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b2b saas cold email framework

New B2B SaaS cold email framework: Start sending these 2 types of cold emails

B2B SaaS companies need to stop sending generic cold email templates

When it comes to writing high-converting cold emails, a quick Google search will return thousands of different rules, templates, and steps to follow.

Cold emails as an acquisition channel are particularly popular for B2B SaaS companies. If you do your research and prospecting correctly, you can test and scale top funnel outreach very effectively and inexpensively, allowing you to allocate resources more effectively elsewhere.

However, given the amount of advice out there, with so many ‘proven’ ways to send cold emails, it’s safe to assume that there isn’t one silver bullet-type strategy that will save your failing email campaigns.

The cold email templates that flooded the internet can work, but their widespread use makes them often ineffective.

Email automation companies that have anything to do with email or cold email (from sending to verification) produce especially this type of content. And there is a fair number of them…

They understand their reads want a quick fix, plug and play solution.

Grow your SaaS business by understanding the principles behind successful cold emails

While small tweaks and improvements are nice, it’s something more nuanced than a simple template or a quick trick when it comes to long-term impact on your cold emails and sales processes.

We send thousands of cold emails weekly for our clients to prospects in different industries. The messages we send differ from client to client, and further for each client inside different campaigns, but they still perform really well.

If you start to approach your sales processes from this angle, you will quickly realize that it’s not about a magic combination of words that will make your prospects want to jump on a call.

Instead, it’s about underlying principles inside the emails. Every framework (in any field, from sales & marketing, to finance or science) is based on specific principles that make the framework robust.

The simple framework that I will discuss here is not different. Tactics follow strategy.

Based on the understanding that principles are more powerful than small tweaks, we set to analyze the cold emails we send (in this experiment, only the first emails) to understand what aspects make the successful campaigns successful.


Analysis of our best performing first cold emails – this is what we found…

Before we discuss what we did. Let’s break down the dynamics of communication that we’re engaging in when sending out emails.

One of the fundamental things our clients grasp when we start optimizing their campaigns is that there are two main categories of variables when it comes to cold email outreach.

Category 1 – You/your business

  • Product and features
  • UX/UI
  • Reputation
  • Pricing
  • Etc.

Category 2 – Your prospects

  • Competence to make a decision
  • Readiness to buy
  • Budget
  • Internal decision-making process, approvals
  • Etc.

The challenging part when it comes to cold emails is condensing the relevant Category 1 information and communicating it effectively and persuasively. How you do this is in your control.

However, you can’t control variables in Category 2 for a specific organization you communicate with. You can only influence WHO will be on the receiving end of your emails. The selection of who enters your sales cadences is in your hands, that’s why prospecting for the right accounts is as important as what you communicate to them.

To understand the effectiveness behind winning emails, we looked at how different elements interact between Category 1 and Category 2 variables.

We found that product differentiation is the major variable when it comes to writing effective cold emails and enticing a response. Upmarket solution deals are made on the features, integration, and flexibility to integrate with existing processes.

If your prospects are cold and you don’t have any history with them, they never saw your ads, read your blog or heard about you, they will care primarily about how your product solves their pain in a differentiated and better way.

Talking about price, UX/UI or other elements is important, but it’s often too early in the sales process.

While talking about price early can work for a certain type of prospects, it’s generally too early in the buying process, especially with organizations at the growth and maturity stage. They need the best solution, not the cheapest option. Click To Tweet

When I talk about differentiation, I mean a 10X differentiation, not 10%. It’s the kind of differentiation where your prospects think ‘Ok, wow, that’s really cool’ or ‘this is very interesting, how does it work?’.

Are you competing on the fact that one or a small number of features are marginally better, or are you offering a paradigm shift in terms of how the problems of your prospects are resolved?

Are you so far ahead of your competition that there is nobody competing with you in your category?

It’s important to be honest with yourself and to not make an emotional decision when thinking about this.

However, most likely you know the answer already – the answer was obvious (at least at that time) before a single line of code was written.

If you struggle to determine this, start by analyzing your competition and their products, conduct user interviews, and quantifying your findings.


Make your value proposition determine the types of cold emails you send

Generally, we send on behalf of our clients two types of emails depending on their value proposition.


If you have a product without significant differentiation – send ‘bait’ emails

In case your product falls into this category, the ‘bait’ emails perform the best. In a bait email, you introduce your product alongside a valuable piece of information or content for your prospect, ideally as a result of using your product (but this is not always possible). The bait also needs to be easy to consume and applicable in the near future.

While we’re baiting a response with something free, the value you offer has to exceed any cold emails they are used to receiving. It has to be something worth paying for.

b2b saas cold email optimization

Some examples are a detailed SEO report made with your SEO tool or a collection of PPC and SERP marketing data of your prospect’s competition. Experiment with offline or online events, data sheets, fact sheets, reports or recent industry research or statistics.

If your product can’t be used to create a bait, think about what valuable information your prospects want and will be a ‘no brainer’ to access and consume.

