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 sell them.

But even so, a few persistent myths on how to market SaaS solutions still linger.  Some ideas probably once made sense, 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 really necessary in the headline anymore. 

For one thing, it’s better to talk about the benefits of SaaS, not “SaaS” by itself:  rapid deployment, regular updates, fewer IT resources, etc.  

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 your 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, you still need to do work to convert the trialer into a buyer.  That usually doesn’t happen 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, or maybe 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 & 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 somehow 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.  Companies need to build visibility, attract leads, cultivate opportunities, close them into leads, and then on-board, retain, and upsell them. There’s plenty of room for clever, creative, even ingenious tactics, but marketing SaaS solutions, especially to enterprises, is a multi-step process.   

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 these tactics may be “old” and they were 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, search engine marketing, or viral marketing campaigns, but don’t automatically rule them out of your marketing mix.  If that’s how your customers evaluate and buy solutions, do it.  (One way to know how 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.  

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.

Sure, you don’t need to do as much missionary work, educating prospective customers on the basics.  They’ve read enough or seen enough from others in their industry to know what your kind of solution can do.  Established solutions like ERP or CRM, for example, are broadly understood by now.

But while you’re relieved of the basic educational work, marketers face a different challenge.  As markets mature, the buyers change.  

Buyers are really busy

For one thing, these mainstream buyers often have less time and less inclination to investigate your solution.  Mostly they’re interested 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 sort 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, figure the mainstream customers will give you about half that time.  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.  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.

To appeal to this less adventurous buyer, marketers should be touting reliability and proven results, not leading edge technology.  The mainstream adopters mostly want to know that others have already had success with the solution.  Solid references and case studies carry more weight than technical spec sheets.

Listening for the change

To know when your market is shifting, 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/interest in technical details.  You’ll see more people finding you through referrals and a greater reliance on customer references.    

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 a shift in the kind of prospects you’re addressing, 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.

Let Your Prospective Customers Know "This Solution is for You"

I’m guessing that at some point before you built your software-as-a-service (SaaS) solution, you thought about who might need this kind of product.  

Maybe you figured it out through market research, your own personal experience and frustration, or a flash of inspiration.

Whatever the methodology, either consciously or unconsciously you somehow answered a critical question: Who would need a solution like this? 

What prospects want to know first 

Oddly enough, that’s exactly the same question prospective customers ask.  When they find their way to your website, scan your email, or walk by your trade show exhibit, what they want to know is this: “Is this solution meant for me?”

Before they think about anything else – how’s the solution built, how much does it cost, what are the key features and benefits, etc. – they need to know if they are the intended buyer.

And by the way, you need to answer that question in 60 seconds or less.  That’s about how much of their attention you’ve bought through a pay-per-click campaign, a tradeshow, PR or whatever tactic you’ve used.   

If you can’t nail that question in that short window, you’ve wasted your money and your opportunity.  The prospective customer ends up clicking, deleting, or walking away. 

I’m talking to you! 

Tell the prospect right up front who you built this solution for.  You want to make it crystal clear to them that “I’m talking to you.”  

And the more explicit the better.

For example, this solution is designed for “small dental offices,” “K-12 school districts,” “companies with 3 or more warehouses,” “companies spending more than 10 hours per week tracking vacation and time-off requests,” or whatever.   

The people in your target market should know, without any doubt, that you’re talking to them.

Be specific, not generic 

Believe me, I know that it’s difficult to narrow your target market.  There’s always a nagging fear that you’re leaving out a lucrative potential market.  You figure that with a few tweaks here and there, your solution probably could be adapted to a broader market and another set of prospects. 

Resist this urge.   

You want the prospect to see your product as “the perfect solution” for their particular problem.  It’s not a generic tool that can be adapted to handle some of their needs… sort of.   

They don’t want a “mediocre fit.”  They want  a “perfect fit.” 

Of course with enough resources, you can sell to multiple audiences and multiple markets.  But each one will require a dedicated focus.  Each group of prospects expects that your solution will solve their particular challenges and is built to suit their specific requirements. 

Prospective customers don’t care about everybody’s problem.  They care about a solution that perfectly fits their problem.

How to Lose a Customer in the First 90 Days

Bravo!  You’ve landed a new customer.

You’ve successfully lead someone through the tortuous process from a lead to a qualified opportunity, maybe to a free trialer, and finally to a paying customer.

And you’ve been racking up customer acquisition costs all along the way.  Whatever tactics you use – search engine marketing, events, email, webinars, etc. – they all cost money.

So now that that prospective customer is a paying customer, it’s time to start to recover those costs.

The SaaS customer acquisition machine

That’s exactly how the software-as-a-service (SaaS) business model is supposed to work.   You invest money up front to acquire a customer, and over time you collect enough revenue from the customer to recover the money.

With a well-functioning SaaS customer acquisition machine in place, you should be putting in $1 for customer acquisition cost at one end, and $3, $4, $5 or more should come out the other end.

Of course, the machine only works if the paying customer sticks around long enough to recover your acquisition costs.  If you put in $1 and the customer only pays for 3 months, you may only see 25 cents in return.  Your machine is broken.

Right about now you might be asking “How long is long enough?”  How many months or years do you need to hang on to that customer?

That depends on how much it cost to acquire the customer and how much they’re paying you.  The higher the customer acquisition cost (CAC) and/or the lower the revenue, the longer the payback period.  (See a more complete discussion of “paying today for a return tomorrow” in this post on the “Wimpy Effect.”)

Why customers leave too soon

Lots of customers will try a solution for 2-3 months.  With most SaaS solutions, deployment is hassle-free, and there’s no upfront license fee or long term commitment.   That’s the good news.

Here’s the bad news.  For those very same reasons, it’s easy for them to leave after 2-3 months.

Why does that happen?

Sometimes the customer figures out that the solution just isn’t the right fit for their problem.  Stuff like that happens every once in awhile, and you really can’t do much about it.

