Saturday, April 2, 2016

Why Drive-by Marketing Doesn’t Work

So you’ve just shipped your new software-as-a-service (SaaS) solution, and for sure you’re eager to tell the world:  get out a press announcement, roll-out a search engine marketing campaign, sign-up for industry events, and whatever else you can think of.

Here’s some advice:  Slow down.

As tough as it is to resist the urge to do something, hold off a bit before going full blast with all this marketing activity.

And if you’ve already started, hang on and take a deep breath.  You may have already found that all this activity isn’t delivering the results you were expecting.  The hodgepodge of tactics and the drive-by approach is taking up lots of time and costing money, but at the end it’s not generating much business.

When SaaS companies find themselves in this bad spot, there’s usually two culprits to blame:  
  1. A poor message
  2. No plan.

The prospect doesn’t really care how your solution works

I’m sure you can do a great job explaining how your solution works and what each of its functions do.

But the prospective customer has other issues on their mind, such as:
  • Who is this for?
  • What problem does it solve for me?
  • Why is it better than alternatives?
It doesn’t really matter how well you execute on a search engine marketing plan, direct mail, or other tactics.  Without a well-thought-through value proposition and messages that answer these questions, the prospective customers won’t respond.  They really don’t care.

Activity without a plan doesn’t move you forward

Just because you’re scrambling to execute on all kinds of marketing activities doesn’t mean you’re making any meaningful progress in the right direction. 

Effective customer acquisition requires a well-structured plan.  It needs to walk through each step of the evaluation and purchase process:
  • Build visibility and generate leads
  • Convert leads into qualified prospects
  • Close prospects into paying customers
  • On-board customers
  • Retain and upsell
Drive-by marketing is unlikely to get prospects through this entire process.  Instead you’re likely to be stymied by bottlenecks and gaps.  Perhaps you’ll generate a huge volume of leads, but find yourself with no mechanism to convert them to prospects, or you'll close a steady inflow of new customers, but have no way to make them successful and retain them.

You can experiment with a whole range of marketing tactics.  There are no hard and fast rules about what might work for your particular audience.  But without a compelling value proposition and a well-structured customer acquisition plan, you may be just wasting time and money.

Saturday, March 5, 2016

Competing in a crowded market

First a confession.  Every once in awhile I get a call from a SaaS company looking for help with their customer acquisition plan, and my first thought is "Are you kidding?

The company tells me that they've developed a wonderful solution with a boatload of impressive features.

But they're selling into a market that's already crowded with other vendors.


Just what the world needs - another HR or CRM or email marketing or whatever solution.

Finding an unmet need, a hole waiting to be filled

But on second thought, I think maybe there's a way for this to work after all.  Maybe we can make the case that the world does, in fact, need another solution.

The challenge is to figure out a way to present this new solution as something different and better than the other choices that are already out there.  We need to determine if there's an important unmet need in the market that this new solution can fill.

Sometimes being late is an advantage

By the way, sometimes there’s an advantage to being a late-comer to the market.

The early entrants have already done much of the missionary work, educating the market and customers are already familiar with the category.

Having had more experience with other solutions, the customers may better understand their needs and preferences. It’s easier to determine what’s really important to them.

A late-comer can also learn from the experience of the established vendors and avoid their mistakes.

Tough to differentiate on features or price

Sometimes, companies’ first inclination is to try to differentiate themselves on features.  “Our solution has this function and the others don’t.”

Unfortunately that’s hard to pull off.  For one, getting prospects to carefully evaluate all their choices feature-by-feature can be tough.

Besides, since SaaS companies can develop and deliver new functions fairly quickly, it’s hard to sustain this advantage for very long.

Others will consider positioning themselves as the “lowest price” solution.  There are ways to make this approach work, but it can present challenges, especially when competing against larger, more established vendors that have deeper pockets and can match the low prices.

Lots of options to look different and better

But there’s no reason for SaaS companies to limit their differentiation options to just features or pricing.

They could, for example, decide to position themselves as the vendor providing the best support or expert guidance.

Or they could highlight the fact that they specialize in a specific industry or market, and they better understand the needs of those particular users.

Or they might consider making a virtue of their smaller size and claim that they are more attentive to each user.

Or… whatever other benefit that might be valuable to the prospective customer.  (Contact me if you need help figuring that out.)

