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Archive for the category: SaaS Marketing

Aligning SaaS Customer Success

saas marketing - saas customer success alignmentSaaS businesses develop intimate, long term relationships with their SaaS customers. Keeping that relationship positive and aligned over the years is a real challenge. In fact, many public SaaS companies have yet to turn a profit. If they don’t keep their customers around for years, then all that capital invested in customer acquisition will have gone to waste.

This is the third post in a series that explores the importance of SaaS customer alignment across the SaaS customer lifecycle. The last post examined the challenges of aligning SaaS customer acquisition, resulting in a short a list of SaaS Customer Alignment Tips. This post continues the list of tips into the second half of the SaaS customer lifecycle by examining the challenges of aligning SaaS customer success.

Churn Starts on Day One

It is typical in B2B software for customer acquisition to eat up 50% or more of total costs. In traditional licensed software, that cost is immediately recovered when a deal is closed by the revenue of the deal. There is very little uncertainty about the value of any new contract: it is the margin reaped between license revenue and acquisition costs. In SaaS, however, customer acquisition costs are recovered over time as the customer renews each period. There is a great deal of uncertainty about the value of any new contract, because the customer might cancel early or stick around for years.

saas marketing - saas customer alignment stock

The economics of a SaaS contract are like that of buying a stock or a bond, where you make an up front investment based on the promise of future returns. As the future unfolds, the value of that investment has little correlation to the price that you paid. It is determined by how effectively the underlying business manages its future. In SaaS, the work doesn’t end when then deal it is signed. It begins, because churn starts on day one.

SaaS Customer Alignment Tip #7

Don’t Fumble Your Handoffs

saas marketing - saas customer alignment fumbleSeparating hunters and farmers is a common SaaS sales best practice. Deals are closed by an aggressive quota-carrying sales team: the hunters, and then handed over to a more service oriented group of account managers and customer success reps for on-boarding, renewals and up-sell: the farmers. Your SaaS customer has only one SaaS customer life cycle. Every time you hand-off a SaaS customer relationship, you create the opportunity for that SaaS customer to fall through the cracks in your process. Read more »

Aligning SaaS Customer Acquisition

saas marketing - saas customer acquisition alignmentSaaS businesses can be overwhelmingly complex. If the multi-tenant, cloud-based technology isn’t enough, there’s the recurring revenue model which creates all kinds of challenges from accounting to sales compensation to funding. Then, there’s the marketing. Getting noticed on the Internet gets harder every year and almost every SaaS product category has a crowded field of competitors. And of course there is mobile, which should come first right? In my own SaaS experience, be it scaling a sales and marketing team, consulting for SaaS startups or bootstrapping my agile marketing SaaS, Markodojo, I find myself returning to a common theme that always cuts through the complexity: SaaS customer alignment.

This is the second post in a series that explores the importance of aligning the goals and actions of the SaaS customer with the goals and actions of the SaaS business. The first post in a series introduced a simple framework for understanding SaaS customer alignment and its many benefits. This post digs deeper into the challenges of achieving SaaS customer alignment in the early stages of the purchase process. Along the way, we kick-off a list of tips to help SaaS businesses improve SaaS customer alignment at every stage of the SaaS customer lifecycle.

Not Everyone Needs Your Stuff

We love our SaaS companies and we love our SaaS products. They’re our babies! But, your baby always looks cuter to you than it does to everyone else. Selling to everyone is one of the biggest causes of poor SaaS customer alignment. Some people just don’t need your stuff, and they will never appreciate the unique qualities of your baby. Selling to everyone is an ill that inflicts many businesses, not just SaaS businesses, because it is baked into the economics. When growth is the primary determinant of SaaS company value, then there is always pressure to expand your available market. Unfortunately, your available market was probably determined a long time ago when your baby was conceived. Expanding your available market generally requires a new product module, a new SaaS product or even a new business unit.

saas marketing - poor saas customer alignment

SaaS customer acquisition should focus on maximizing available market penetration, not increasing available market size, and to do that you have to have a very clear picture of your target SaaS customers. Who truly needs your stuff? Why do they need it? What do they get out of it? How many are there? And, how can you reach them? This information goes by a lot of different names: market segments, qualification criteria, pain points, buyer personae, customer profiles, use cases, etc. The important realization is that they are all the same thing in the end: tools that reinforce SaaS customer alignment. The primary difference is in the depth of data; because you tend to have more of it the deeper the SaaS customer proceeds into the purchase process.