But there are other problems that you can do something about. 

Poor on-boarding

No matter how simple you think your product is to learn and use, in most cases a new customer needs at least a little bit of guidance to get started.  A “quick start” guide, helpful “sign-posts” built into the product, or a “getting started” video might be all that’s needed to get them started and to build their confidence.  (Most folks don’t have time for an hours-long training course anyway.)

This kind of on-boarding help is especially important when there are many users (for example, an HR application used by every employee) or there’s a lot of existing data to be imported into the new system.  Without some help to get over these initial barriers, new customers may never actually deploy the solution.

In the world of on-premise, licensed software, this is fondly referred to as “shelfware.”  The difference in the SaaS world, however, is that the vendor doesn’t receive a large upfront license payment, and customers won’t keep paying for a subscription that they don’t use.  They’ll leave.

Reality doesn’t match the promise

Marketing and selling SaaS solutions is really about marketing and selling promises.  The vendor promises to deliver certain functionality over the course of the subscription.  (See “SaaS Marketing is About Promises, not Products.”)

If the actual solution doesn’t deliver on the promise, new customers will not only be disappointed with the functionality of the product.  They’ll lose confidence in the SaaS vendor.  And then they’ll leave. 

Gotcha pricing

In many cases, it makes sense for the SaaS vendor to publish their prices on their website. 

Prospective customers need the information to see if the solution fits within their budget.  They may also see it as an indication of the vendor’s transparency. 

New customers rightly expect that the price they pay is the price that’s posted.  And they’re usually surprised, disappointed, and even upset when it’s not.  When the invoice includes “extras” such as a required minimum number of users, a mandatory data migration fee, or other unexpected “gotchas,” new customers are not happy.  And they leave.

Marketing extends to customer retention

For SaaS marketers, the customer acquisition process does not end once the prospective customer converts into a paying customer.  The SaaS model doesn’t really work that way.

Success requires that you hang on to that paying customer for awhile.  SaaS providers that don’t pay attention to retaining new customers – especially through the first critical 90 days – will fail. 

Good content marketing requires good content

Content marketing isn’t just a good idea.  It actually works.

I’ve seen it work for my clients and I’ve seen it work for my own business.  Most folks find me by way of my blog or my newsletter.

When it’s done well, content marketing can boost visibility, enhance credibility, and generate inbound leads.  There’s a reason it’s sometimes called “inbound marketing.”

It can be especially effective for software-as-a-service (SaaS) companies, where keeping the cost of customer acquisition is critical. 

But here’s the thing about content marketing:  It requires good content.

Seems obvious, but lots of SaaS companies have a hard time getting this right.

First explain the problem

Too often, companies think “content” means a product brochure, a demo, a data sheet, or something else that’s all about the solution.

But most prospects are not yet ready to hear about the solution.  They first need to learn more about the problem.

What’s wrong with their existing process or product?  

Until prospective customers acknowledge that they have a costly problem and recognize that there’s a better approach, they’re not yet ready to pay attention to any vendor’s particular solution.

Many of my blog posts and newsletter put the problem right in the headline, e.g. “Most demos are useless,” or “Avoid random acts of marketing.”

Once prospects recognize that they have an urgent project, then – and only then – should you start talking about how your product works.

Educate and earn the right to promote

At the beginning of the evaluation process, content that helps educate the prospect will be more effective than promotional product brochures.

The vendor has two tasks at this early stage of the process.

For one, they need to educate the prospect.  Besides helping them to understand the scope of the problem, the vendor can help explain to the prospective customer how to evaluate solutions. 

• What criteria should be used?

• Who should be involved?

• What are good sources of information?

The second goal for the solution vendor is to establish credibility.  The prospect must have confidence that they are working with a knowledgeable expert, a company that truly understands the needs of customers.

This is especially important for SaaS as the prospects will be relying on the vendor to deliver reliably over the life of the subscription.  (See “SaaS marketing is about promises, not products.“)

Of course at some point in the prospective customer’s evaluation process, they’ll need to see material specifically about the product and how it works: data sheets, technical specs, etc.  But first the vendor needs to show they’re knowledgeable and credible.  They need to earn the right to show their product to the prospect. 

Where Up-Selling Goes Wrong

Up-selling can be a very good thing for software-as-a-service (SaaS) companies. It’s a winner on two counts:

1. It boosts revenue per customer
2. It usually lowers the cost of customer acquisition. 

According to one critical SaaS metric – Customer Lifetime Value/Cost of Customer Acquisition – up-selling is a formula for success.

But selling to existing customers isn’t always easy and there are few ways it could go wrong.

Unhappy customers

Before you can sell new services to an existing customer, they need to be happy with the old services.  That sounds obvious, but it’s easy to see how companies can get it wrong. 

Imagine a sales team that’s not connected to the support team.  In that instance, the sales person may have no idea that a customer is in the midst of a long unresolved support issue.  When the sales person calls on that account to sell add-on services, that might not go so well.

Bad timing 

Sometimes the up-sell effort is simply mis-timed.  There’s both a good time and a bad time to try sell new services.

I purchase services from one particular SaaS company that insists on pitching me new services every time I call in to their support people about a problem I’m having with their service.  I’ve just called with a complaint, and you want me to buy more stuff?!  Not right now, thank you.

Hidden cost

Customers don’t react well when the additional service you’re offering really ought to be part of the standard subscription fee.  If it’s something that’s fundamentally necessary to make the solution function effectively, the customer rightly expects it to be included… not an add-on that they need to pay extra for.

I’ve even seen SaaS companies that charge extra for an add-on service… and then require the customer to buy it. That doesn’t sound like the way you want to treat new customers.

Wrong offer

Offering to provide an add-on service to an existing customer is usually most effective if it’s targeted to their particular needs.  If the add-on is best-suited to your larger customers, for example, focus the up-sell effort on your larger customers.  Offer something else to your smaller customers.