What to remember when writing the bait cold emails:

  1. Short
  2. Industry specific
  3. Account-specific
  4. Explain your product in 1-2 sentences
  5. Valuable bait that solve a real problem
  6. Test baits
  7. Clear call to action


If you have a differentiated solution – send ‘fact-based’ emails

In case you are miles ahead of the other players in your market, the ‘fact-based’ emails tend to perform the best.

These emails are shorter and require less research when crafting the offer (however, don’t neglect personalization). The fact-based emails simply state in what major areas you differ from other competitors.

While it’s not a ‘take it or leave it’ messaging, these emails resemble it. You outline your differentiation (remember 10x differentiation) and ask whether your prospect wants to know more.

Don’t be too pushy in this email however, ask for a brief and no strings attached introduction, discovery call or a meeting. In this case, your product is the bait.

What to remember when writing the fact-based emails:

  1. Short
  2. Outline major areas of differentiation in 3-5 brief points
  3. Explain value of taking the next step (e.g. a discovery call)
  4. Clear call to action

Here at App Marketing Minds, we often consult our clients on the types of emails they send. While their cold emails are doing well, they could be doing better by offering a bait, or improving their existing baits.

b2b saas cold email optimization

Why so many B2B SaaS companies struggle with cold emails?

I already described the 2 categories of variables that can influence the outcome of a cold email. The list is far from exhaustive.

A campaign that is underperforming can have one or more variables contributing to its performance. The ony way to find out is through A/B testing.

However, understanding where your product falls in the marketplace and adjusting messaging accordingly will make a significant difference.

Applying this change led to up to 70% improvements in lead generation efforts.

This is still concerning only the first email – but what happens next?

Switch it up regardless of your value proposition in the later emails. Introduce content baits and also go with shorter, fact-based emails.

You need to keep systematically A/B testing different angles and emails with your product, offer and market

What’s the take-home message?

Don’t simply copy email templates that you and thousands of other people can download from the internet. The chances are thousands of other people are sending, and millions are receiving these emails.

You can’t spam your way to success in sales. Think about the value you provide, whether through your product or through a bait that will lead to a demonstration of your product.

Thinking about the principles behind emails will produce results, not tweaking one or two words.

Maybe your value proposition is truly unique, but you’re not clearly explaining it in your emails. On the other hand, you could be directly selling (‘take it or leave it’) a generic solution while having many direct similar competitors.

Try to make these changes and let us know the results.

If you’d like to discuss your current sales campaigns, simply leave us a message or schedule a call. If you are new to cold emails, discover how we will set up a turn-key outbound lead generation campaign for your business.

b2b saas lead generation
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SaaS sales expectations

Acquiring your first SaaS users: expectations vs reality

Your big, anticipated product launch is looming. Whether you’re a new founder or an experienced entrepreneur, you’ll still experience the emotional highs and lows of your high expectations, long hours and stress leading up to the launch.

In this post, I’ll discuss the 3 major expectations founders and marketers have when acquiring their first users, and what is the best course of action when faced with (harsh) reality.

Are you guilty of any of these false expectations?

”…we will get 10x results across the board if everything will be perfect!”


Expectation:
We spent so much time and resources to make everything perfect…Unless everything is perfect, we can’t launch! And anything but perfect results will be a massive disappointment.

In reality, having everything perfect in its true meaning would probably lead to close to perfect results. However, the concept of perfection is elusive. And chasing it will be destructive.

Let’s take matters into perspective. The majority of venture-backed businesses (~75%) still fail, whether that is due to not finding product-market fit, sales inefficiency or the team (despite VC vetting procedures).

Even with all the funding, access to VC network and resources, they still mess up and run into difficulties at almost every stage of growth.

Perfection is unlikely to be achieved at that level, let alone with startups without all these benefits. Instead, strive to be effective and representative in your approach – not perfect.


Reality:
Your SaaS product’s sales launch and first user acquisition campaigns are not going to be perfect.

Your initial sales efforts need to be effective, representative and have the correct foundations for the future. The entire sales process, results, and even your confidence will be initially based on market feedback/data, and all the lost and won accounts.

You still need to go to market with all the necessary tools (marketing collateral, sales pitch, landing pages, email templates, lead generation process etc.) but expect and plan to improve over time.

There will be a point in time when you need to stop trying to learn new things and playing around with the site and emails, and simply go for it.

The reality is that you can’t expect to improve on your sales approach without feedback from your customers.

As you collect more feedback and data, this information will be channeled to fuel your strategy into a more sophisticated process, which will also increase the effectiveness of the campaign.

In the example above, a sales process can progress from the initial sales approach (founder sales) to account based marketing, as data and experience increase.

However, let me clarify that sophistication doesn’t always equal effectiveness (sometimes the opposite)! In this example, we are adding more layers to the campaign which was based on good foundations.

