Saturday, December 3, 2016

5 ways your SaaS marketing plan could go wrong

No matter how hard you’ve been working on your marketing plan, it still might go wrong.

That’s usually not for lack of effort.  It’s just that software-as-a-service (SaaS) marketing is hard.  It’s different than marketing traditional on-premises software and it’s easy to make mistakes.

I review the marketing programs of lots of SaaS companies and I see the same kind of mistakes over and over. 
 
This isn’t an exhaustive list, but here are 5 errors that are especially common.

Ineffective message


Sometimes it’s not at all clear to the prospective customer what you sell, who should buy it, and why.

Most SaaS customers care about what your solution does, not how it works.  (See "Don't talk techie to SaaS buyers.")

Focus on your benefits and advantages, not just your features, and spell out the costs of “doing nothing.”  Explain that putting off fixing the problem comes at a significant cost.

If you can’t clearly and consistently explain your value to the prospect, all the time and money spent on attracting leads is wasted.

Distracted buyers

Most SaaS buyers are busy people.  Besides trying to carve out a few minutes to evaluate your solution, they’re handling HR, Finance, Marketing, Sales, or whatever other function they’re responsible for during their day job.   They’re often distracted by other, more pressing priorities.  (See "Your prospect has a day job.")

Getting over this challenge means an effective marketing plan needs to do at least two things:

Make it easy for the prospect to see the value in your solution very quickly.  When you do get a few moments of their attention, make the most of it.  Whether it’s a free trial, a demo or a video, don’t make them travel down a long and lonely road before they get to an “AHA! moment.”

And second, stay in front of the prospect for a long time.  Eventually many of them will regain their focus and they’ll resume their search for a solution…and you want to be on their radar screen when they do.

Promoting in the wrong places

Some marketing plans promote the solution in the wrong places.  The prospective customers are in one place… and the solution is somewhere else.

As intriguing and popular as Facebook, Pinterest, twitter, or Instagram are, they might not be the place where your prospective customers are looking for solutions.  (See "Looking for customers in all the wrong places.")

Many of the B2B SaaS vendors I work with find a much more valuable audience at “old school” venues, like local business groups or trade publications.  Maybe not as cool, but much more effective.


Gaps and bottlenecks

Most B2B SaaS purchases aren’t impulse buys.  The buyer usually travels along a multi-step evaluation and purchase process, and marketing needs to be right alongside them.  

Your marketing activity needs to cover the entire journey, from first getting attention and capturing a lead, to cultivating it into a qualified opportunity, closing, on-boarding, and retaining a paying customer.   

A plan with gaps means prospects get lost or stuck somewhere along the journey.  (See "Why drive-by marketing doesn't work.")

I’ve seen companies that do wonderful work attracting attention and generating traffic…but then have no efficient mechanism to convert “traffic” into leads.  Other companies sign up lots of new customers… but then lose them after a few months.

Gaps and bottlenecks in the process waste money and slow down the process of winning and keeping paying customers.

No attention to existing customers

When I marketed on-premises software, I only paid attention to existing customers on two occasions:  When I saw them at a user conference and when I needed a customer success story.  That’s it.

That won’t work for SaaS.  If your marketing plan stops at the point when a prospect becomes a paying customer, you’re going to have a problem.  (See "Your existing customers are prospects too.")

The SaaS business model generally requires that customers stay around for awhile, at least long enough to recover your customer acquisition costs.  Renewals are essential.  To put it another way, churn kills.

Which means that you need to keep marketing to existing customers.  They need to be reminded regularly of the value your solution brings to them.  That’s marketing’s job, and it should be part of your plan. 

Most SaaS buyers are too busy already, and they won’t spend lots of time trying to figure out that stuff by themselves. Most won’t wade through lots of technical jargon about your platform, your patented algorithms, or whatever other sophisticated technology you have under the hood.

Out of date with customer concerns

Buyers change over time and your marketing plan should change as well.  You can’t automatically use the same messages and tactics year after year.

Over the course of three years, one of my clients has seen their market rapidly mature.  Instead of the adventurous buyers they used to attract - people willing to fearlessly try new technology - they are seeing mostly “mainstream” buyers - people that need more hand-holding and reassurances that they’re doing the right thing.