This is one of the advantages of offering a SaaS solution.  You actually do know quite a bit about your customers and how they use the solution.   You should be able to target precisely those that might be most interested in particular add-on services.

In fact, trying to up-sell everything to everyone can backfire on you.  When you present them services that aren’t appropriate for them, your customers get the impression that you really don’t know much about them.  That’s not good for a long-term relationship.

Five Mistakes with Free Trials

It’s common for software-as-a-service (SaaS) companies to offer free trials.  That’s because a lot of times they work.  Done well, free trials can be a very effective way to attract new customers. 

But done poorly, they can be an expensive failure. 

I’ve seen SaaS companies make several common mistakes with their free trials.

1.  “Free” isn’t really “free”

Sure, it’s called a “free trial.”  But to the SaaS vendor, it’s not really free.  They’ve paid to build and host the solution, and attract and support the trialer.

And it’s not really free to the trialer either.  They’ll invest a fair amount of time learning and evaluating the solution.

So if you’re going to offer a “free trial,” recognize that it actually will cost something. 

2.  A free trail doesn’t always make sense

Free trials make sense for certain solutions and markets, but not all of them.  For example, customers might not be eager to deploy a critical enterprise application throughout the entire organization as a free trial.  There’s just too much at stake.

Talk with your prospective customers to see if they’d consider taking on a free trial.  You might find that they’re not as eager as you might expect. 

3.  Free trialers need guidance

If you want free trialers to see the value in your solution, you need to take them by the hand and show them.  If you let them just wander around, don’t expect they’ll see what you want them to see. 

Whether through a phone call, email, video, sign-posts in the trial, or some other way, walk the free trialers to the handful of awesome features and benefits that you think will cinch the deal.  And try to get them there in less than a few minutes.

4.  Free trialers don’t convert automatically

Just because someone signed up for the free trialer doesn’t mean the marketing and sales job is done.  It takes some work to convert them into a paying customer.  They need to be shown the value in the solution (see item 3, above), push it to the top of their to-do list, allocate budget, and trust the vendor. 

All that might not happen by itself.  It requires some effort.

5.  “Lost trialers” aren’t really “lost”

Just because a free trialer didn’t convert to a paying customer at the end of the trial doesn’t necessarily mean they’re no longer a prospective customer.  It doesn’t always mean that they’ve purchased another vendor’s solution or changed their mind.  They simply got distracted by other priorities and the trial period expired.

Stay in touch with these “lost” trialers.  At some point, whatever problem they had that caused them to sign up for the trial in the first place will probably bubble back up to the top of their priority list.

When that happens, you want to be top-of-mind and give yourself a second chance.

SaaS Marketing is About Promises, Not Products

If you’re a software-as-a-service (SaaS) marketer and you think you’re marketing a product, think again.

What you’re really marketing are promises.  You’re promising to customers that you’ll deliver value over the life of the subscription. 

Though part of that value includes making available a certain set of functionality on day one – features to track a sales pipeline, manage inventory, handle HR, etc. – it goes way beyond that. 

You are also promising that you’ll deliver:

• Hassle-free deployment
• Reliable performance and instant access
• Security for the customer’s data
• Expert customer support
• An ongoing stream of enhancements

Earning trust means more than showing features

That’s a lot of promises, and marketing them requires that you win the prospective customer’s trust.  They need to believe that you’ll make good on them.  There’s a lot more to it than just showing that the features work.

You need to show customers that you’re committed to a long term relationship… something that extends beyond a one-time transaction.

You need to show them other customers that you’ve kept satisfied over a long period. 

You need to show proof of reliability and security, and a track record of enhancements.   

In short,  you need to show them you’re a company they can trust.

There are several critical differences between marketing SaaS and traditional on-premises software:  different buyers, different messages, and different processes.  Marketing SaaS requires a different strategy, something fit for selling promises, not just a product. 

Customers Don’t Really Care About SaaS

It wasn’t that long ago that just describing your application as a “software-as-a-service (SaaS),”  or saying that it ran “in the cloud” was enough to get attention.

Companies like salesforce.com and a few other pioneers could differentiate themselves largely by saying they weren’t traditional on-premises software.  ‘Why buy applications built on old technology when you can buy solutions built on new technology?’

Not anymore.

SaaS just isn’t so new and different anymore.  In almost any market these days, people are well-aware of SaaS, and they have a decent choice of cloud-based solutions for HR, CRM, ERP and a whole range of other acronymed applications. 

“SaaS” doesn’t make you different anymore

If your goal as a marketer is to differentiate yourself, simply highlighting the fact that your solution is “SaaS,””runs in the cloud” or is “web-based”  really doesn’t do much for you anymore. 

In your marketing messages, there’s no point in putting your “SaaS-ness” or “cloudiness (?)” front & center anymore.  

For customers, it’s just not the most important thing.

Instead, focus on what customers really care about.  Explain what SaaS really means for them:

• They can deploy the solution quickly without adding lots of new hardware
• They can access the application from any device connected to the internet
• They can rely on regular updates
• They can avoid a large up-front license fee
• They can let experts worry about uptime and security.

SaaS buyers aren’t techies

Highlighting benefits, not the technology itself, is an especially good idea for most prospective SaaS solution buyers.  Usually they’re professionals in HR, sales, marketing, or finance.  They’re not technologists. 

Of course they care about security, access, performance and other benefits that depend on the platform.  And sometimes a SaaS primer can help. (Call me if you need help with a primer.)  But most SaaS solutions are not a technical sell.

Talk so the customer will listen

Of course you’re proud of the solution you’ve built and how you’ve built it, and you’d love to tell everybody about your clever technology.

But if you want to get the attention of prospective customers, don’t talk about what you want to say.  Talk about what your customers want to hear.

