In the previous article, we listed the top five marketing challenges for SaaS companies to SMBs in India. To address these marketing failures, let’s discuss a series of proven marketing strategies.
There are three broad aspects to finding a solution to these challenges:
Finding the ideal customer
Narrating a compelling story (and making the promise), finally,
Serving them well (by living up to the promise)
The nine questions that will help you define your marketing strategies for SaaS companies
We will explore the topic with nine key questions.
Who is your ideal customer? Who is a non-customer?
Define a buyer persona. Ask, who decides, who pays, who influences the buying decision. Who uses the product? These are not necessarily the same person. The SMB owner might be the person who pays but his manager could be the decision-maker whereas the executive who is going to use the application is the influencer. Having clarity on the buying ecosystem and the stakeholders in the buying journey would help in deciding the right approach, language, tone and channel for marketing communication.
As a necessary corollary also define who is a non-customer. Define the qualifier and the thresholds well in advance. This will help the sales team qualify a suspect into a prospect quickly saving invaluable time. Remember every minute spent with one prospect is a minute less spent with another. Therefore, it is pertinent that we qualify our leads well and efficiently to optimize opportunity cost.
Here’s a little tip: It might make more sense to go after people who have a real ‘pain’ not only a ‘fit’ for your product. In other words, sell the pain-killers first, vitamins later.
Let’s define our target SMB segment little more granularly with this light.
We will use two dimensions, number of employees and annual recurring revenue (ARR) for this purpose.
Small enterprise: #Employees < 100 and ARR< $50Mn
Medium enterprise: 100 < #Employees < 1000 and $50Mn <ARR< $1Bn
Large enterprise: #Employees > 1000 and ARR> $1Bn
Different folks, different strokes!
The goals, challenges and risk profiles of these three segments are different therefore we need different marketing strategies. Few differences between the SMBs and Large Enterprises are the following:
Business goals for SMBs are more tactical and short term whereas those for a large enterprise are often strategic.
The risk appetite of SMBs is lower than their Larger counterparts.
Appetite for Time-To-Value (TTV) for an SMB is short whereas large enterprises might wait longer to realize ROI.
Typical challenges with the SMBs are low growth, low productivity and sub-optimal or non-existent processes whereas large enterprises face challenges that come from becoming large. These are slow decision making, higher compliance, lower margin etc.
Where do they hang out? What are the right channels to reach them?
A lot about finding value is in answering the question, where to fish? The ocean is vast, wide and open. The coastline goes on miles after miles. However, we can put our net in a select location at a time. Therefore, if I am looking at catching shrimps I must be in that part of the ocean where the climate supports breeding of shrimps.
Therefore, it’s crucial that you validate your knowledge of places your ideal customer’s hangout, physically, and virtually. Then you will know how to reach them, what tools you need and what is the right time of the day to reach them. You will know whether a google ad campaign of social media marketing strategies would fetch results or you need feet-on-street in physical market places to get your customers onboarded. Please notice these aspects also define how many employees you need in order to scale. It has a direct impact on your cost structure and hence unit economics.
How do I make answering question 1 & 2 above a scalable and reliable process?
Short answer, by building a Sales Engine. Having a bullet proof sales process is the mandate. We should treat sales as a science. Take out idiosyncrasies from the sales process by standardizing the interactions without wiping out the potential for personal touch in the sales communication. If your process requires a lot of manpower to scale then rethink. There must be something we are doing inefficiently. Think marketing automation, self-guided low-touch onboarding and grievance redressal such as chatbots, a well written FAQ etc.
Why should we care about having a story, you ask? Because there is no better way to connect to a human than telling a story that resonates. We have been using stories since eternity to inspire ourselves to shape opinions, take actions, help navigate the world or recover from a painful memory. We all tell ourselves a story that we believe. So, your product must also have a story. Let’s explore a few questions that might help finalize our marketing and sales communications story.
Business goals for SMBs are more tactical and short term whereas those for a large enterprise are often strategic.
- Avijit Dutta
What is the ‘pain’ of our product solves? Are users aware of the pain? The marketing strategies to solve them now?
It’s a no brainer that our marketing strategies should clearly communicate the problem we are trying to solve. If you are solving a problem that is obvious such as a procurement system that optimizes sourcing or a simple CRM for a small business, your product might resonate with an SMB owner. However, if you are selling a marketing automation product or an operations process optimization solution it might be less obvious to a typical SMB owner profile. He might require a fair bit of educating before he realizes that he has this problem.
In the article, 5 reasons why SaaS marketing fails, we have explored a typical SMB user profile. A unique challenge with an Indian SMB owner is that he is not likely to be active on the internet and social media. However, the younger generation of an SMB household is active on social media. Can we take their help to reach their parents? Should our social media ads target these younger household members rather than their parents? These are hypotheses waiting to be tested.
If the business owner is aware of the problem, he might have a temporary hack, a ‘jugaad’ that is holding the fort for him and he might be unwilling to spend additional resources to avail a ‘proper’ long term solution. This brings us to the mindset challenges we discussed in our previous article. It is pertinent that we have appropriate response to such objections.
Why would they care about our marketing strategies? What are the impacts of their inaction? What is the ‘real’ cost of inaction? Does spending on such a solution make sense?
The mindset of change resistance, technology aversion, lack of vision and unwillingness to add another cost are some of the resistance we have to deal with in selling our SaaS solution to an SMB owner. Educate, educate, educate. That’s the watchword. Awareness and education should be at the core of our marketing content strategy.
When faced with change resistance it is often useful to highlight the impacts of not availing the solution. It might be decreasing revenue, uncertain profitability, low productivity etc. The impacts of inaction could trigger a FOMO (fear of missing out) response and change the mindset of the user to try out the product.
