shortens the sales cycle, and enables customer retention. Writing about your expertise and how your product provides a solution for users is key to the long-term success of your brand.
Your content should first and foremost drive traffic to your website and social media channels. This is where blogging comes in. Blog posts don’t have to be long and tedious; they just have to be unique, informative, and relevant for your target audience. Aside from blogs, you can also create videos, infographics, slides, and other materials.
While it can be intimidating to produce quality content on a regular basis, it’s worth the effort. HubSpot found that businesses with 51 or more posts see 53% more traffic than blogs with fewer posts.
And content isn’t only used to generate leads; it can help convert them into customers. Premium gated content (e.g., research papers), vendor comparisons, and trial downloads are just some examples of how using content can apply all throughout the sales funnel.
Through social media channels, you can accelerate content reach. Whether organic or paid, using Facebook, LinkedIn, Twitter, and other platforms can impact your audience scope and user engagement.
Aside from content marketing, you can also include email drip campaigns, retargeting, SEO, and other marketing tactics that create opportunities for you to showcase your value proposition. When you nurture leads and continue to provide relevant content to your target audiences, you will drive customer engagement and conversion.
For a SaaS marketing plan to be complete, it has to include how the strategies are measured.
Key metrics that need to be gauged when determining marketing success include:
The monthly recurring revenue, or the measure of predictable revenue stream, is the lifeblood of any SaaS company.
The lead velocity rate, or the speed at which your team is making money, is the most important metric in SaaS. With MQLs, you can have forward-looking projections beyond sales and pipeline forecasts.
The percentage of customers who cancel their subscriptions to your product, gives you insight as to where you need to make adjustments on the product, marketing, or pricing.
The net promoter score, which shows which customers buy more, stay longer, and refer your product to others, provides further feedback on what works and what doesn’t for customers.
When the evaluation process is in place, you can strategize how you can satisfy customers and maintain a successful business.