Avoid Random Acts of Marketing

After months or years of development, your software-as-a-service (SaaS) solution is finally ready.  Now you just need to find customers.

So you put up a website, attend a tradeshow, and produce a video.  Then you host a webinar and post to a blog.  On top of that, you toss in a bit of search engine marketing and prepare a couple of press announcements.

You could call this an “all of the above” customer acquisition plan.

But it might just be random acts of marketing.

Poor connections, poor results

Though the individual elements may be executed well, this shotgun approach to customer acquisition usually doesn’t produce much in the way of results.

You end up with an attractive website, a beautifully-produced video, and well-written blog.  Unfortunately, you don’t end up with lots of paying customers.

That’s because the individual elements are not connected and don’t fit into a logical process.  They don’t move a buyer step-by-step toward a purchase.

You might generate lots of visibility and web visitors, for example, but unless there are elements in place to capture contact information from the visitors, all that web traffic doesn’t mean much.  Unique visitors, by themselves, do not generate revenue.

Or maybe the website is, in fact, capturing contact information.  But there’s nothing in the marketing plan to cultivate those leads and convert them into qualified opportunities and buyers.  In that case, you’ve collected an impressive list of contacts, but no revenue.

Or maybe the tactics in place are effectively leading prospects far enough through the process that they actually purchase your solution.  But there’s nothing in place to retain these paying customers.  So you end up with lots of customers that go away after a few months.  

Why does this happen?

These kinds of gaps in the process happen all the time and  it’s very understandable.

By the time they’re ready to go to market, companies have spent lots of time and money building their SaaS solution.  They’re proud of what they’ve built and eager to tell the world about it.  And they’re in a hurry to start selling it.

So they just starting “doing marketing stuff.”  There’s lots of scrambling to put up a website, get out emails, crank out press announcements, post videos, and do whatever else seems like it might be a good idea.

Some of these might actually be good ideas.  And I’m all in favor of trying different tactics to see what works and what doesn’t.  (See “There is no marketing magic bullet.”)

But companies really need a plan in place before they start executing on all these tactics.  Otherwise all that activity is a waste of money.

That’s money no company can really afford to waste, especially SaaS companies.  The website, email, webinar, video, tradeshow and whatever else seems like a good idea costs money now that they need to earn back over time.   That’s how the SaaS business model works.  

Step back and put together a plan

When it comes to marketing, resist the urgency to “just do something… anything, and let’s do it ASAP!!”

There’s a better way.

Start with a plan.  Specifically, put together a plan that meets three criteria:

• Make sure the individual elements fit together.  For example, if an email campaign is intended to drive visitors to the website, make sure there’s a way to capture contact information from those visitors.

• Cover all steps in the customer acquisition and retention process.  Don’t focus exclusively on programs that generate leads, but neglect tactics to convert leads into customers.  Don’t work hard to acquire paying customers, but forget about programs to retain them.

• Match up with your prospects’ behavior.  If your customers look for your kind of solution at tradeshows, for example, go to tradeshows.  If they don’t use Facebook to evaluate solutions, don’t spend time with Facebook.  To know how customers buy, it’s best to ask them.  (Call me if you need help.)

For most SaaS companies, it shouldn’t take more than a few weeks to put together a workable plan.  It’s time well spent.

Two Essentials for SaaS Marketing

If you’re marketing a software-as-a-service (SaaS) solution, where should you start?

It’s obviously something SaaS companies about to bring their solution to market for the first time should be thinking about.

But established SaaS companies should be asking a similar question:  Do we have the basics in place?

Most companies should have two essential items in place as the foundation for their customer acquisition efforts:

1. a value proposition & messages document
2. a customer acquisition plan.

A compelling value proposition and messages document

Before you start promoting your solution, you need to have a clear message on what you’re promoting and why anybody should care.  That’s exactly what an effective value proposition and messages document can do.

It answers a few fundamental questions:

• What is the solution?
• Who should buy it?
• What problem does it solve for them?
• How costly is that problem?
• Why should they buy it from you instead of someone else?

And it should answer these questions very succinctly.  A condensed version should be able to cover the basics in a few lines.

It’s best to capture the value proposition and messages in a single document.  (Some people refer to it as their “messaging bible.)  That way you can “cut & paste” from it and be consistent.

A customer acquisition plan

The customer acquisition plan spells out who you intend to reach with your value proposition and how.  It specifies which tactics you’ll use to reach your audience at each point in the customer acquisition process. 

A plan is much more effective than random acts of marketing:  firing off an occasional press announcement, showing up at a trade show,  pushing out an email from time to time, etc.

A plan helps avoid gaps or bottlenecks in the process.  For example, you don’t end up generating lots of leads… with no means to follow up.  Or attracting lots of free trials… with no way to convert them to paying customers.

Putting a plan in place beforehand can save you lots of time and money.

Start sooner rather than later

Putting together a compelling value proposition and messages document and an effective customer acquisition plan takes a good amount of thought and time.

If you’ve not yet made your solution widely available, you should try to put this material together well before you go live.  It will make the launch process much easier and more productive. 

But if your solution is already in the market and you’re actively promoting it, it’s still worthwhile to prepare a value proposition document and a customer acquisition plan.  You’ll fill in critical gaps and get a better return on the time and money you’re already investing in marketing and sales.

Of course feel free to contact me if you need help.

SaaS Buyers Are Quick to Buy

Most SaaS buyers make their purchase decision quickly.

When they need a solution, they do some online research, maybe ask a colleague, try the solution or watch a demo, and then buy.

The whole process might take a few days, maybe a few hours.

There’s no long, drawn out sales engagements, RFIs and RFPs, head-to-head “bake-offs,” contract negotiations, blah, blah, blah.  Customers find it, they see it, they like it, they buy it.  Done.

Neither vendors nor buyers can afford a long sales process

Why the quick decision?