The only way to detect a change like this is to stay in touch with your customers.  That way you can make the appropriate adjustments. 

You can’t put the marketing plan on auto-pilot.

Saturday, November 5, 2016

Don’t talk techie to SaaS buyers

No matter how wonderful your proprietary algorithms, the priceless virtues of your state-of-the-art
platform, or the brilliance of whatever other sophisticated technologies you’ve got under the hood of your software-as-a service (SaaS) solution, here’s an unpleasant truth:  Lots of your customers don’t really care.
 
Most of your them only want to know what your solution does, not how it works.

In fact, sometimes all that techie talk just goes right over their heads.  They're experts in whatever field they're in, but they don’t necessarily have a technical background. 


Limited IT input

After all, one of the key attractions of SaaS is that it usually requires no technical background.  The buyer isn't responsible for on-premises hosting, deployment, on-going maintenance, or periodic upgrades, so the folks in IT with a technical background play only a limited role in evaluating solutions.

When IT does have a role in evaluating SaaS solutions, it’s usually in a secondary, review capacity, not in the lead.  They need to ensure that the solution adheres to certain standards for security, reliability, and performance, and that it can be integrated with other applications.

And if those issues are likely to come up at some point in the purchase process, you’ll certainly need some marketing material that addresses them.

But that kind of technical detail usually won’t have much impact on the people who take the lead in the evaluation and purchase process.  These folks typically have responsibility for a particular business function:
  • It’s a sales manager that needs to manage deals in the pipeline
  • It's a recruiter that needs to track applicants
  • It's an accounts payable manager that needs to process invoices, and so on.

Speak in the decision-makers' language

Don’t talk techie to your buyers.  Instead, you need to talk to them in the language of a sales manager, a recruiter, or an AP manager.  (See "Your customer has a day job.")

If they’re in a particular industry, you need to speak the language of their industry.  Hospital administrators talk about patients, real estate managers talk about properties, and commercial bankers talk about borrowers.

You need to show that you understand the unique needs of their particular industry.  They’re the ones buying and using your solution.

Talking techie to them is a waste of time.  In fact, it may get you routed to IT, a place you don’t want to be.  An executive selling SaaS solutions to healthcare companies told me recently that when their sales people get passed to IT, he knows the opportunity is heading toward a dead-end.

Focus on business goals

Instead of hearing about your super fantastic technology, the people buying your solution want to hear about how you can help them reach their business goals.  What can it do to:
  • Boost revenues
  • Cut costs
  • Satisfy customers
  • Retain employees
  • Or attain other business goals.  
Of course, your technology is behind all of that.  It’s what makes your solution go.

But the primary evaluators and decision-makers don’t always need to look under the hood.  Talk to them about what your solution does, not how it works.

Saturday, October 8, 2016

Do your prospects know what you're selling?

Sometimes marketing pros focus on the wrong things.

When there’s a problem attracting prospective customers, marketers usually look first at their lead generation programs.  They ask questions like:

  • Is our email campaign targeting the right people? 
  • Is our website visible to search engines?  
  • Are we participating in the right events? 
  • Are our social media campaigns working?”

And sometimes they will, indeed, find that certain lead gen programs aren’t working.

Or they’ll find bottlenecks or gaps in the process and they’re losing prospects somewhere in the evaluation and purchase journey.

A message problem, not a program problem


But oftentimes the problem is more fundamental.  The problem is not with any particular program;  the problem is with the message.

The prospective customer simply doesn’t know what the vendor is selling.

They come to the website, read the email, or see them at an event... but they can’t figure out what problem the vendor's solution might solve for them.

They might find a long list of features and even an extended discussion on how the solution is built.  But they won’t get an easy answer to a couple of simple questions:

What is this solution, and what problem does it solve for my business?

How does this happen?

Most companies start out with good answers to these fundamental questions.  In fact, often the solution has been built with the precise intention to solve a particular problem.

One client of mine, for example, started life as a landlord, struggling to manage all the details of managing rental property.  They couldn’t find a cost-effective solution, so they decided to build their own.  Buildium has now been adopted by more than 12,000 other property managers.  And it’s clear what problem they solve for their customers.