If you’re competing in a crowded market, trying to stand out from the rest isn’t easy… but it’s usually not impossible.

Saturday, February 6, 2016

Why Your Prospects are Ignoring You

Trying to connect with someone while they’re scanning their Twitter feed, replying to texts, and staring at a full inbox, while desperately trying to meet deadlines for whatever deliverables are on their long to-do list isn’t easy.  But if you’re the poor marketing person trying to reach prospective customers, that’s exactly what you’re up against. 

And that’s especially true if you’re marketing a software-as-a-service (SaaS) solution.  That’s because the person evaluating the solution is often the same person that will be using the solution.

The evaluator is also the user

If you sell an HR solution, you're trying to reach the HR manager.  If you sell a sales automation solution, your audience is the sales executive.  If it’s a marketing automation solution, it’s the marketing professional.

When that's the situation you face, here’s the challenge:  All of these folks are busy.  They all have a full time job.  As much as you’d like to think otherwise, these folks have other things to do besides evaluating your solution.

Gone are the days when an expert from IT may have taken the lead in finding and evaluating software solutions.  It's a lot different for most SaaS solutions; no one has that dedicated assignment.
  
If you're the marketing person, what that means is that you need to work extra hard to grab a slice of your prospective customer’s attention.

Here are a few idea to help:

Easy to grasp message: Whatever it is that your solution does, you need to articulate the value clearly and concisely.  If you force the prospect to work too hard to figure out how you can help them, they simply won’t bother.

Create urgency.  The prospective buyer needs to feel a sense of urgency about the problem that your solution addresses.  They need to know that every month, every week, every day that they put off solving the problem, their business suffers… badly.  Evaluating and purchasing a solution is not something they can afford to put off for long.

Talk business benefits, not technology:  Remember that your SaaS buyer typically is in sales, marketing, finance, HR, or some other non-IT role.  They care about solving business problems: closing more business, optimizing marketing programs, improving cash flow, filling open positions, or whatever it is in their job description.

When you talk to them about your solution, you need to talk to them about business benefits, not just features and functions.  They care more about what your solution does and how it can help their business;  they don’t care so much about how it works.

Be consistent:  To get through to these busy buyers, repetition works.  They usually need to hear your message over and over before it has an impact.

If you’ve crafted an effective value proposition - something that is easy to grasp, creates a sense of urgency, and addresses business benefits - tell the same story everywhere.  The prospective customer should see it on your website, at events, in sales presentations, on webinars, in papers, and anywhere else you’re promoting your solution.

Resist the urge to constantly tweak the message.  You may be sick of hearing yourself say the same words every time, but that's what it takes to get through to your prospective customer.

Saturday, January 9, 2016

Bad leads cost you money

I know this is hard to believe, but sales people occasionally complain about marketing.  And they usually moan about two things in particular:
  • Not enough leads
  • Poor quality leads

I’ve seen this a lot, so I can tell you how lots of marketing people react.  They focus on fixing the first
item - generate more leads -  but pretty much ignore the second - improve the quality.

Why?  Usually because it’s just easier and faster to crank up the lead volume:  spend more on pay-per-click, add a couple more events to the calendar, or push out more direct mail.   Voila!  More leads.

At some companies, in fact, the marketing team’s compensation scheme may be tilted to encourage this.  They pick up a bonus for hitting some target number of leads.

A "suspect" is not a "lead"


Of course, if you’ve been through this kind of thing before, it’s easy to see the fly in the ointment here.

The fact is that lots of these “leads” are not really “leads” at all.  Many are really just “suspects” or “contacts.”  They’re names of people that may be interested in buying at some point in the future… but not yet.  You know very little about them and they’re not at all ready for a direct conversation with a sales person.

So what happens when we pass these “suspects” along to a sales person who then tries to get in touch with them?  Usually two bad things:

For one, the prospects are bothered and annoyed.  They don’t pick up the phone, reply to an email, or give a call back.  Why would they?  I know when I get a phone call that starts with “I see you were just on our pricing page,” that’s doesn’t make me feel warm and fuzzy.

Yes, I know there’s all kinds of research that says you need to connect with a prospect within 5 minutes of their inquiry, and that may work when it’s an inquiry from a qualified prospect.  But does downloading a white paper or signing up for a webinar really count as an inquiry from a qualified prospect?