For one thing, lots of SaaS vendors won’t engage in a long sales cycle.  All that schmoozing, demo’ing, and negotiating is too expensive and doesn’t fit their low-touch sales model.  They can’t afford it.

More importantly, SaaS buyers can’t afford it either.  Or at least they can’t afford all the time.

Remember the SaaS buyer is usually someone whose main job isn’t evaluating and buying technology solutions.  It’s not like traditional on-premises software where IT was the gatekeeper and did most of the evaluation. 

With SaaS solutions, the end-user is often doing the evaluation.  It’s the sales manager who’s evaluating a SaaS sales tool, the finance manager who’s evaluating expense reporting solutions, or the HR manager who’s evaluating a time & attendance tracking solution.

Besides evaluating software, these people have a day job.  They manage sales, or finance, or HR.  

Rapid deployment and no long-commitment speed up the process

The fact that SaaS is a lot easier to install and deploy and that there’s often no long-term commitment also speeds up the evaluation cycle.  Buyers figure they can try something for a few months, and if they’re not happy, they can walk away without much lost.

Enterprise sales could be an exception

Of course there are exceptions to this scenario.  Larger enterprises may go through a more formal evaluation process than small or mid-sized businesses.  And companies might take more time with applications that they’ll be distributing broadly throughout their organization, those that will need customization, or require a long-term commitment. 

But that still leaves a lot of SaaS solutions that will be bought PDQ. 

Good news and bad news for SaaS vendors

A shorter evaluation cycle can be good news and bad news for SaaS solution providers.

The good news:  They can cut some of the time and expense from the process.  Most buyers won’t force vendors through an arduous RFP, a months-long evaluation process, and innumerable exchanges of red-lined contracts.

The bad news:  Vendors need to be quick.  The evaluation window is only open for a short time.  Jump now… or miss your chance.

Once a prospective buyer expresses interest – they call the vendor, download a free trial, ask for information, whatever – the SaaS vendor needs to respond.  Not in a few days… now!

That doesn’t always mean they need to get on the phone ASAP.  A free trialer might be eager to get a call from the vendor, but other prospects might not be so far along in the process.  

But companies should at least acknowledge the person’s interest and provide a way for them to move ahead in the process. 

Make a positive impression… quickly

Once vendors do get an opportunity to put their solution in front of the prospective customer – with a demo or a trial, for example – don’t waste that precious time.  Knock their socks off in the first few minutes, showing off high-impact features and benefits.  There’s no need for a plodding walk-through of every feature and function.

Lost prospects often aren’t really lost

If SaaS buyers didn’t purchase the solution, SaaS vendors shouldn’t necessarily count this as a “lost” sale.  In many cases, the prospect just got distracted by other priorities (a.k.a. their real job.)

Once they work through those “distractions” and focus on SaaS solutions again, the vendor wants to still be in front of them.  Newsletters, invitations to webinars, news of valuable white papers, for example, can be cost-effective ways to do that.

I often explain to people that marketing SaaS solutions is strategically different from marketing traditional software.  Different audience, different message, and different process.  The shorter evaluation process is one of the key differences. 

Get in sync with your prospective customers.  If SaaS buyers are quick to buy, SaaS marketers can’t be slow.

Acquiring Customers Ain’t Cheap

It costs SaaS companies $1.07 in sales and marketing expense to acquire $1.00 in annual contract revenue.

So says excellent research on the experience of SaaS companies, prepared by David Skok along with Pacific Crest Securities.

The SaaS companies included in their survey spent, on average, $1.07 on sales and marketing to win a customer that would be worth $1 in annual contract value.

Some might react with horror at that news.  “To grow a SaaS business to $100 million in annual contract value, I need to spend $107 million to acquire customers!!”

Not me. 

Spending $1 to earn $3 is a good thing

That ratio – $1.07 in customer acquisition costs (CAC) delivers $1 in annual contract value (ACV) – is great news.

Here’s what that number means.  If a SaaS business wisely invests $100 million in customer acquisition costs, they’ll earn nearly all of it back from customer revenue in the first year. 

And if they can hold onto those customers for a second year, they’ll earn another $100 million in revenue, and in the third year, another $100 million. 

In other words, the first $100 million in CAC earns nearly $300 million in contract revenues over three years.

With that kind of return, the SaaS company should put as much money into CAC as it can get its hands on.

Before folks bombard me with objections, let me be clear on a couple of points.  For one, I’ve made an assumption that the money spent on sales and marketing to acquire customers is spent efficiently.  (Call me if you need help with that.)

And second, for the sake of making a point, I’ve omitted the cost of retaining an existing customer.  The Skok survey shows that companies will pay 12 cents annually to retain an existing contract worth $1.00.    Factoring that in, the cost to acquire $300 million in contract value over three years is closer to $131 million.  Still not too shabby.

SaaS is a “pay now, collect later” model

So with such an impressive return, why the resistance to spending on customer acquisition?

It may come from a couple sources.

Perhaps there’s some misunderstanding about the SaaS business model.  SaaS companies spend money on customer acquisition in the present in order to generate revenue over the life of the customer.  (See “SaaS customer acquisition:  Feed it or starve it?”)  It may take 2 or 3 years to recover the sales and marketing costs.  (If you need more than 3 years to recover CAC, let’s talk.) 

That’s a lot different than the traditional on-premises business model that charges large up-front fees for software, plus on-going maintenance fees.  In that scheme, companies might allocate 4, 5, perhaps 6 percent of annual revenues to marketing. 

Effective sales and marketing costs money

There might also be a misperception about how much sales and marketing really costs.  Companies should expect to pay well if they want it done well.  

• It costs money to design and maintain an effective website.  
• It costs money to prepare compelling content.  
• It costs money to design an effective customer acquisition plan.  
• And it costs money to execute effective search engine marketing and social media campaigns.  

The experts who do this work don’t do it for free.

