The Covid-19 pandemic has put most businesses in a difficult position. Even SaaS companies that operate in the cloud and have been able to transition to remote working environments quite seamlessly have had to re-forecast and reimagine their business-as-usual. Many have had to reduce marketing budgets, adjust growth targets, and focus instead on weathering the storm.
As the economy slowly begins to wake up, though, SaaS companies now need to figure out how to reignite their efforts and outcomes. Unfortunately, because this situation is without precedence, it can be very difficult to chart a path forward.
While no one can say for sure what the future holds for businesses in any industry, there are some simple courses of action that can help your SaaS business not only stabilize operations but actually position itself for growth in the months to come.
Refining your ideal customer profile
For every product, there exists an ideal customer profile (ICP). Your target ICP is made up of buyers who are a great fit for what you’re offering and who stand to achieve a high return on investment (ROI). In turn, these ideal customers are more likely to have a long lifecycle with your company, which positively affects both retention rates and, more importantly, monthly (MRR) and annual recurring revenue (ARR).
You can understand this ideal category of buyer by looking at your revenue profile. Which of your customers are driving the highest percentage of sales and revenue? Of these top customers, which achieve the best ROI with your company? And what do these customers have in common?
By identifying similarities, you can reach an understanding of the types of organizations most likely to spend heavily on your services over the long term. This enhances your ability to increase marketing effectiveness towards these types of customers. You can use these ICPs to define the customer personas you should be crafting your messages for.
Examining your customer base also gives you the opportunity to hedge against vulnerabilities. For example—and this is a particularly poignant consideration in the wake of Covid-19—if the majority of your revenue comes from just a few of your customers and these customers experience challenging times, your business could be hit hard as a result.
Consequently, by understanding where your money has been coming from over the long term, you can market toward similarly dependable potential customers, while also looking to diversify revenue streams.
You can also use this information to figure out which of your offerings brings in the most revenue. By steering your marketing strategy toward inventory with a proven record, you maximize the effectiveness of your efforts.
Subscription management software makes it easy for SaaS companies to pull and compare customer and financial data in an effort to compile robust, accurate reports.
Farming existing customers
While attracting new customers is necessary, it can also be very expensive. Indeed, many businesses spend about five times more on marketing to new customers than it would cost them to retain existing ones.
One simple way to increase MRR without radically increasing your marketing budget is to upsell or ‘farm’ customers that already see value in the products you provide.
The benefit of an upsell strategy is that the arrangement can be mutually beneficial. Your ARR increases, while your customers enjoy the benefits of enhanced services that make their lives easier and their businesses more profitable.
Put together a short nurture campaign targeting existing customers with content created to show the value of other features of your product or service or different packages. Like new customers, they’ll need to be educated on the value of the offering but it’s much easier to expand revenue with customers that already know, like, and trust you than those who don’t (yet). In the upsell realm, it’s companies with flexible catalog and plan offerings that are ultimately advantaged. If you’re able to seamlessly customize and enhance unique packages to clients based on their specific and evolving needs, your odds of conversion success are much higher.
Indeed, many customers actively appreciate the opportunity to consider and take advantage of buying product packages they feel have been uniquely tailored to their needs. Personalized recommendations are 60% more effective than the more generalized alternatives, so it stands to reason that putting together personalized content destinations to help existing customers make the decision to upgrade that much easier.
It’s all a matter of playing the odds: companies have, approximately, a 70% success rate when selling to existing customers. Compare that to the 5% to 20% chance of success you have marketing to new customers and it becomes clear how you should be using your time. That said, not all upsells are created equal. Part of your objective should be to develop an upsell strategy that’s value-driven and minimally invasive for your customers.
An easy, low-profile way to extend upsell promotions is to provide upgrade options at the checkout and again at points throughout the customer journey when the customer’s usage trends warrant it. For example, for a small fee, Netflix gives customers opportunities to upgrade the number of screens they’re able to use at once. Likewise, for a reasonable upcharge, Zoom enables users to increase their meeting time limit, number of hosts and participants, level of support, and branding customization.
These marketing efforts work because they’re low pressure and legitimately enticing based on actual customer need. Conversely, you can lose sales that were a foregone conclusion and long-term customers alike by being overly aggressive in your upsell tactics.
While only about 17% of salespeople think they’re being pushy, about 50% of prospects feel they are. And even after the sale has been made, about 40% of people quit their subscription services at some point. A good degree of decorum will help to ensure you stay on the right side of those statistics.
Creating organic web traffic
With everything slowing down, now may be a particularly good time for your business to focus on building sales leads driven through organic web traffic.
SEO is particularly prudent in view of the fact that 57% of businesses currently report that the majority of their leads are generated online. And while the formula for success in this arena is multifaceted—for example, Google uses 200+ criteria when ranking content—it really comes down to one key consideration: quality.
By producing value-driven content—enhanced by the occasional long-tail keyword—you can build links, increase the shareability of your articles, and, ultimately, sharply enhance the number of people exposed to your products. Presently, SEO-driven content has an average 14.6% sales conversion rate; often comparable with, and, in some cases, significantly higher than, more conventional marketing efforts.
But be wary of falling prey to the many fad-based gimmicks that plague the world of SEO. Though keyword stuffing and buying links are both practices that have yielded results in their day, search engine algorithms are continually being tweaked to avoid giving this sort of content attention. It’s much more sustainable to write well, use keywords sensibly, and create value-driven content that in some way directs customers back to your product catalog.
While search engine optimization practices do take a lot of effort on the front end, the payoff is similar to that of a perennial garden: once the work has begun you can go on enjoying the results for years.
By focusing on content creation and link building now, you can trust that when the economy does fully reopen your business will already be benefitting from a low-cost and highly effective source of lead generation.
With the U.S. economy as bad as it has been since the Great Depression, and with a lot of sluggishness and uncertainty continuing in the Canadian economy as well, no one can say for certain how long it will take for businesses to return to pre-COVID-19 conditions. Presently, the emphasis is on making do with what one has. The above-mentioned steps rely heavily on two resources that most SaaS companies already have in abundance—data and existing customers. These are low-cost assets you can start using today to increase profits and to prepare for an eventual return to more usual business operations.
From all of this uncertainty comes new opportunities. By building organic traffic, crafting highly targeted messaging, and maximizing the effectiveness of your customer base, your company will be highly prepared for the eventual economic rebound that will follow.
By embracing these simple but effective marketing techniques, you may even find your company better positioned than you were at the beginning of this pandemic.