How to waste an expensive resource      

Here's the other bad thing that happens when you chase down these unqualified prospects: you end up squandering one of your most valuable and expensive resources - sales people.

According to a survey conducted by Pacific Crest Securities, in software-as-a-service (SaaS) companies that sell through field or inside sales teams, sales expenses account for the largest portion of customer acquisition costs (CAC).



CAC Composition: Sales vs. Marketing Cost % of CAC




For SaaS companies that need to keep customer acquisition costs under control - and by the way that basically means all SaaS companies - wasting sales resources is not a path to success.

Tossing "suspects" or "contacts" from the marketing team over to the sales team just causes more problems.  Where sales people were once complaining about sitting on their hands, without enough prospects to call, now they're complaining about wasting time trying to chase down people who aren’t ready to talk to them.

Cultivate "suspects" into "leads"

Many of these "suspects" need more time to educate themselves.  They're still at the beginning of their evaluation process and need to better understand the options available to them.  That takes time.  Remember, these are busy folks and often get interrupted by other priorities.

Using sales professionals to chase these people who are early in the process is too expensive.  Instead, SaaS companies should be cultivating them, nurturing them until they are ready. 

So what's this "cultivation" all about?  It's really just a cost-effective way to stay on a prospect's radar screen.  When the prospect does focus again on whatever the problem is that you solve, they’ll have you and your solution at the top of their mind.

White papers, newsletters, webinars can all be effective cultivation tools.  (You should see what works best for your organization.)

The key is to find some way of staying in touch that’s relatively inexpensive, educates the prospect, and most importantly doesn’t require an expensive sales person.

And whatever mechanism you use, it should provide an easy way for the prospect to signal that they’re ready for the next step… they are now ready for a direct conversation. (Contact me if you need help with this.)

I doubt I have the key to everlasting peace, harmony, and love between sales and marketing.  But if you're in marketing and you hear complaints from the sales folks about leads, here's an idea:  Think first about Quality not Quantity... not the other way around.

Simply tossing more suspects or contacts into the pipeline, without a way to cultivate and qualify them, wastes time and resources, and it won't you any more popular with sales.

Bad leads costs you money; they don't make you money. 

Saturday, December 5, 2015

5 SaaS Marketing Myths

With 150,000+ people jamming into Dreamforce earlier this year, I think it’s fair to say that this "SaaS thing" is for real.  Customers are definitely getting smarter about how to use software-as-a-service (SaaS) solutions, and vendors are getting smarter about how to build and sell them.


But even so, a few persistent myths on how to market SaaS solutions still linger.  Some of these ideas probably made sense at one time, but no longer apply.  Others never really made sense… but they seem to stick around anyway.

 1.  SaaS is a differentiator

This certainly falls into the category of “It made sense at one time.” 

But touting that you’re “SaaS” in 2015… well it’s just not that big a deal anymore.  (See "Customers Don't Really Care About SaaS.")

Of course, you want to say you’re a SaaS solution somewhere in your description, but highlighting “web-based” or “runs in the cloud” is not necessarily the headline anymore. 

For one thing, it’s better to talk about the benefits:  rapid deployment, regular updates, and fewer IT resources. 

Moreover, in many markets, most of of your competitors are also marketing SaaS solutions.  In fact, prospective customers often just assume that any modern application is running in the cloud.  So saying you're "SaaS" just doesn’t make you stand out. 

2.  Free trials are essential 

I remember talking to a group of aspiring SaaS entrepreneurs a few years ago, all of whom described their marketing plan like this:  “We’ll put up a free trial on our website.”

That idea didn’t make a lot of sense then, and it doesn’t make a lot of sense now.

Of course, free trials do work for lots of SaaS applications.  Bur not for all of them. 

Sometimes a free trial just isn’t the best way for the prospect to really see the value in the solution.  Maybe they don’t have time to put in the data that’s required, or maybe they don’t want to risk trying out an application across their entire organization.  (See "Free Trials Don't Always Make Sense.")

And of course, even if prospects do take advantage of the free trial, the vendor still needs to do work to convert the trialer into a buyer.  That doesn’t usually happen all by itself, especially for B2B applications.

Instead of defaulting to free trials, SaaS companies should think about alternatives, such as a money-back guarantee, a no-obligation contract, a “sand-box” where prospects can play with the app.  Heck, sometimes a good old-fashioned demo, conducted by a skilled sales support engineer, is the best way to show off your solution. 