SaaS Customer Alignment Tip #1

Create a Common Customer Understanding

saas marketing - saas customer alignment knowledgeChances are your SaaS Marketing VP has some version of market segments, buyer personae, and lead scores, while your SaaS Sales VP has some version of qualifying criteria and pain points, and your SaaS Product VP has some version of users and use cases. Do they match? Are they shared? Do they use the same language? Read more »

Avoiding Poor SaaS Customer Alignment

saas customer alignmentWhen I’m not completely absorbed with my agile marketing software startup, I do a bit of SaaS consulting on the side. SaaS colleagues come to me with a wide variety of problems from positioning to sales compensation to churn analysis, but lately I’ve noticed a common theme: poor SaaS customer alignment. SaaS businesses develop intimate, long term relationships with their customers that are enabled by the always-on connection between the SaaS customer and the SaaS business through the SaaS product. Like many long term relationships, it is founded on a recurring cycle of needs fulfilled and expectations met, or not. And I don’t just mean customer needs and expectations. There are two sides to every relationship. SaaS businesses need to make money as much as SaaS customers need to spend it. SaaS customer alignment means aligning the goals and actions of the SaaS customer with the goals and actions of the SaaS business at every stage of the SaaS customer lifecycle.

This is the first post in a series that explores the importance of SaaS customer alignment. This first post introduces a simple framework for understanding SaaS customer alignment and its many benefits. Future posts will examine the challenges of achieving SaaS customer alignment in customer acquisition, customer success and early product market fit.

saas customer quality

In SaaS, customers are the fundamental unit of measure. Each new customer brings a new thread of subscription revenue that is woven into a larger tapestry to form the total recurring revenue of a SaaS business. The quality of that tapestry hinges on the quality of your SaaS customers. But,what makes for a high quality customer? Read more »

Eleven Secrets of SaaS Product Design

saas product secretsSaaS product management professionals should always remember that there are four P’s in marketing, one being product. Unfortunately, software companies have a bad habit of thinking about product in isolation from the rest of the marketing mix. This is a particularly costly mistake in SaaS and is the root cause of many a SaaS Don’t. Unlike other businesses, SaaS creates a real-time, always-on connection between the customer and the company through the SaaS product. Smart SaaS product managers look to establish this connection as early as possible and to leverage it throughout the entire SaaS customer lifecycle.

This is the fifth and final post in a series that explores SaaS marketing strategies that drive growth throughout the customer lifecycle using the three fundamental SaaS growth levers: customer acquisition, customer lifetime value and customer network effects. In the course of this exploration, we’ve encountered numerous examples where the SaaS product itself is the instrument of growth. This final installment explores the product P in more detail providing Eleven Secrets of SaaS Product Design that drive growth at each stage of the customer lifecycle.

The Boundless SaaS Product

What are the boundaries of your SaaS product? Login? Purchase? Mobile? From a SaaS customer’s point of view, there is little distinction between your SaaS product, website, mobile app, support, service and community. It is a seamless online experience…if you design it that way! Great SaaS product management professionals don’t simply specify features and functions, they create online experiences that satisfy business, professional and personal needs. And in the course of satisfying those needs, they drive revenue growth by pushing the three fundamental SaaS growth levers.

Below are eleven SaaS product management secrets for creating SaaS products that sell themselves, one secret for each stage of the SaaS customer lifecycle. Underscoring each secret are two enduring economic themes: Read more »

Breaking Through The SaaS Ceiling

saas growth marketingIt’s the dream of every Internet entrepreneur to build a business that goes viral. Yet the sad truth is that most do not. It’s hard to think of any other industry with such a winner-take-all mentality as Internet software. The volatile combination of small market entry costs and big network effects creates wave after wave of disruption and consolidation, and quite a few millionaires along the way. Alas, virality is an elusive goal, particularly in SaaS. For this reason, SaaS Don’t #10 insists that you should not depend on network effects. Instead you should focus first and foremost on satisfying each and every single customer. But, if you’ve done that…bring on the hockey stick!

This is the fourth post in a series that paves the path to sustainable SaaS growth. The first post in this SaaS growth series introduced the concept of the SaaS growth ceiling, as well as the three fundamental SaaS marketing levers for breaking through it: customer acquisition, customer lifetime value and viral customer network effects. This installment explores the third, final and most funnest SaaS marketing lever: network effects, offering three proven SaaS marketing strategies to drive SaaS growth by getting your customers to sell themselves.

The Roof is On Fire!

saas growth marketingYou don’t need a PhD in economics to understand network effects; you just need to know how to throw a party. No one wants to go to a lame party. The more people that are going to a party, the more other people want to go. And, the more they are willing to pay to get in. If you’ve ever tried to get people to move from one party to the other, say from dinner to dancing, then you know that you have to get them ALL to move at once, or nobody moves. Finally, if your party gets big, crowded and mainstream, the hipsters start leaving to find the next big thing. So, let’s party!

