How is Software-as-a-Service or SaaS marketing different from marketing a licensed software product? I hear that question a lot and it’s an important one, because there are significant differences in how to market and how to sell SaaS compared to licensed software, particularly to the enterprise.
The key is to do it cost-effectively, since up-front operational costs are higher with SaaS, while up-front customer revenue is low. It’s a matter of keeping a close eye on the key SaaS metrics. Having a robust SaaS marketing plan is also critical to getting good ROI from your marketing and keeping customer acquisition costs low. You can get a SaaS marketing plan as well as sheets to track the key SaaS metrics as part of our SaaS Business Planning Package here.
Here are the top four differences in SaaS marketing:
There is a fundamental business difference between SaaS and a licensed software product: you’re offering a service as a complete solution and not a product. That difference is reflected in all areas of your business, not just sales and marketing positioning. Even more than for licensed software, marketing is about solving a customer pain point, and the benefits of your service to the customer… It’s not about marketing a list of product features. Customer support, and in fact all customer interaction, must also reflect this service (customer comes first) orientation.
An important aspect of how to sell SaaS profitably is making sure customer acquisition costs are low. Even if a lead becomes a sale, you don’t know how long they will remain a subscriber, nor what their long-term lifetime value will be. The traditional activities of enterprise software marketing are usually too costly to be the primary means of lead generation or lead nurturing in the SaaS model: expensive glossy brochure mailings, meeting with individual customers FTF many times during the sales cycle, investing in a big booth at the annual tradeshow, etc.
With SaaS, marketing is not only about driving leads into the sales funnel, but also about ongoing marketing to your existing customers. A prospect that turns into a sale is only a client for one subscription period if they don’t receive immediate and ongoing value from your service… and you’re not likely to make a profit from that. It is critical to proactively market to existing clients to keep them using your service: communicate case studies, get active in customer forums, publish newsletters, ask customers for feedback, etc.
Since you’re selling a solution, you want your service to come up first when/where a potential customer is looking for that solution to their problem. That means being on the first page on Google when they search for that need, being responsive and answering questions in user groups and on forums, participating in social networks, etc. Even better, find ways to scale this communication through viral means within your customer base, so that your existing clients are supporting and driving new users to your solution.
For more help and tips on marketing your software or SaaS offering, take a look at our
software marketing plan resources here. And download our software marketing plan template package here.