But too often this original simple idea - “let’s build a solution to a solve a pressing problem” - gets lost.  Or at least it gets covered over by lots of technical details.


The messages about the product no longer focus on “what it does.”  Instead, they're all about “how it works.”  A prospective customer needs to work too hard to understand what the solution is and why they might need it. 

And anything that makes the prospect work too hard is usually a bad thing.  These folks don’t have a lot of time to spend trying to figure out whether a particular solution is something they can use.  They have day jobs.  (See "Your prospects have a day job.")

Fixing the problem

The good news is that this problem is fixable.  In fact, when clients call me to ask me to help them acquire customers, I first look at their messages:

Is it clear what they sell and why someone should buy it from them?

Sometimes a few tweaks can help, but sometimes a complete overhaul is in order.

There are a few different ways to develop a clearer, more effective message that better describes the solution:

  • Ask existing customers to explain why they bought the solution and why they find it useful.  

  • Listen to the most effective sales person present the solution to a prospect.  Often they’ve developed a simpler, more compelling message than the “official” version.

  • See how direct competitors present themselves.  While it’s important to distinguish a solution from competitors, it’s worth seeing which elements are working for them.

And once you’ve crafted a concise, clear and compelling value proposition and messages - something your prospective customers will quickly grasp - it’s important to write it down.

I often do this in the form of a “Value Proposition and Messages Guide.”  (See "To deliver a consistent message, you need a script.")  This is something that you can cut and paste from liberally as they prepare websites, email, white papers, or any other marketing material.

When marketing professionals are struggling to generate more leads, qualify more opportunities, and nudge people toward a purchase, sometimes the problem is in the programs. They’re not run well or they’re poorly targeted.

But often the problem isn’t with the programs; the problem is with the message.  Prospective customers simply can’t figure out what exactly you sell and why they ought to buy it. 
  


Saturday, September 10, 2016

Your prospects have a day job

Just because you may be spending all your time trying to market and sell your solution, doesn’t mean your prospective customer is spending all their time evaluating it.

These prospects have other things do to.  In most cases, the person looking at your software-as-a-service (SaaS) solution isn’t assigned full time to evaluate and buy new software for the business.

Instead, they're accountants working in Finance, recruiters working in HR, or sales managers trying to hit their quota.

Or if you sell into a particular vertical market, they might be property managers dealing with tenants, consultants working with clients, or dentists treating patients.

Evaluation is an on-again, off-again process

Rarely do they have days or weeks to pore over every feature and function.  And their research is often interrupted, so they can only focus intermittently.  One minute they’re carefully considering your solution, and the next minute there’s something more pressing that’s grabbed their attention.

Even when they sign up for a free trial, most prospects will only spend a couple of hours actually trying out the product.

It's not that they don't care.  They know the solution may be critical to their business and that making a bad choice will be painful.  The problem is that they simply don't have a lot of uninterrupted time to do a thorough evaluation and make a purchase.

With so little time, in fact, they often end up doing nothing.  When I talk to “lost prospects,” many of them aren’t really “lost” at all.  They’re just “on hold” and haven’t made any decision at all yet.

I’ve learned a few lessons on how marketers can reach busy prospects like these.

Stay in front of prospects over a long period

Because your prospects can only focus on your solution in a bit of time here and a bit of time there - and you’re not really sure when exactly when that bit of time will be - you need to stay in front of them over a long period.  When they’re ready to refocus on finding a solution, you want them to remember you.

By the way, when I talk about staying in front of your prospects, I’m not saying deluge them with spam.  Educational material on best practices or industry trends will usually make a better impression than a stream of promotions.  And of course, offer an easy way to opt out.  (See "Content:  More isn’t always better.")

Provide a clear path for them to take the next step  

In your communications, make it easy for the prospect to signal that they’re ready to take the next step.  Provide a form, put up a “Chat Now” box, or post a toll-free phone number.  Lead scoring and other techniques can help you know when prospects are ready, but sometimes they’ll just tell you themselves.