Read more »

SaaS Marketing | Maximizing Customer Lifetime Value

saas marketingWhat’s the stronger driver of SaaS company growth: customer acquisition or customer lifetime value? The answer is yes. Rapid, sustainable SaaS growth is equal parts customer acquisition and customer lifetime value. Simply multiply these two numbers and you get your SaaS growth ceiling, the most revenue your SaaS business can ever achieve. Period. The end. If you want to change your future, you have to change one of these numbers. However, most SaaS marketing professionals think their job ends at purchase. In SaaS, the intital purchase is only the first of many. Keeping each and every customer around longer and making the most of the business relationship along the way has as much impact on SaaS company growth as acquiring more customers. Therefore, good SaaS marketing lasts a customer lifetime.

This is the third post in a series that paves the path to sustainable SaaS growth. The first post in this series introduced the three fundamental levers of SaaS growth: customer acquisition, customer lifetime value and viral customer network effects. This installment explores the second lever and provides three proven SaaS marketing strategies to drive SaaS growth by maximizing customer lifetime value.

Two Views of Customer Lifetime Value

There are two sides to every purchase: buyer and seller. Maximizing customer lifetime value isn’t something you do to a customer, it’s something you do for a customer. In SaaS, customer lifetime value is often expressed as average recurring revenue times the average customer lifetime (one divided by percentage churn rate), however, this is only the sellers side of the coin. When thinking about what you can do to maximize customer lifetime value, it is a good habit to think about it from your customer’s point-of-view. For example, reducing churn means giving your customer a reason to stick around, while upselling and cross-selling mean solving more problems, incresing satisfaction, and providing greater ROI. Getting paid is just an end to the means.

SaaS Marketing Strategy #5 | Reduce Churn

There is only one SaaS marketing strategy to reduce churn: Read more »

SaaS Marketing | Accelerating Customer Acquisition

saas marketing acceleration SaaS marketing professionals know that customer acquisition is the name of the game. What they generally don’t know is that sustainable SaaS growth requires accelerating customer acquisition. In the long run, acquiring more customers is not enough. Your SaaS marketing strategy must aim to acquire more customers, faster. Otherwise, churn wins and you stop growing.

This is the second post in a series that paves the path to sustainable SaaS growth. The first post in this series introduced the three fundamental levers of SaaS growth: customer acquisition, customer lifetime value and viral customer network effects. This installment explores the first lever and provides four proven SaaS marketing strategies to drive SaaS growth by accelerating customer acquisition.

The SaaS Marketing Mandate: Remove Buyer Roadblocks

While shopping can be fun, buying a SaaS product is hard work. As the buyer, you have to figure out your problem, research and evaluate solutions, negotiate a purchase, and learn how to use yet another piece of software. Unfortunately, most SaaS vendors make it even harder than it has to be. Without world-class SaaS marketing, the typical SaaS product is hard to find, hard to understand, hard to buy and hard to use. And, every ounce of work creates a roadblock for the would-be buyer.

saas marketing roadblocks

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The fundamental goal of SaaS marketing is Read more »

Driving SaaS Growth Through The Customer Lifecycle

saas growth SaaS growth isn’t a goal; it’s an obsession. The good news is that SaaS growth can be very smooth and predictable, because of the SaaS recurring revenue subscription model. The bad news is that SaaS growth can also be predictably slow the bigger you get. After a few years of rapid SaaS startup growth, it’s easy to find yourself on the short end of the hockey stick if you don’t know the right levers to push.

The Three Levers to Break Through the SaaS Growth Ceiling

At any given time, you can calculate the SaaS growth ceiling for your SaaS business with a simple formula: customer acquisition rate divided by percentage churn rate. For example, if you acquire 200 new customers each year and your percentage annual churn rate is 20%, then at 1,000 customers ( 200 / 20% ) your growth will slow to zero, because customer churn will equal new customer acquisition of 200 customers per year. New customers come in the front door, while old customers leave out the back. Moreover, you will begin to hit the SaaS growth ceiling in exactly one average customer lifetime of 5 years, equal to 1 divided by your 20% churn rate. Finally, your SaaS growth revenue ceiling will equal 1,000 customers times your average customer subscription, e.g., $10M per year for an average subscription of $10,000 in annual recurring revenue. Without a fundamental change to your business, that’s all the SaaS growth you get.

