The software-as-a-service (SaaS) model has become quite popular among tech firms, globally. Companies, as well as customers, love the convenience offered by SaaS products, increasing both the demand and supply of such subscription-based business services, simultaneously.
According to Gartner, SaaS companies registered a revenue of $72.2 billion in 2018. From 2015 to 2017, the average use of SaaS apps by companies has doubled. Where companies were using 8 SaaS-based products in 2015, by 2017, they used at least 16 SaaS products for routine operations.
The SaaS domain has been nurtured by the growing trend of custom software development. It would not be wrong to say that the future belongs to SaaS and entrepreneurs are keen to grab a slice in the SaaS pie.
Before you jump in the sea yourself, it is important to understand that you need to be prepared to face the competition. The dynamic ecosystem, as well as thousands of players, are making it hard for SaaS businesses to acquire new customers.
Some industry experts reveal that the cost of acquiring new customers can be up to 92% of the first year’s average contract value.
So, it’s better to be prepared to fight and give your best, right from the beginning if you don’t want to sink in. And to do that, you need to avoid marketing blunders that might harm your growth prospects. So, let’s see the most common marketing blunders SaaS startups can make.
#1 Underestimating the cost of acquisition
The growing popularity of SaaS-based products can leave you with unrealistic sales expectations during the first year itself. As mentioned before, the cost of customer acquisition is high in the current scenario due to increased competition.
So, the biggest mistake you can make is to underestimate the cost and efforts required to acquire new customers.
The best way to deal with the rising cost of customer acquisition is to create a dynamic strategy that focuses on growing revenues by spending money that doesn’t exceed the lifetime value of a customer. This way, you will be assured of spending lower than you earn and thus become profitable in the long run.
Also, you need to be quite realistic when you define key metrics and also set an additional budget for customer retention, too. The majority of SaaS startups are increasing their spending on customer retention to stay competitive.
#2 Ambiguous Pricing Strategy
If you fail to provide transparent pricing information about your product, there are high chances that customers will prefer buying from a competitor.
In the digital era, 97% of the customers research products online before purchasing anything. And they use 7.9 different sources on average before making a purchase decision.
When customers do not find clear and comprehensive information about pricing plans, i.e. what they will pay and how they will pay, they tend to abandon you for others.
Typically, you can make any of the three mistakes mentioned below, concerning your pricing strategy:
- Having no pricing information at all: Many SaaS startups don’t just have a pricing page on their website in the beginning or have a very vague idea of what customers will pay if they sign up. This can appear as a questionable practice to many.
- One price fits all: Though you may be a fan of simplicity, such a strategy can turn away many potential customers. No single price can fit every budget. You need to have dynamic and multiple price points.
- Doing too much: It is good that you are thinking of multiple subscription plans. But your pricing plans should be clear and should not confuse the buyers. If you have several plans, it is good to create a toggle between multiple subscription options.
#3 Not allocating required resources for marketing
As a SaaS startup, you might be too inclined to build and sustain your tech backend that you forget to allocate sufficient resources to marketing and sales.
SaaS marketing is turning out to be quite expensive with rising customer acquisition and retention costs. If you don’t spend much on marketing and allocate required resources, you might fail to make an impact.
Some of the biggest SaaS companies spend more than half of their annual budget on marketing and sales alone. So, if you want to succeed, you need to give a thought to how much you’ll spend and align it to industry standards.
#4 Treating Sales & Marketing as Independent Departments
In the fast-evolving digital world, sales and marketing departments should be thoroughly aligned. Your sales team should get insights from the marketing team and vice versa. The concept of SMarketing is useful for any SaaS business and can improve customer acquisition results.
If you are not publishing what your customers want to hear, not addressing their queries in real-time, you are missing out on a lot.
Your sales team must give real-time feedback to your marketing team. At the same time, your marketing team should share insights from campaigns with on-ground sales staff. Without a synergy between these two, your dream could quickly collapse.
#5 Ignoring the Value of Lead Nurturing & Marketing Automation
Probably one of the biggest marketing blunders you can make is to ignore the importance of lead nurturing. If someone is interested in your product and still you fail to transform him/her into a customer, then there is nothing that can save you from doom.
You must use marketing automation and lead nurturing tools to your benefit. You should have a structured system to follow-up with interested leads, nurture and convince them to buy out your SaaS product.
You may have a great product in your kitty. You might even have spent an enormous amount of time and effort in software development that aligns with the needs of your prospects. But without a proper marketing plan, everything is a waste of time. Make sure to have a streamlined strategy, so you avoid the above marketing mistakes and take your SaaS startup to greater heights.
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