Do it cost-effectively

To make this “stay in front of them for a long time” approach work, you need to keep your costs under control.  SaaS companies need to pay close attention to the cost of acquiring customers.  Staying in contact via email, newsletters, and webinars might be more cost-effective than other means. 

Save the more expensive outbound calls for prospects who have already signaled that they’re ready to talk directly with someone.
 
Be ready when they’re ready

When prospects do signal that they’re ready to talk about a purchase, make sure you’re ready too. If you drop the ball here and ignore prospects that are eager for attention, that’s frustrating for them and lost sales opportunities for you.

Someone should be available to quickly answer their email, pick up the phone, or respond to the “Tell me more” form.  The window of opportunity is open for only a short while.  (See "SaaS buyers are quick to buy.") 

Selling solutions to busy people is a challenge, and for most SaaS solutions, you’re always selling to busy people.  I’ve found, in fact, that when a prospect does have lots of time on their hands, they’re usually not very a good prospect.




Saturday, August 6, 2016

To deliver a consistent message, you need a script

Here’s the easiest way to waste your marketing budget:  spend money to promote your message… before you know what your message is.

Until you’ve developed a compelling and consistent value proposition, there’s no sense in broadcasting anything out to the world.

Unfortunately, I see this all the time: a beautifully designed website, a well-produced video, or a clever email campaign that doesn’t clearly convey the company’s message.  They make the prospective customer work way too hard to figure out what’s being sold and why they might buy it.

And to make matters worse, often each of these marketing deliverables tells a different story.  It’s tough enough to make an impression on a prospect; it’s almost impossible if you deliver a different message every time you get in front of them.

Without a consistent and compelling message, none of your marketing programs has any impact.  The money spent on search engine optimization, paid search, email campaigns, webinars, events or whatever else you do to promote your company is wasted.  

And in the software-as-a-service (SaaS) world, wasting the sales and marketing budget is a quick ticket to failure.  (See "Bad leads cost you money").

What should someone buy your product?

Here’s the good news:  the problem is fixable.   But it does require work.

For one thing, you need to think hard about what your value proposition really is.  Who should buy your solution and why?

Hint:  it is not just a list of features, no matter how long or technologically sophisticated.  
 
The value proposition needs to clearly specify:
  • The target market:  The target audience should know “Is this solution designed for me?”
  • The key features and benefits.  “Does this solve my problem?  Why would I spend money on it?”
  • The advantages over alternatives.  “Why should I buy this solution from you?” 
 
Write it down!
But once you’ve thought through a compelling value proposition, you’re not finished yet.  There’s an important second step:  Write it down.

You should prepare a written document.  When I work with clients, I call it a “Value Proposition and Messages” document.  Sometimes they call it a “Messaging Bible.”  It comprehensively addresses all the key issues:  target market, key features, benefits, and advantages.  And it’s all in a single place.

Depending on your market and solution, the full “Value Proposition and Messages” document could run more than a dozen pages.  However, it should also include a one-page “boilerplate” description and a concise one paragraph version that can be added on to press releases or email signature lines.

Required reading

Before anyone prepares any marketing material - website copy, white papers, videos, whatever - they should first consult this document.  That way, they’ll know exactly what messages they are expected to convey.  They won’t be making it up as they go along.

Of course, the value proposition can be adjusted over time as conditions in the market change.  But it’s not something you want to be constantly tinkering with.  Get the messages right, and then use them over and over and over.  Consistency is a good thing.  

Working from a single written document makes it easier to be consistent from one marketing deliverable to another.  Everyone is working from the same script.  The website, videos, and webinars, all sound like they’re from the same company, promoting the same solution.  Wherever and whenever a prospective customer sees you, they get the same message every time.

Saturday, July 9, 2016

Nothing simple about SaaS benchmark metrics

There are lots of simple questions about SaaS that don’t have simple answers.  Here are a few I hear all the time:
  • How much should I spend on sales and marketing to acquire customers?
  • How many leads do I need to attract?
  • What’s the right leads-to-paying customer yield?
  • What’s an acceptable level of attrition?
There are certainly plenty of surveys and published benchmarks on SaaS metrics that try to provide 
guidance.  Just do a Google search on "SaaS conversion funnel." 

