SaaS Marketers Face A New Reality
I talked to more than a dozen marketers from SaaS companies at the recent SaaStr Annual event, and while they each had day-to-day challenges that were specific to the companies they work at, they all had two pain points in common.
Rewind back a decade ago to 2006.
At the time, the biggest challenges for marketers were typically:
- How do I get found online?
- How do I get traffic to my website?
- How do I convert that traffic into leads?
- How do I turn those leads into paying customers?
Much of the innovation in marketing technology was around the top of the funnel—building tools that help marketers attract more leads and help sales reps close more deals. As a result, over the last decade, marketers have gotten damn good at demand generation and customer acquisition. And one of the proof points to this is the rise of topics like growth marketing and conversion rate optimization. Getting more leads is very rarely the challenge today. Marketers are focused on how to be more efficient.
And that brings us to today.
As software continues to eat the world, more and more businesses have made the shift to subscription-based revenue models. As a result, a larger percentage of this year’s revenue is expected to come from existing customers—which means businesses need to place a bigger emphasis on customer success than ever before. Think about this: How different would the buying experience be if the sales rep who sold you your new car checked in with you monthly to see how things are going? Instead, all of the work is done up front, and once you sign the papers, that sales rep could care less about how you’re doing with your brand new car.
Marketing software needs to change to match the new paradigm.
Why Marketing To Customers Is The Future Of Marketing
In February I spent some time out in San Francisco at SaaStr Annual. In just two years, SaaStr has grown to be one of the biggest and most influential meet-ups for SaaS marketers around the world. So while I was there, I wanted to sit down with as many marketers as I could to learn about their current challenges and the things they are focused on in 2016 and beyond.
I talked to more than a dozen marketers from SaaS companies, and while they each had day-to-day challenges that were specific to the companies they work at, they all had two pain points in common:
1. How do I get better at upsell and cross-sell? In addition to a subscription-based revenue model, nearly every SaaS business today has some type of free plan or multiple subscription tiers, which means that upsell and cross-sell are always happening in one form or another. Everyone is trying to get more out of their existing customer base and increase metrics such as customer LTV (lifetime value) and ARPU (average revenue per user). The challenge today is getting the right message to the right user in the right place at exactly the right time.
Are you talking to free trial users or power users who know your product like the back of their hands? Did you send a message to the admin on the account who pays the bill or the person who is logged in and using your product every single day? These are questions that are hard to answer today. The data is there, but it’s really tough to take action on it—unless you want to spent half of your day running reports, calling in favors from the product team or (gulp) learning SQL.
2. How do I get better at fighting churn? Churn is an absolute killer in SaaS. One CEO I talked to mentioned losing 10% of his business each month to churn—and the worst part is that 30% of that alone came from things he could control (like credit card expirations) if he had the right communication tools in place. Fighting churn can have a real impact on the bottom line: According to Bain and Co., a 5% increase in customer retention can increase a company’s profitability by 75%.
It’s clear that in 2016 and beyond, the challenge for marketers is no longer attracting and converting leads, but it’s marketing to their existing customer base.
Instead of wondering how we can attract more customers, marketers will be focused on how to get more out of existing customers. As a result, we’ll need to have a layer of customer intelligence and team collaboration that doesn’t exist today.
While traditional marketing will be focused on marketing to strangers (prospects and leads), relationship marketing will focus on marketing to customers. Depending on the organization, this could be the responsibility of the product marketing, growth marketing, or customer marketing teams. And instead of trying to move one of those strangers further down the funnel, relationship marketing will be focused on creating a long-term, valuable relationship with an existing customer.