This SaaS growth ceiling depicted in this example is calculated generally by the following basic formulas from the SaaS metrics series.

max SaaS company # customers = acquisition rate ÷ % churn rate

max SaaS company revenue = acquisition rate x average subscription value ÷ % churn rate

Alternatively…

max SaaS company revenue = acquisition rate x average customer lifetime value

This last formula highlights two of the three fundamental SaaS growth levers: acquire customers faster and increase customer lifetime value. If you double your customer acquisition rate, the SaaS growth ceiling doubles with it. Double customer lifetime value by doubling average subscription value or halving your churn rate and again the SaaS growth ceiling doubles.

In the end, however, churn always wins. Churn scales with the size of your customer base. Churn is negatively viral and can only be countered completely by a positively viral growth lever: network effects. Adding more sales reps and increasing your marketing spend are not enough. These strategies may increase your acquisition rate, but to outpace churn you must increase your acquisition rate again and again and again.

The SaaS Growth Levers Follow the Customer Lifecycle

The three fundamental SaaS growth levers: customer acquisition rate, customer lifetime value and viral customer network effects arise naturally and sequentially as a SaaS business matures. Read more »

SaaS Branding | 6 Challenges of Killer Cloud Brands

SaaS branding has some unique challenges that aren’t covered in the average MBA program. As a new communication channel, the Internet has altered the rules of branding for almost every category of product. However, cloud brands that owe their very existence to the Internet often find that the message, the medium and the merchandise are a confusing tangle of clicks, words, sounds, images and experiences that is difficult to describe.

I’m not going to re-hash branding 101, there are plenty of resources available for that. I’m also not going to provide a fool proof recipe for creating killer cloud brands. Anyone who says they have that is lying. What I will do is provide some SaaS branding food for thought by exploring 6 key questions you need to ask before committing to your SaaS branding strategy. Because once you commit, it’s not easy to change. All brands, not just cloud brands, are ultimately owned by their buyers, not their sellers. Once you put yourself out there, the evolution and results of your SaaS branding strategy are no longer your own. Your first impression may also be your last, so you should strive to get it right.

Are You in a Category unto Yourself?

saas branding categoryWith respect to cloud brands, everyone wants to own the category. It’s where the big, BIG money is. Moreover, the combination of network effects and switching costs common on the Internet often demand that you attempt to own the category, as everyone else is destined to be an “also ran.” Consider the status of the direct competitors of Salesforce.com, Google, and Facebook.

I like Al and Laura Ries description of the relationship between categories and brands.

“The mind is like a sorting rack at the post office, which has a slot or ‘pigeonhole’ for every name on the letter carrier’s route. Every piece of mail is put into the hole corresponding to the name on the mail. If there’s no hole for a new piece of mail, it’s set aside in a pile called ‘undeliverables.’ So too with brands. The mind has a slot or pigeon hole for every category. If the pigeonhole is named ‘safe cars,’ this is the hole for a brand called Volvo.”

When you are creating a new brand, your challenge is to shove your way to the top of the slot by focusing on your unique and valued qualities over the competition. Building a new category is 3X more difficult, as you must first clarify and create a new pigeonhole where none currently exists, second promote the unique and valued qualities of the fuzzy new category relative to unclear alternatives, and third hold on to the top of the slot by outpacing the competition (which will come eventually if the category is real).

If you find yourself in the enviable position of being a BIG category unto yourself and the nature of that category demands that you own it, then your SaaS branding strategy should focus on crystallizing that confusing tangle into a simple, easily describable position that is unlike any other. No easy task as we all have very big, complex post office racks. Fail and your brand becomes “undeliverable.” If you find yourself in a crowded category where you must fight your way to the top, then focus on your unique differentiation to pull away from the crowd. In either case, realize that positioning alone will not win the battle of the cloud brands; you must also deliver.

Are You Experienced?

saas branding experiencedCloud brands are the most experiential of service brands. What you see and hear isn’t always what you get. You can’t taste them. You can’t smell them. You can’t touch them. You can only do them. Cloud brands must be experienced to be truly understood. In addition, most cloud brands follow a recurring revenue subscription model which precludes any ongoing discrepancy between your message and your service. Your SaaS branding strategy must be tempered by reality, such that your service absolutely delivers on the promises made in the name of your brand.

The experiential nature of cloud brands is one of the myriad reasons behind the free trial imperative of SaaS. If you are tired of explaining and explaining and explaining your cool new category or you can’t quite come up with the perfect words to describe your difference, any car salesperson will tell you that there is no better way to seal the deal with an uncertain buyer than a test drive. With cloud brands, doing is believing.

The cloud brand experience does not begin or end with your product. Read more »

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