Of course, companies should take advantage of newer sales and marketing tactics, like social media and inbound marketing.  These can get them in front of prospective customers much less expensively and more effectively than they could have done several years ago.

And for some solutions, building a viral component into their product can be a powerful way to gain customers. 

But even with greater efficiency, customer acquisition still isn’t cheap.

SaaS companies pay a lot for excellent developers and UX designers.  They should expect to pay a lot for excellent sales and marketing people too.

There’s a reason that sales and marketing expenses at even well-established SaaS companies account for their single largest on-going expense.  Workday’s sales and marketing expenses, for example, represented 56 percent of their annual revenue according to their most recent annual financials.

Instead of looking at customer acquisition costs as an expensive burden, people should be looking at them as an investment.  And with returns of 200, 300, maybe 400 percent, a fairly lucrative investment at that. 

Your Message Should Be Boring

Why in the world would I want a box of business cards with a different design on each one?

In radio ads, I’ve heard a company that sells business cards promoting that very feature: “Business cards with a different design on each one.”

I’m sure they use some very nifty software to make this happen.  But why?

• Do people expect me to hand over more than one card when I introduce myself? 
• Are they comparing the card that I gave to them with the ones I gave to others in the room?
• Are people collecting my business cards to have a complete set? 
• Do they swap them on some secondary market?

Probably not. 

If they’re like me, they enter the info into their contacts app, put the business card in the stack of other cards bound by an elastic band, and stick them in a desk drawer.

So why tout “a different design on every card?” Here’s the only explanation I can come up. 

The company thinks that a person gets bored looking at the same, same, same business card every time they hand it out.

Boredom can be a good thing

Maybe people do get bored. 

But here’s some news:  They should be getting bored.  They should be getting tired of showing the same thing every… single… time.

When it comes to your business card, boring is OK.  In fact, whenever you’re talking to someone about what your business does, boring yourself is actually a good thing.

You should be saying the same thing over and over and over.

Note that I said “boring yourself,” not “boring the other person.”  Just because you’ve delivered the same message a thousand times doesn’t mean you can’t muster some passion.  This is your business after all.

Stick with the core messages

Once you’ve figured out the core value proposition and messages – who should be buying your solution, what problem does it solve, and why is it better than alternatives – you should tell that same story… every time, everywhere.

Why? 

Because the folks who you want to hear your message are hearing lots of other messages along with yours.  They’re positively bombarded with messages.

Repeating your message consistently is the only way that your value proposition can possible get through.  It’s the only way people will remember it.

They should see it on your website, your blog posts, your presentations, your demos, your ad campaigns, and yes, even your business cards.

Staying on script improves impact, saves time & money

Believe me, I’ve been doing marketing for a long time and I understand the urge to step out, go off script, get a little crazy. 

And by the way, it’s perfectly OK to be creative.  There are ways to present the same fundamental message in different ways.

But if you wander from the basic message, you’re losing impact and squandering resources. 

If every time you want to prepare a video, a press announcement, a white paper, or any other kind of marketing material, you need to figure out the basics – who’s the audience, what’s the problem, how do we solve it, why should you buy from us – you’re going to waste a lot of time and money.

That’s bad for all companies and especially bad for software-as-a-service (SaaS) companies.  They have no time and no money to waste.  (See “SaaS customer acquisition:  Feed it or starve it?”)

SaaS companies are much better off developing a compelling value proposition and message… and sticking to it.

Sure, the same message every time can get boring to you.    But you are not the person you’re talking to.

A Free Trial Isn’t Really Free

Free, free, free. 

It sure is a powerful word.  Which probably explains why “free trial” is used so often by software-as-a-service (SaaS) marketers.

Lots of SaaS solutions, whether they’re for business or for personal use, let prospective customers use the solution for free.  And then after 15 days, 30 days, maybe 60 days, they ask them to actually pay for it.

(For now, I’ll focus on free trials.  I’ll leave the subject of “freemium” or “free forever” for another day.)

Here’s one reason free trials are so common:  they work.  They can attract lots of users, and even lots of paying customers, if they’re done properly.

I’ll let you in on a secret about free trials, though.  They’re not really free.

Not free for solution providers

Free trials cost money for the SaaS providers.

There’s the cost of developing, hosting, and maintaining the solution. 

There’s the cost of supporting the solution if you offer help to the  trailers.

There’s the cost of attracting prospects to the free trial in the first place.  Search engine optimization, pay-per-click, email, PR, or whatever other tactics you’re using to drive people to find your free trial cost time and/or money.

And then there’s the cost of trying to convert the free trialers into paying customers.  Whatever you’re doing, it’s not free. 

If you’re not doing anything to convert trialers to paying customers, we should talk... soon.

Not free for the customers

Free trials aren’t really free for prospective customers either.

It takes time for them to find the solution and figure out if it’s something worth trying.

It takes time to register and then download the solution.

It takes time for trailers to learn to use the solution

And then it takes time for them to input some data and actually work with the solution enough to see any value in it.

None of these activities are costing customers cash out-of-pocket.  But their time isn’t free.  

These prospective customers evaluating your solution are busy folks.  They’ve got a long list of things to take care of during the course of a day.  If they want to use the free trial, they’ll need to make time to do that.

By the way, if the folks using your free trial have all the time in the world, you might wonder whether they have the authority and budget to eventually make a purchase.

Think before you go free

If you offer a free trial, or you’re considering one, keep the costs in mind… both the costs to you and to the customer.  Ignoring them usually leads to failure… namely, high costs and low revenues.

Free trials, done well, can be effective.  But they’re not really free.

The human touch wins SaaS customers

Lots of smaller software-as-a-service (SaaS) businesses are tempted to try to sound “corporate” or hide their real personality when they talk to prospective customers.

They act impersonal, like some alien borg.

They think that “sounding bigger” makes them more credible.

It’s a bad idea that usually doesn’t work.

How can I trust you?