Finally, our marketing strategies must address the ROI question as objectively as possible. If we are able to quantify the outcomes, relate those to a business KPI such as potential cost-saving or productivity gain or better conversion rates, etc. and back it up with relevant case studies, verifiable testimonials and social proof we can pull the customer out of his concerns into the zone of the excitement of trying out a new and novel solution embracing change.
What motivates them to take action? Why implement these marketing strategies now?
Nothing else motivates people more than a desire to remove the pain. So, the marketing content must subtly but repeatedly speak about the most significant pain the product is solving. It could be low sales, high cost due to a productivity blind spot etc.
How do you create a sense of urgency for taking action? Highlight the value erosion linked to time. Put an estimate to the real cost of inaction and help the customer see the bigger picture.
Finally, make it easy for a new user to try out your product. Once he is on trial solve a low hanging pain for him and let the experience speak for itself.
What’s the role of content in your business?
Well-written marketing communication or a sales script produces an authentic dialogue between your customer and your band. It establishes the context and addresses the most crucial reservations of a user/buyer from using your product. Content is king. There’s an old saying about the companies of the new economy that every company is a media company.
Here’s a little tip: In the book, The Science of Selling the author talks about six choices involved in any sales decision. The idea is to help your prospect make these six choices progressively and arrive at a solution that you are offering. That’s how you pitch.
Why change? Why now? Why in your customer’s industry? Why your customer’s company? Why your customer’s product? Why spend? This is how you arrive at a promise they can’t say ‘no’. When a user signs up for a free trial your actual work has only begun. A SaaS sales cycle is not complete until a trial user upgrades to a paid plan.
The onboarding and customer success team may not be part of the sales organization in many SaaS organizations but this is where the marbles slip off the hands. We must not celebrate too early by looking at an uptick in number of trial users. The key to retention and ‘real’ sales closure is in creating a Remarkable First Experience, let’s call it REF. A sales engine that produces REF gets referrals and hence a low or no cost growth.
How do you create a Remarkable First Experience (REF)?
Remember at this stage (sign up for trial) a user is trying to form an opinion of your product. A trial is an opportunity. We must use it to give our user a reason to celebrate her decision to try our product. The only way to do so is to create a remarkable first experience. This should include a smooth onboarding process that makes her feel welcomed and a quick win solving a low hanging real ‘pain’ point. These two will undoubtedly validate his decision to buy your product.
Are you tracking the right metrics? Are you using data for growth?
Often as a SaaS-preneur, we end up tracking only the most obvious metrics. Because finding a product-market-fit is iterative, timely feedback and learning insights from early activities decide success or failure for a venture. Therefore, we must go beyond the obvious.
Volume metrics such as number of downloads, subscription revenue, Monthly Active Users (MAU), Daily Active Users (DAU), number of uninstalls are one-dimensional metrics. These give us a snapshot of the past. Nothing more nothing less. Whereas metrics such as a conversion rate, churn in percentage gives us a little more information about user behaviour. These are two-dimensional metrics.
Then we have some vanity metrics which don’t serve anyone in reality such as likes and shares on Facebook, Instagram, followers on social media pages etc. Tracking these are not enough. It is not unusual to plot some of these metrics over a timeline and see how user behaviour has changed over time. These are third-dimensional metrics. And most stop there.
Often as a SaaS-preneur we end up tracking only the most obvious metrics.
- Avijit Dutta
Can we go further with the data the product is generating? Yes, we can, and we must. For example, a cohort analysis can give you more insights into retention behaviour rather than just tracking churn on a timeline. In a cohort analysis a particular subset of users (say who downloaded your app in Jan) are tracked over the months instead of clubbing all users as one. It gives insights into how user behaviours have changed from cohort to cohort over time. It allows the entrepreneur to narrow down performance of a particular growth campaign, or product update objectively.
You may also build your own interesting 2×2 matrices. Let’s say we want to optimize our sales and marketing funnel by assessing our efforts. In a particular month we have 1000 prospects, 300 demos and 100 signups for trial products. So, the Show Rate (CR1) is 300/1000 i.e., 30%, the Win Rate (CR2) is 100/300 i.e., 33.33%. This is obvious. But let’s build a 2X2 with these data.
Campaign A has a higher show rate meaning more people took the demo but low win rate meaning either the performance of the demo wasn’t good or our product doesn’t match their expectations. So, feedback goes to the demo and product team.
Campaign D has a low show rate but a higher win rate, meaning the targeting was right and the sales demo team also did a great job. However, we need to follow up with this cohort of prospects for showing up for a demo.
Campaign C is a clear winner with high show rate as well as high win rate. It means the targeting, channel and product-fit is just right.
This is an example of a four-dimensional analysis.
You may go further to five-dimensional analysis if you trace the same 2×2 over time, say weekly or monthly. You may also create cohorts for your sales team at team leader level and analyze and compare their performance with respect to each other.
Here’s a little tip:
In the early phase of a product, launch runs your company like a collection of projects driving well-defined growth initiatives. Every project should have a start and end with a clearly defined hypothesis to test within the defined time frame (maybe in weeks) with a defined measurable success criterion. Then be vigilant on the data these efforts are generating. And, of course, go beyond the obvious and invent the metric you need.
In summary, it is apparent that if we are able to address these nine key questions above with the right mindset and take the suggested initiatives, we won’t have to worry much about the switching tendencies of the customer. Let’s understand that switching is a ‘cost’ to the customer hence she is not likely to indulge in switching from your product if you don’t give her a reason. We must ensure the product, as well as the system architecture, are interoperable enabling quick migration in case the client wishes so. These marketing strategies signal our values of customer centricity (keeping customer’s interest first) and our confidence in the product and the experience we are offering to the market.