The image shows an improvement of the entire sales strategy, but this same process improvement can happen not only across approaches (FS to ABM) but also within one approach/channel.

Let’s take cold emails for example, from low market data/feedback, sophistication and effectiveness to high.


1) Mass cold emails with no personalization

2) Better prospect list + Cold emails with basic personalization

3) Better prospect list + Cold emails with advanced personalization

4) Better prospect list + Cold emails with advanced personalization + industry-specific content

The channel and approach you choose will depend on your experience in SaaS sales and marketing, the product itself, and your market – but the main focus should always be on effectiveness and efficiency.

Another aspect to consider is having solid foundations from the start, your foundations will support your long-term approach. Again, don’t strive for perfection, but keep this in mind.

Don’t build your sales strategy that is too complex for your current needs, but also don’t go for the quick and easy solution.

As you start acquiring your first customers, maybe you don’t need the most expensive and complex sales automation tool, however, ensure that your infrastructure will be able to support future tech demands.

For instance, by choosing vendors that offer tiers that will expand in complexity as your business grows and need for features increase.


“…uhmm, and now what?”

Expectation:
Users will just start rolling in as soon as we launch!

Probably not too many founders have this naive expectation (but I am sure some do), however, a great number of founders grossly underestimate the effort it will take to build a sustainable pipeline of qualified leads that will become customers.

The competition is increasing and CAC is growing too. There are some amazing stories of companies who claim that their entire success formula is in “building a product people love” – but every founder loves their product and thinks people love it too!

Building a sustainable pipeline is for the average SaaS business, not an easy task.

Reality:
Nobody is going to use your product if you don’t make a conscious effort to acquire them. It’s close to impossible to acquire any new users without a pre- and post-launch strategy

Firstly, your sales and marketing strategy should be on your mind even before a single line of code is written. By understanding your users and their behaviours, your product should be created in a way to allow seamless adoption through 1-2 primary sales channels as a part your product-channel fit.

Secondly, as you build your product, you need to also start building an audience to sell to once you’re ready to launch. Many founders neglect this and just bury their in the sand, doing things they feel more comfortable doing. Instead, they should be out there promoting and creating.

As a business, your role is to produce products and services people love, and sell them.

Selling is a part of this equation, and neglecting sales will have only one possible outcome in the long run…we know what is it.


SaaS sales pre-launch activity

The goals of your pre-launch campaigns should be:
– building a pipeline of qualified leads
– brand awareness, excitement, engagement
– collecting feedback
– agreement from beta users to become early adopters
– thought leadership

In fact, you don’t need to reinvent the wheel to achieve these goals. Start with content marketing – start blogging even if your product is not ready, and also use 3rd party platforms such as Quora (great for targeting your user base), Medium or Linkeidn and explore guest blogging opportunities.

Secondly, start a Youtube channel. If you’re short on time and resources, record 5-10 minute long videos and transcribe them.

Repurpose content and create blogs, powerpoint presentations and downloadable PDFs from the transcript. In terms of content topics, educate your audience about solutions that will bridge the gap between their problem and their desired outcome.


”….everyone will love our product. I mean… I love it!”


Expectation:
I, the co-founder and also my friends love our product. I am sure everyone else will too!

Unfortunately, many founders don’t properly validate their business idea. For the argument’s sake, however, let’s consider a situation where the founders did conduct thorough market research and gap analysis.

But what if they still struggle to acquire their first 25-100 users? If you’re bringing a new idea to market, research will give you valuable information, but it will never tell you the entire story.

Only presenting a product to potential customers and asking them to show how much they like it with their wallets will give you a good understanding of whether the direction you’re going is correct.

Reality:
The market will tell you whether your product is useful or not. Based on this, adjust to the current situation.

If lead generation is still an uphill battle, even after adjusting your strategies and trying a variety of new approaches, it may be worth considering if you’re going in the right direction.

Quickly test if you’re going the right direction:
The initial sales struggle doesn’t need to immediately indicate that there is no market for your product. You can do a number of tweaks first, that should bring you closer to product-market fit.


SaaS sales tweaks

– Feedback: your ideal customer didn’t buy? The best way to know why is to ask why!
– Targeting: do your target accounts really need your solution, or would a different group benefit more?
– Sales focus: are you focusing on the right features and outcomes? Are you pitching to solve too much, pleasing everybody/nobody or are you offering too little and not solving an important problem at all?
– Sales team and processes: is your sales team, including you, equipped with the right education and tools to attract and close new deals?
– Positioning: can you improve your market positioning to occupy a special place in your users’ mind?
– Messaging: is your product, price and marketing messages aligned?
– Product: is your product really solving a problem?


Think about how to test these variables in your business, and collect the right data that will act as a catalyst for change. It’s important to not make premature conclusions and to not be completely attached to one idea about your business.

Being willing to make changes can save your business. On the other hand, don’t be too hasty, changing the direction every week. You may be tempted to satisfy every potential customer who says they’ll buy only if you add one custom features for them. Don’t do this.