It’s hard to gain the trust of prospective customers if the provider is faking it.  People usually see through that.

And it’s hard to sell SaaS without trust.

When customers buy a SaaS solution, they’re not buying a product;  they’re buying a promise.  They are relying on the vendor’s promise to deliver certain functionality and service over the life of the subscription. 

Which means that before they subscribe, the customer needs to trust the provider.   They need to believe that the SaaS provider will deliver as promised.

Instead of faking it, SaaS companies would be better off acting naturally.  If a company is smaller, friendlier, and can treat customers with a more personal touch than its larger competitors, it should flaunt it, not hide it.

The buyers are also the users
 
The prospective customers care about the kind of people they’ll be working with over the life of the subscription.

Whether they’re in HR, sales, marketing, finance, or somewhere else in the organization, the people that are evaluating the SaaS solution before its purchased are often the same people who will actually be using the solution after its purchased.  There’s often no “intermediate buyer” in IT or procurement.

What that means is that the people making the purchase decision will also be considering the “personality” of the SaaS provider.  Besides thinking about features and functions, they’ll be asking themselves, “Are these the kind of people I’m going to want to work with if I subscribe to this solution?”

In most cases, they’ll prefer friendly, personable experts over an impersonal, corporate borg.

SaaS Marketing is Not a Numbers Game

“If we just dump enough names in the top of the funnel, some paying customers are bound to come out at the bottom of the funnel!”

Wrong.

This approach to customer acquisition – sucking in as many suspects as possible – is costly and inefficient.  In other words, it’s a very bad fit for software-as-a-service (SaaS) companies.

For one thing, collecting all those names isn’t free.  Adword campaigns, website optimization, list purchases, or any other tactics you might use to attract possible leads cost money.

And then cultivating those contacts – qualifying and nurturing them into legitimate opportunities – costs even more money. 

Working on bad leads actually costs money; it doesn’t make money.  (See “When Lead Generation is a Bad Thing.”)

Low yield doesn’t work for SaaS

This “strategy” – pull in as many names as possible and then hope that at least a small percentage of them eventually convert to paying customers – creates a tremendous strain on the SaaS business model.

On the expense side of the equation, it means substantial sales and marketing costs that are incurred up front.

On the revenue side, it means small and uncertain income collected over a period of time.

Relative to expenses, revenues are too low and too slow.

Timing vs. quantity

The goal is not to get as many names into the top of the funnel as possible. 

Instead, companies should be trying to get the right names into the funnel and move them through it as quickly as possible.

SaaS success requires turning “suspects” into paying customers as quickly and efficiently as possible.  The goal is to shorten the conversion cycle.

SaaS customer acquisition is actually a timing game, not a numbers game.

Accelerating the SaaS Purchase Process

Inbound marketing can be very cost-effective, but it can also be slow.

Inbound marketing relies on prospective customers making contact with vendors.  That’s the other way around from traditional marketing, where vendors try to make contact with potential customers.

What that means is that by the time the vendor engages with a prospective customer, that prospect is already fairly far along in the evaluation process.  They’re already familiar with the vendor and the solution.  In other words, they’ve qualified themselves.

That’s perfect for software-as-a service (SaaS) vendors.  They can focus their sales and marketing activity on well-qualified prospects.  

That fits well with the SaaS business model which demands that companies spend their sales and marketing resources wisely.  (See”SaaS companies can’t afford to sell”)

Finding customers in the short term

But it’s not so perfect for SaaS vendors in a hurry.

While inbound marketing makes sense – and the process usually works over time – it can be a long journey.  The prospective customers move at their own pace, not the vendor’s pace. 

If you’re a SaaS vendor that needs to close business in the short term, you need to add in some other tactics.  Inbound marketing may not have the instant impact you need.

Friends & family

There’s a reason most vendors’ early sales are to friends & family.  These folks already have some connection to the vendor.  They might be a previous employer, an investor, or former colleagues, for example. 

Vendors looking to quickly sign on some early customers should focus their efforts on these friends & family. 

These folks are already familiar with the vendor, which means they’ve already passed through the early stage of the evaluation and purchase process.  They’re more likely to buy the solution in the short term.

The early adopters

In most markets, there is usually a cadre of early adopters, folks that are actively looking for innovative solutions. To gain a competitive advantage and bolster their credentials as market leaders, they are more willing to try technology solutions before they become mainstream. 

If you’re looking to close business in the short term, seek out these early adopters.

Where do you find them?  Look at the press announcements for vendors selling solutions that are complementary to yours.  See who’s speaking at relevant conferences.  Find out who’s publishing a blog that describes their experience using new technologies.   

Leverage the early adopters

One of the reasons early adopters want to be out front is that they like being known as innovators.  They want others to take their advice and follow their lead. 

So once you’ve secured one of these folks as a customer, enlist their help to find others.  They tend to have a wide sphere of influence.  They post, they speak, they network.  And they’re often willing to help.

Don’t abandon inbound marketing

Do keep one thing in mind:  While you’re focused on closing a few deals in the short term, don’t forget about inbound marketing.  That’s what you’ll need to attract the prospects that will fill your sales pipeline over the medium and long-term. 

These are the customers that will get you “across the chasm” and help you establish a sustainable revenue stream. 

Yes, it may take them some time for these prospects to get to know you, assess their needs, and evaluate how well your solution fits their requirements and budget.  (See “Winning SaaS customers requires patience.”)

But when they do eventually get there, they’ll be well-qualified and ready to seriously evaluate your solution.  You just can’t rush the process.

What makes junk mail junky?

The junk email I get about replacement windows, oil change coupons, and life insurance doesn’t really bother me.

Somehow I got on a list of millions of people who own a house, own a car, and can still fog a mirror. 

These emails go out in bulk and luckily my spam filter traps most of them. 
 
Are you talking to me?  Really?