3.  You can do marketing on the cheap 

It’s absolutely true that marketing SaaS solutions comes with its own set of daunting challenges.  Among them is the “Wimpy” challenge, named for the character from the Popeye cartoon, whose signature line was “I’ll gladly pay you on Tuesday for a hamburger today.”


That’s a decent description of how the SaaS business model works.  You get paid in the future for the sales and marketing expenses you make today.  It’s not at all unusual to take 2 or 3 years to recover the customer acquisition costs.

Which explains why it’s especially important for SaaS companies to be careful with their sales and marketing expenses. 

But that doesn’t mean SaaS marketing can be done on the cheap. 

Inbound marketing or content marketing, which puts “bait” in front of prospective customers, will usually be more cost-effective than indiscriminate cold-calling, but good content isn’t free.  Even if you can push it out via social media or email for little cost, preparing compelling content - blog posts, papers, videos, email newsletters, whatever - requires time and/or money.  (See "Good Content Marketing Requires Good Content.")

And then of course, once you attract the attention of a prospect with your content, you need to cultivate and close that opportunity.  You may need an inside sales team, a channel partner, or even face-to-face meetings.   Again, none of those tactics are cheap, especially for B2B solutions.

4.  One clever “hack” is all it takes

I’m not a big fan of the term “marketing hack.”  Or at least, I don’t buy the idea that clever gimmicks will unlock the secret of acquiring and retaining customers.  Sure, I can appreciate a smart marketing tactic as much as the next guy, but looking for one, or even a handful of these tactics to do the job just isn’t a sound approach.

Acquiring and retaining customers is a long-term process.  There’s plenty of room for clever, creative, even ingenious tactics, but marketing SaaS solutions, especially to enterprises, is a multi-step process.  Companies need to build visibility, attract leads, cultivate opportunities, close them into leads, and then on-board, retain, and upsell them. 

It requires a well-structured, end-to-end plan, and a lot of work to carefully execute it.  There’s a lot more to it than a few clever “hacks.”

5.  “Old” marketing tactics don’t fit SaaS

There's plenty that's new about SaaS technology and the SaaS business model, but that doesn't necessarily mean that the way people evaluate and purchase solutions is new, too.

In fact, prospective customers in some markets still use “old” ways to find out about solutions.  They go to trade shows, get an unsolicited direct mail piece, or ask a colleague.  Just because they’re “old” and were well-established long before SaaS - even long before software - doesn’t mean they won’t work for SaaS solutions. (See "Old Tactics Can Still Work for SaaS Marketing.")

Maybe they’re not as leading edge as social media, pay-per-click, or viral marketing campaigns, but don’t automatically rule them out of the marketing mix.  If that’s how your customers evaluate and buy solutions, do it.  (One way to know how your customers evaluate and buy solutions… just ask them.)

And don’t be afraid to try a new, or an old, tactic. If it works, do more.  If it doesn’t, try something else. 

Saturday, November 7, 2015

As markets mature, marketing gets tougher

You’d think that as markets became more mature and people already understood what your solution does, it would be easier to promote and sell.  Not exactly.

It's true that you don’t need to do as much missionary work, educating prospective customers on the basics.  Most of them have read enough or seen enough from others in their industry to know what your kind of solution can do.  Solutions like ERP or CRM, for example, are broadly understood by now.

But while you don't need to do the basic educational work, marketers face a different challenge.  As markets mature, the buyers change.

Less time to reach them

For one thing, these mainstream buyers often have less time and less inclination to investigate your solution.  Mostly they’re interest in how you can solve an urgent problem.  They don’t much care about how the product works. 

These folks have even less time to wrestle their way through your website, email, or other marketing material to figure out what you can do for them. 

If your early-adopter customers gave you 90 seconds to capture their attention, you should figure that the mainstream customers will give you about half that time.  That means you’ve got about 45 seconds to hit them right between the eyes.

Not trail blazers

Marketers should also know that these mainstream buyers have little interest in being trail-blazers, the first one on their block to have the shiniest new thing.  They’re happy to let the earlier adopters suffer through the learning experience of refining new, unproven products.  By waiting, these mainstreamers expect that by the time they adopt it, your solution is ready for prime time.