You need to find the right balance between listening to the market and staying on your course and pivoting only when data indicates that it’s necessary.

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How much should you invest into your SaaS sales and marketing

How much should SaaS companies invest into sales and marketing?

There is not a clear-cut answer that will apply and fit to every single SaaS business out there. Each business has it’s own unique problems and nuances. However, by looking at data and behaviour of other SaaS companies, we can derive to some interesting insights.

After working with companies finishing their MVP and needing a growth strategy, established companies experiencing sales decline, or even clients close to $100m in ARR, I noticed that the attitude and sales strategies vastly differ (we’ll highlight some outliers later in the article).

What companies will we talk about?

I will focus on segmenting companies by their growth and investment stage – all the way from ideation to Series A.

The impact of sales & marketing spending on growth

Perhaps as expected, greater investment into sales and marketing leads to greater growth.

Looking at the 2017 SaaS survey conducted by KBCM Technology Group (excluding companies below $5mm in ARR), we see that the companies who spend the highest percentage amount of their revenue grow the fastest.

Does this apply to you, at all times? Probably not.

Let’s look at different stages of early companies, and where you fit in.

Stage 1: Building your MVP / Pre-seed funding

How much should you spend on sales and marketing at this stage? It’s likely that you don’t even have a functioning MVP and many crucial questions related to your product and market are not answered yet.

My answer is as little as possible – close to $0.

Focus on leveraging your network, building your product, networking with investors, and gathering initial market feedback from potential customers, network and advisors. 

The pre-seed capital should be used to achieve the keys milestones to push your product forward, such as hiring new new technical talent.

Stage 2: Seed funding 

It’s likely that at this stage you have a functioning MVP which you can show to your friends, family or early stage investors to back up your pitch slides. The size of a seed fund deal can range from few thousand dollars to approximately $1.5mm.

Companies at this stage try to find their product-market fit and align their product with their ideal customer profiles, and to create a scalable, repeatable and predictable sales process. The amount of capital raised at this stage will also play a significant role in your sales strategy, just as the complexity, iterations and investment required for product development.

However, once you recognize the signs of product-market fit, such as:

  • Shorter sales cycles
  • Increased direct traffic
  • Predictable and growing sales
  • High net promoter score

It’s time to shift from founder sales, to professional sales.

Once you understand how to serve your customers and you know they want your product, it’s time to invest into a “real” sales process. You need to invest into in-house sales reps (1-3 reps) or temporarily outsource sales and lead generation to accelerate growth. It’s time to shift away founder sales and relying on network and referrals.

The data from 2012 to the current SaaS 2017 report indicates that greater investment (as a percentage of revenue) into sales and marketing does contribute to higher growth.

Therefore once you identify your primary acquisition channel, and establish your channel-product fit, being resourceful and not overly conservative (10-50% of revenue invested back to sales) is likely to contribute to greater growth.

Learn more about resourceful marketing through repurposing content. Download a copy of our Content Distribution Checklist and maximize your content marketing investment.

SaaS Content marketing tools

Stage 3: Series A

At this stage, product-market fit should be achieved. Your customer base, sales force and ARR are showing clear signs of growth.

The primary channel is unlikely to be enough to fuel the growth however, and new sales approaches, strategies and talent needs to be used. As the chart from earlier suggests, greater sales and marketing investment leads to higher growth rate. The study found that the median percentage of revenue spent on sales and marketing was 37%, but the fastest growing companies invested 50% to 51%.

If we look at the industry leaders, we can clearly see that the biggest players also lead the way in their investment into sales. Just how much they spend on sales and marketing?

Salesforce – 53% of their sales revenue

Marketo – 66% of their sales revenue

Constant Contact – 38% of their sales revenue

Bonus: Modeling sales and marketing investment

Tom Tunguz shared very interesting data on sales investment of publicly traded software companies.

(sales and marketing spend as a percentage of revenue of companies with different sales volume, white lines represent medians)

For instance a publicly traded company with revenue between $5m and $10m spends around 90% of their revenue on sales and marketing, whereas companies with sales up to $5m, around 180%. Take a note of some of the outliers however, some companies at the $100m mark still spend about 160% of their revenue on sales.

Tom also created and shared a simple model to forecast your own sales investment, you can access it here.

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SaaS Sales & Free Trials: With or without credit card details?

SaaS Sales & Free Trials: With or without credit card details?

While many companies simply follow the trend and what their competitors do (as little barriers to get using their product), some still struggle with this dilemma… and for the wrong reasons.

Should you ask for credit card details before starting a free trial, or not?

In this post I’ll briefly summarize my thoughts, based on what I’ve seen in real organization that decided to have free trials with, and also without CC details.

Try before you buy

“Try before you buy” has become the primary consumer mindset when buying software (SaaS or mobile apps) across almost all verticals and price points. Whether we consider low price points (free or freemium) to enterprise pricing (demos). Getting this right is crucial, otherwise all your prior investment into lead generation, will be lost.