And some of the rules-of-thumb you'll find can be helpful.  For example, it’s tough to make the SaaS business model work when attrition exceeds 10 percent.

Use caution with rules of thumb

But you should be careful not to take these SaaS benchmarks as gospel.  Just because they apply to some SaaS businesses doesn’t necessarily mean they apply to yours. 

Though some survey may show, for example, that 50 percent of leads should convert into paying customers, it’s easy to imagine a scenario where a business could succeed with only a 20 percent conversion, or at the other extreme, a scenario that requires an 80 percent conversion.  

Focus on CAC/LTV and payback period

Ultimately all that matters is this:  Can you earn back more than you spend to acquire a customer, and how long does it take to do that?  

It’s all about the average customer acquisition cost (CAC)/long term value (LTV) ratio and the payback period.  (I've written about this in "Acquiring customers ain't cheap" and elsewhere.  David Skok and others have also written about the topic at length.)

Realistically, a successful SaaS business cannot afford a CAC/LTV ratio that's greater than 1.  You cannot invest $1 in sales and marketing expenses and get 75 cents in return.  If you put one dollar in and three dollars come out, that's good.  One dollar in and ten dollars out is even better.  In any case, the LTV must exceed the CAC, eventually.  

The payback period tells you more precisely how long “eventually” is.  The longer the payback period, the deeper your pockets need to be to sustain the business.  SaaS companies that can recover their customer acquisition costs in less than one year, for example, need less capital than those that require three years.

No single "right" answer

Working within those guidelines however, there are plenty of ways for a SaaS business to succeed.  A
company with a high subscription price and long subscriptions can afford a high customer acquisition cost.  It could succeed despite low conversion rates and high attrition.  For them a lead-to-paying customer yield of 10 percent and attrition of 20 percent, for example, may be sustainable.  Obviously, there’s an opportunity to operate more efficiency, but a high LTV can cover a lot of sins.

At the other end of the spectrum, a company with lower subscription prices and shorter subscription terms needs to be much more efficient with its customer acquisition spending.   To succeed, it may need to hit a lead-to-paying customer yield of 40 percent and attrition below 5 percent.  For them, operating at optimum efficiency is critical for survival.

By the way, if your company finds itself at either of these extremes - or somewhere in the middle - give me a call.  I may be able to help you get more from your investment in sales and marketing.

I wish there were simple answers to some of the basic questions... but there really aren't.  There’s no “right” level of spending to acquire customers, no “right” leads-to-paying customer yield, and no “right” level of attrition.  It all depends on your particular business and your particular market.

Saturday, June 4, 2016

Content: More isn’t necessarily better


When it comes to content marketing, more isn’t necessarily better.  If one blog post per month is good, it doesn’t always follow that two posts will be really good.  In fact, it might be worse.

Don’t get me wrong, I’ve seen content marketing work.  It can be especially effective for software-as-a-service (SaaS) companies that need to keep customer acquisition costs under control.  If you provide good content - blog posts, newsletters, white papers, webinars, infographics, etc. - prospective customers are more likely to find you.  And that’s usually a lot less expensive than you trying to find them. 

Quantity vs. quality

But effective content marketing work doesn’t mean pushing out a deluge of content.
For one thing, producing good content isn’t easy.  I mean “good” in the sense of “useful to the intended reader.”  You want them to find some value in the material.  Prospective customers should be impressed with your expertise, not your word count.   

Some folks can crank out useful content day in and day out, but unless you’re Dear Abby, it might be better to give yourself more time to pull together your thoughts before publishing.

Over-burdening your audience

You should also think about content from your readers’ perspective.  Even if you do have the skill and bandwidth to crank out lots of content, do they have the bandwidth to read it? 

Remember, in the SaaS world, the person you’re targeting is usually a very busy person.  Besides evaluating solutions for their business, they have another full time job.  While they’re thinking about HR software, they’re also running the HR department.  While they’re considering marketing automation software, they’re running marketing campaigns.  Or while they’re evaluating, financial management solutions, they running Finance.  It’s not like they have all day to read, watch or listen to everything you push out during the course of a day or a week. 

A few thoughtful pieces are far more valuable to your prospective customers than a non-stop barrage.  There is a line between helpful content and spam.