What does bother me though is the inappropriate email I get that isn’t sent out by the millions.  It’s the ones that come out from a real person who somehow thinks I’d really be interested.

I get several of these every week from PR people who want me to talk with their client who’s been named “something or other of the year,” or who thinks I ought to do a blog post on “Promotional Products Work! Week,” whatever that is. 

A few weeks ago, someone sent me a press announcement about changes to tax law in Idaho.  Huh?

These emails are friendly enough, and I’m certain that a new tax law in Idaho is very interesting to someone… but not to me.

Anyone who’s spent any time trying to figure out what I would really be interested in would know that.

I’m not asking folks to do a lot of work here.  Thirty seconds on my website or LinkedIn profile will tell you everything you need to know.

Junk email is bad for SaaS marketing

So other than a rant about junk email that finds its way to my inbox, what does this have to do with software-as-a-service (SaaS) marketing?

For one thing, this kind of inaccurate marketing costs time and money.

Some marketing or PR person spent at least a little bit of time putting together the note… though obviously not enough time to figure out whether I’d really care about whatever it is they’re promoting.

And if they follow up the note with a phone call, it’s even more time-consuming and more expensive.

If you’re using poorly targeted email to market a SaaS solution, you’re wasting time and money.  And the SaaS business model doesn’t leave much room for that. (See “SaaS customer acquisition: Feed it or starve it?”)


Junk mail costs trust

The bigger cost though is credibility and trust.  And for SaaS businesses, that means a lot.  

Remember, SaaS marketers are selling a promise, not a product.  They are promising to deliver some benefit over the life of the subscription. 

Before they buy anything, the prospective customer needs to trust that the vendor will deliver on that promise.  (See “Winning customer trust.”)

Establishing that kind of trust first requires that the vendor spend a little bit of time finding out about the prospective customer.

• What kind of tasks are they responsible for?  
• What challenges do they face?  
• What kind of solution might help them succeed? 

How do you find that out?  Ask.  (See “Listen to your SaaS customers,” March 2014)

Wrong mail to the wrong person = wrong result

When a SaaS marketer sends out an email to a prospect before they know anything about the prospect, they’re off to a bad start.  It’s tough to start a relationship with someone when you haven’t bothered to find out anything about them.

All you’re likely to do is waste time and money and annoy the prospective customer. 

Rather than respond to your email, the prospect is likely to wonder:  “What in the world was this person thinking?!”

Winning SaaS customers requires patience

“Eighty percent of success is showing up.”  — Woody Allen.


For most companies, buying a software-as-a-service (SaaS) solution to address a critical business need isn’t a decision they take lightly.

Evaluating a solution to support HR, CRM, finance, marketing, or any other important part of the business takes a good amount of deliberation.  It could involve a demo or a trial.  There might be several people involved in the decision.  It could require a series of meetings or presentations.  In other words, it takes time.

And time is in short supply.  Prospective customers don’t have a lot of it.

What’s urgent for you isn’t necessarily urgent for the customer

While you, a SaaS vendor, thinks your solution is the most important priority, the customer has other items on their to-do list.  And the particular problem your solution is addressing just might not be at the top of the list right now.

That doesn’t mean they don’t have a problem that you can solve.  It doesn’t mean they don’t like your solution or your company.  And it doesn’t mean they’ve already bought a solution from some other vendor.

It just means they’re not ready to evaluate your solution and make a purchase decision right now.

Two options:  Push or Wait

So what’s a SaaS vendor to do?

One option is to push.  That is, try to move the problem and your solution higher up on the priority list.

Create a greater sense of urgency and convince the prospective customer that every day they delay, they’re losing money, losing customers, exposing themselves to risk, or some other bad outcome.  (See Practical Advice on SaaS Marketing newsletter: “Turn ‘nice to have’ into ‘need to have.'”)

Another option is to wait.

But waiting doesn’t mean sitting on your hands and doing nothing. It means staying in front of the prospect, so that when they are ready and able to spend the time to evaluate solutions, you’ll be there.

Guidelines for waiting

Waiting isn’t easy, especially when your company has sales goals to meet.  But there are a few guidelines to doing it effectively.

Be consistent:  Staying in front of a prospective customer requires a long term commitment.  It can easily take a prospect many months before they fully engage on an evaluation of your solution.  And you’ll probably not know precisely when that moment arrives.

That means you need be in front of them consistently… maybe not once every week, but certainly at least once every month.  A “one and done” approach won’t work.

Educate your prospect:  The most effective way to stay in front of prospects is to provide something useful for them.  Publishing an insightful white paper, a blog post, benchmark data, or some other valuable content reinforces your credibility and makes a positive impression.

By the way, keep in mind that just because someone’s on your contact list isn’t an invitation to harass them.  A high “opt-out” rate will tell you’ve crossed into “spammer” territory.

Keep costs low: All of this effort to stay in front of prospects while you wait patiently isn’t free.  It’s part of the customer acquisition costs that make the SaaS business model so challenging.  (See “How to cut customer acquisition costs.”)

But there are ways to keep the costs under control.  Email newsletters, white papers, and blog posts, for example, are fairly inexpensive to distribute.  On the other hand, on-site visits from sales executives are expensive and probably not the most efficient way to stay in touch with prospects who are not yet ready to fully engage.

This stuff does work

I recall work I did with one particular vendor to assess whether this “stay in front of prospects” strategy really works.  We looked at the deals we had won and worked backwards to examine the entire life of the relationship with the customer.

In most cases, we found that the process extended over many months and involved at least ten “touches” with marketing material.   That is, we got in front of the prospect ten times over the period: sent a white paper, invited them to a webinar, delivered a blog post, etc.  All that activity happened before the customer seriously engaged in an evaluation of the solution and began working closely with a sales person.

Believe me, I know patience isn’t always easy.  But if you’re selling important solutions to enterprises, plan for it.  It’s just the way the process works.