But why do we see this trend?

The amount of SaaS vendors is dramatically increasing, and so is the competition in the market. Because of this, what would cost you money in the past is today given away for free in free trials or freemium products. All for the sake of demonstrating how and why is their solution better.

Customers are simply used to trying something and evaluating whether they like the product or not – i.e. whether they get the value or not, before purchasing.

Ultimately, because this is what consumers expect, asking for the extra step of commitment and investment of submitting credit card details will lead to lower free trial sign-ups.

Hoping to get only “high quality” sign-ups by creating the pay wall is not likely to be as profitable as acquiring a larger number of free trial sign-ups, and delivering exceptional value.

Free trials need to create real impact

Providing exceptional value is always a must.

….How?

Through an intelligently designed onboarding process which guides your users through the right hoops in order to realize the value you provide.

Also, this can be complemented by useful content related to the benefits your product brings.

How much of this value should you provide? Enough to the point where upgrading is the only logical course of action at the end of the trial.

My verdict? Focus on top of funnel lead generation efforts, make the free trial sign-up as effortless as possible — therefore without credit card details, and focus on delivering exceptional value as soon as possible during the free trial.

SaaS Onboarding Playbook (1)

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SaaS growth strategy and sales

How to Grow SaaS Sales Without Increasing Spending – The 3 Most Common Problems Of Over 55 SaaS Companies

How to Grow SaaS Sales Without Increasing Spending – 3 Most Common Problems Of Over 55 SaaS Companies

 

Do you also catch yourself late at night reading one post after another about a topic that really interests you, clicking from website to website and consuming all the information?

To me, this happens way too often. However, I realized that a lot of the information about startups and SaaS sales is elaborate enough to spark interest, but not elaborate enough to gain something tangible you can start immediately executing.

After solving demand generation and sales problems of almost 60 SaaS companies through App Marketing Minds, I started to see some patterns in what works and what doesn’t, and where organizations make the biggest mistakes.

In this post I will outline the biggest problems surrounding slow or no growth of companies and how to prevent the “we’ve tried it all and it’s not working” problem – therefore companies that can’t figure out the right sales process, or whose sales are plateauing or dying.

I will discuss problems surrounding your sales processes that are likely to cause unnecessarily high CAC, low user sign-up rates, and high churn.

More importantly, how to maximize existing resources in order to engineer your processes grow without overspending on new approaches.

While we hear about fantastical valuations and funding rounds, where too much cash is a problem, for such organizations there are dozens of smaller players going through very rough times. Especially because the SaaS business model is based on recovering CAC and earning profits for each user down the line through recurring fees, being resourceful and innovative in sales can go a long way.

 

Contents

Problem 1: Your sales funnel is not really designed for your users

Problem 2: Lack of understanding of the who and why behind SaaS churn

Problem 3: Impatience and neglected testing that leads to missed quota

Problem 1: Your sales funnel is not really designed for your users

I am certain that you, just like the majority of businesses, did your initial research phase thoroughly.

You defined you Ideal Customer Persona (ICP) and drilled down you personae so you clearly understand their needs and wants, goals, pain points, fears.

You also talk to your users on a consistent basis to get feedback to continuously understand how they interact with your product to receive the value they pay for. This allows you to align your marketing messages to speak their language and offer a product they are excited about.

However this is not enough in today’s competitive SaaS landscape.

I’d like to make a distinction between understanding what users want to hear and actually applying this knowledge at the right time in the sales cycle. Therefore the problem often doesn’t rest in doing the research, but rather in executing the tactics correctly at the right time of the sales process.

I made the assumption that you know your users really well, that you understand them and their questions and concerns. If not – you need to address this first.

Let’s discuss the actual problems we come across.

Many businesses don’t understand that their users (who often fragment into various groups) will have different set of questions and problems as they move along the sales funnel. Instead of applying the right language and trying to answer their questions globally, the right buyer questions need to be addressed at the right time of the buying process.

Download this post in PDF

After reading some great resourced but together by David Skok (VC, Matrix Partners) on how to map buyer journeys, we started to build on this concept to really drill down on each persona to orchestrate a high-performing sales funnel, mapped to specific buyer questions of that stage.

This is how most businesses see the sales process, it’s important to remember that this is the vendor’s perspective.

 

SaaS sales process

 

The journey can look like this, where:

  • Visitors land on your website
  • Read about your solution
  • Start a free trial / book a demo
  • Purchase

 

The first problem arises when companies try to do everything at once across all stages.

Visitors who just landed on your site – most likely a blog post, are unlikely to be ready to purchase. Yet too many SaaS sales strategies focus on selling even when the visitors are not completely sure what your product does.

Similarly, your re-engagement paths should not focus on building brand awareness, but focus on value perception and sales.

Differentiate the content and language used according to the appropriate stage and align messaging with your visitors’ journey.