These less adventurous buyers care a lot more about reliability and proven results, not leading edge technology.  They want to see that other companies similar to theirs have already had success with your solution.  Solid references and case studies carry more weight than technical spec sheets.

Look carefully for the change

To know when your market is shifting and different buyers are entering the market, you need to pay attention.  You’ll hear different kinds of questions from mainstream vs. leading edge prospects.  You’ll detect an even shorter attention span or at least less tolerance or interest in technical details.

You’ll also likely see more people finding you through referrals and a greater reliance on customer references. There a simply more people out there to ask.  

You’ll detect this in discussions your sales people have with prospects.  You can also ask new customers directly about their evaluation process.  (FYI, contact me if you want help in conducting these interviews.)

If you’re not paying attention to changes in the market and you wont' that there's been a shift in the kind of prospects you’re addressing.  The messages and tactics you'd had success with in the past may not work any longer.

You’re liable to find that your growth stalls.  Despite an expanding overall market, you’ll see your cost of customer acquisition going up, and the return on you sales and marketing investment going down.  Neither of those are a good thing for a software-as-a-service (SaaS) company.


Saturday, October 3, 2015

Your toughest competitor… inertia


It's possible that the competition for your technologically sophisticated, software-as-a service (SaaS) solution is somebody else’s technologically sophisticated SaaS solution.  

Some markets are jam-packed with SaaS solutions, all scratching each others' eyes out to win deals. 

But while you're battling tooth and nail with other SaaS solutions, don’t forget about the other competitor in the picture:  inertia.

In many cases, in fact, inertia may be your toughest competitor.

A high tolerance for "good enough"

Your target customer has probably been stumbling along for quite awhile, somehow managing to get by with a mediocre solution.  Depending on the department and the function, it probably consists of some combination of a spreadsheet, email, Word docs, and paper forms.  Sometimes Quickbooks or sticky notes are in the mix, too.


Of course, you know that home-grown solution is less than optimal.  It’s awkward to use, prone to error, and inefficient.

In fact, the prospect probably knows that too.  They're quite aware that the system they’re using now is really just barely good enough.

But most companies have a high tolerance for “good enough.”

Only urgent problems get attention

Folks at these companies are busy, they have lots of other priorities, and they can only focus on things that need urgent attention.  If the problem you solve is way down on their list of priorities, your solution isn’t likely to get attention any time soon.  So the prospect customer puts off any decision to evaluate alternatives, replace the current system, and purchase something new.

It’s not that they’re buying a solution from some other vendor.  They’re simply not buying anything at all.

Time is not on your side

Delays like this are a particularly acute problem for SaaS companies.

SaaS companies have incurred lots of costs up-front to get a prospective customer’s attention.  Adwords, events, inside sales, or whatever other tactics you use to attract prospects cost money.  To recover that investment in sales and marketing, companies need to convert those prospects into paying customers.  That’s how the SaaS model works.

When the prospects have no sense of urgency, no immediate need to buy, the sales cycle gets longer, and the SaaS companies collect no revenue.  That’s a problem.

And the longer the sales cycle runs, the longer the delay before there’s a purchase, and the bigger the problem.

Companies need much deeper pockets to fund a six-month sales cycle vs. a six-day sales cycle.

Subscription deferred is actually revenue lost

But wait it’s actually worse than that.  Under a subscription model, revenue that’s deferred is actually revenue that’s lost.

In the traditional license model, if a deal gets pushed out from January to April, the license fee is still received in full, albeit one quarter later.

But in the SaaS subscription model, if a purchase decision moves from January to April, that’s three month’s worth of subscription revenue that’s lost.  When those three months have passed, they’re passed.  It’s not possible to recover the subscription revenue for that quarter.     

What’s a marketer to do?

It’s not enough to trot our your impressive roster of features, benefits, and advantages.

The first task is convince the prospect that they have a problem and that their existing system is not, in fact, good enough.  They need to see that every month, every week, every day that they ignore it, and try to get by with their existing solution, is badly hurting their business.

You need to point out, for example, that:
  • Their paper-based recruiting system is losing them great candidates and costing them hours per week. 
  • Their accounting solution is losing track of thousands of dollars and exposing them to liability.
  • Their customer support solution built with email and Word is infuriating customers.
  • Their inventory management system cobbled together with Excel and paper documentation is costing them lots of money in overstocks and shortages.
 Until they see that they have a problem - an urgent problem - they don’t care about your solution.