 

saas customer journey mapping

 

Remembering how this messaging framework fits onto the sales process is crucial as me move forward.

The second problem arises once we realize that users simultaneously operate on a second decision making path. Their perception of their buyer journey differs from vendors’.

 

SaaS sales journey

 

Think about how you go from a problem to purchasing a solution. The steps are likely to be:

  • ”Oh wow, this is annoying! I wish there is a solution for this!”
  • You start searching for solutions
  • After you find several vendors that seem to scratch your itch, you decide which vendors to evaluate further
  • Free trials are started or demos booked
  • After weighing up the solutions you derive to a decision whether the value you received is greater than the monthly commitment the vendor is charging

 

As you can see, there is a great danger of misalignment between what vendors want and how they communicate they want (sales) and what users need to know to make a purchase.

We can address this misalignment in two steps.

 

1. Map your sales funnel to the buyer journey

Vendors’ role is to adequately display value so the visitor-brand engagement ends in a purchase. Therefore vendors’ communication and perception of how their sales funnel should look must align to what users need to receive in order to progress to the next stage and purchase.

Misalignment occurs when vendors don’t provide the necessary information at the right stage.

 

saas marketing process

 

Focus on what information your users require at each stage to create alignment. Deep understanding of your ICP and thorough research is the only way to achieve this.

 

saas marketing process

 

Once we understand what information users require at each stage, we can then proactively work on answering their concerns and move them along their purchasing journey.

 

saas sales and marketing funnel

 

As the image above demonstrates, we’ll address two broad and ubiquitous concerns.

1) How does this provider compare against other solutions on the market? Do the features provide what I need?

2) Is the price justified?

 

Knowing our ICP really well will allow for detailed breakdown of questions and concerns. It’s important to address all of these fully.

 

saas content persona strategy

 

Let’s think about applying this methodology to a real business – a SaaS landing page builder for example.

 

Competitive features matrix

  • Clean UI
  • Many integrations available
  • Wide range of customization

Demonstrate ROI

  • Pricing of solution vs graphic designer or developer
  • Pricing of solution vs developer designer for landing page
  • Pricing of solution vs time to build a static landing page yourself
  • Pricing of solution vs developer for custom integrations (e.g. difficulty of integrating email marketing provider)

 

2. Address the buyer decision making paths of different buyer personas

It’s likely that your product doesn’t appeal to only one extremely defined group of users. Maybe there are subsets of your primary user base, or maybe you offer different pricing tiers and solutions altogether – depending on number of seats, custom requirements or depth of usage.

There will therefore need to be several paths for different customer segments.

 

buyer persona for saas

saas buyer persona 2

 

Whether you attracted your traffic organically to a blog post, marketing on 3rd party platforms (Linkedin, Quora, Medium) or via paid traffic, it’s important to realize that different segments will have different problems and may require different solution / use case once they arrive to your site.

To fully maximize your content marketing resources, you need to re-purpose and distribute your content in a systematic manner. To learn how to do it you can download our internal tool from here.

 

SaaS Content marketing tools

 

While operating within the same framework, adjusting the individual items of the path can be achieved through different resources and content, personalization based on user segment, high vs low touch sales, or different sales tactics (provocative, consultative, transactional, or solution based sales)

 

Problem 2: Lack of understanding of the who and why behind SaaS churn

The SaaS world is full of important metrics which need to be tracked.

For example, you’re probably tracking already…

  • Visitors
  • Sign-ups
  • Traffic to free trial conversions
  • Lead:close ratio
  • Churn
  • CAC
  • CLTV
  • NPS
  • MRR

..and the list goes on and on.

However, the extent to which businesses collect and analyze their data differs significantly. Not uncovering important patterns from data that impact the bottom line will hurt businesses in 2018 more than ever before.

For many, the challenge comes from not knowing how to identify insights from the data. Hence not seeking much utility in collecting it in the first place.

From my experience, the average business (especially in its early stage) is focused on top-of-funnel metrics and conversions. How to get cheap and qualified traffic, how to convert the traffic, or how to scale this process. Of course, understandably, these and many other metrics are absolutely necessary.

What goes often unnoticed is a well-designed onboarding process that focuses on both, churn reduction and data analysis too.

Reducing churn by engaging users with the correct information, making ICP adjustments and even leveraging users’ network to get more customers is drastically cheaper than acquiring a completely new user.

I started to implement a modified version of a clever churn-reducing method used by Typeform (presented in a great and very insightful talk by VP of Customer Success at Typeform David Apple).

To reduce churn, firstly we identify who is churning and why, and how to mitigate it. There are four areas we’ll look at:

  • What is churn in your business
  • Churn drivers
  • Segmentation
  • Improvements

 

The following sections are components needed for drilling down into your audience based on metrics that you’re unlikely to be collecting and analyzing at this stage. However, if you’re interested in optimizing your free trial and increase your free trial to sales conversions, I highly recommend to read our SaaS onboarding playbook.

 

SaaS Onboarding Playbook (1)

 

What is SaaS churn?

You need to be crystal clear about what churn means specifically for your business.

We developed expertise for certain industries at App Marketing Minds, however, it rarely happens that two clients have the exact same product and business model. Therefore the product and market dynamics will differ from business to business.

To illustrate the point, whether your product is a mobile app (game), a marketplace or b2b SaaS, the definition of churn will vary drastically.

We could identify churn as the loss of a customer – they became unsatisfied with your solution, or their need was satisfied. However, it’s not always this simple.

Here are just some examples of how the definition will vary and that you need to be very clear about how your users use your product.

  • Cart abandonment plugin for Shopify (ecommerce) – this product will work on the “set it and forget it” model, therefore churn can be identified as deactivation and then subsequent uninstall
  • Landing page builder – infrequent sign-ins or less/no new landing pages being built, or complete deactivation?
  • Form builder such as Typeform – in some cases users have one-off need, or infrequent need to build information collecting forms. For example, form for a monthly or annual company event. If this user stops their subscription, just to reactive in 6 or 12 months, is that churn?
  • Market places – similarly to the example above, if an HR marketplace platform (such as Upwork) loses a user that had one-off hiring need for a long-term project, is that a churn, despite the goal the purpose of the goal has been fulfilled and goal of the user met?
  • Social media or entertainment apps – users are expected to be using the product daily, therefore few days of inactivity can be considered as churn
  • Online directories – should a business listed on Squarspace that goes out of business be considered as a churned customer, even if there isn’t anything Squarespace can do to keep them in business?

Clearly understanding what identifies as churn in your case is vitally important to measure and analyse the correct data.

All the examples above are likely to be considered as churn, but they will have different implications and meaning for each business. You need to start categorizing churns in relation to your business model to distinguish between different user behaviours.

 

Churn drivers

Once we identify whether the business model is subjected also to the “other churn”, we want to identify why and what are the causes. In the case of Typeform, many of their churned customers were despite churning happy – they simply solved their need by using Typeform.

Similarly, while I worked on a project with a background checks provider, many customers churned simply because their hiring demands didn’t require new candidates, therefore there wasn’t a need for frequent background checks.

Once you identify churned customers, it’s important not only to categorize types of churn but also to ask quantitative (NPS) and also qualitative questions to really understand the motivation behind their actions.

 

Segmentation

The objective of this stage is to meaningfully segment users to get more fragmented churn data. In contrast to lead generation, where you are most likely to segment based on company size, use case or depth of usage, here we’d start with looking at the retention curve to understand in what time frame do users churn.

 

 

saas retention curve

 

We can then start segmenting users into categories based on the churn timeframe.

 

 

 

Once we segment users based on retention, we can start looking into important metrics such as:

  • What percentage of your users fall into each category?
  • Is the percentage breakdown of users in each category consistent over time?
  • How much revenue does each segment bring?
  • What is the ROI for each segment? Based on the segment which has the greatest ROI, you can start focusing on attracting this customer segment more over others. Below is a visual representation of plotting different retention curves in relation to customer segments

 

 

  • How does the total number of accounts in each segment compare to ROI they generate? (example, segment 3 and 4 could have similar amount of total users, but ROI could differ)

 

To drill further into each segment, you need to start looking at characteristics of customers in each segment to understand who they are.

Knowing the representation of different customers among these segments will allow for more detailed targeting and refined messaging.

The segmentation will depend greatly on your business and what you consider relevant. We could however in each segment consider the following:

  • Company size (e.g. 0-5 employees, up to 10 employees, up to 50, over 100)
  • Industry
  • Use case
  • Geography
  • Traffic source
  • Number of sales touches
  • Behaviour during onboarding (e.g. engagement)

Application of this methodology is extremely useful for aligning your marketing with the right message to the right audience.

What percentage breakdown of these characteristics corresponds to our segments, and more specifically the most profitable segment?

Continuing with the landing page building SaaS from above, if you identified that the greatest CLTV and ROI segment consists mostly of business that to a large degree share these characteristics:

  • Have up to 50 employees
  • Are marketing agencies
  • Based in the US
  • Acquired through Linkedin Ads
  • Use your product to build pages for their clients inexpensively and quickly
  • Average 3 contacts with the customer success team

…would you make some changes to attract this specific type of customer? I believe so.

Not only that, given that you know this type of customer will lead to greater ROI down the line, you can be confident about spending more to acquire them.

On the other hand, cutting down on acquiring low ROI or unprofitable customers will have significant impact on your marketing performance and allow you to allocate budget on high ROI segments.

 

 

Problem 3: Impatience and neglected testing that leads to missed quota

What I mean by patience? I am referring to refraining from frantic switching from one approach to another as soon as some setbacks arise.

Secondly, I am talking about aimless continuing with unprofitable acquisition approaches just because the budget (for now) allows it.

While I make this point, I want to acknowledge that I will speak mostly to early stage businesses that struggle with funding – that is, there isn’t any. To those founders that have a vision, little to no entrepreneurial or sales experience and some hard earned cash to turn their vision into reality. These are the businesses in the Micro SaaS (1-2 people) and Bootstrapped category, and everything in between.

A common characteristic of these businesses is that they are extremely resourceful, risk averse, and keen to weigh up every advertising check that is sent off to the market.

The founders must wear different hats to keep moving forward, and usually approach outside help to boost their sales after depleting personal network and getting their fingers burned a little.

Deciding when is the right time to completely reshape your demand generation strategy after encountering setbacks such weak sales performance is in these circumstances difficult. And smaller the budget, the harder it gets.

This is particularly important for bootstrapped and underfunded businesses where a string of suboptimal marketing campaigns can be detrimental.

The problem stems from an extreme scarcity of resources that often boils down to these two thinking processes in face of under-performing sales attempts:

  • We’ve been running this campaign already for two weeks, and still no results? Let’s try something completely different!
  • We’ve been running this campaign for 10 weeks, spent 80% of our budget and no real results? We need to continue and hope it will turn around – we don’t know what to else try but we need sales now!

These extreme examples are not that far from reality of many organizations.

So how to approach this situation? Not meeting sales goals tends to be a multivariate issue which tends to be overwhelming.

Let’s break down the problem/solution into three categories that can lead to growth without spending extra resources:

  • Determine your product-channel fit
  • Focus on your primary channel and don’t diversify too early
  • Keep testing when things work and also when things don’t work

 

Product-channel fit in SaaS

We can loosely define product-channel fit as the compatibility between your product and your chosen channel to acquire customers the most direct, quick and cheap way.

An overwhelming number of entrepreneurs have the attitude of “we built this amazing product, how do we sell it?” One indicator of a product-channel fit issue. Product-channel fit should be considered before launching any sales initiatives, in fact, it should be considered while you build your product.

Your product need to be built with users in mind, as the market (people) will quickly indicate if your product is addressing their needs through sales (product-market fit). Similarly, your product needs to be built with a primary channel in mind. The demand generation part of your business during development can’t be an afterthought.

I took the framework which Briand Belfour described in his $100M+ Growth series and narrowed my focus on market, channel and product alignment (fit) when working with clients that require rapid sales improvement.

 

 

Given we operate in a sales capacity, where our role to market and sell the existing solution, we work with the assumption that the model elements (e.g. correct pricing or monetization method) are achieved.

Consider your ICP’s characteristics and the problems you’re solving as you build your product. Based on this, ensure that your product has characteristics that will fit the right acquisition channel for the audience with a clearly outlined and understood why.

This will be your primary acquisition channel.

Let’s consider an example: an app in the entertainment niche (music), utilizing social groups and connections between users to share their favourite music, operating on a freemium model with paid upgrades, targeting millennials.

The freemium model relies on high number of sign-ups and subsequent in-app conversions. However, a problem with this model is that paid campaigns (such as Facebook, Google ads) may become costly very quickly if the in-app conversions are low.

Building this product with the right channel in mind could focus on leveraging the product’s network effects and focus on virality.

This can be achieved through encouraging sharing the app with user’s network on social media through gamification, access to premium features or creating a sense of cause which will be achieved through sharing (e.g. everyone deserved ad-free music experience).

Secondly, given that on average 24% of users abandon an app after the first use – the time to first value needs to be extremely quick.

 

Credit: Localytics

 

Users need to immediately realise what value they receive from the first and continuous use. Clean and simple UI, just as quick comprehension of usage will add to first-time engagement and stickiness.

Achieving channel-product fit is therefore an issue that needs to be tackled before a single advertising dollar is spent. If you haven’t considered it when building your product, review how your product, ICP and primary acquisition channels align. You may realize that an entirely different approach is more suitable. Maybe you’re just climbing the wrong hill

 

Narrow your demand generation focus

Once you establish the primary acquisition channel, build a well thought-out demand generation strategy and don’t diversity for the sake of diversifying.

Are you trying to get good at Facebook ads on limited funds without prior experience when your product is not suitable for it? Or maybe trying to pay high agency fees without any guarantee it will work? Recipe for disaster.

Diversifying is not bad, but it should be way ahead in the future once your primary channel is working and bringing in healthy ROI.

As Peter Thiel comments in his book Zero To One about distribution channels: “If you try for several but don’t nail one, you’re finished. Distribution follows the power law.”

Simply put, the power law describes a phenomenon where a small number of items (in this case channels) is clustered and will account for majority of results (sales).

 

 

The relationship between new channels and results will be therefore nonlinear – doubling the number of channels will not result in doubling of revenue.

Additionally, in case where multiple channels perform equally but not well, spending resources to identify and fixing problems of several channels at the same time will lead to minimal results.

Focus on establishing and optimizing the primary channel will yield the best results.

Many entrepreneurs underestimate the effort that is required for driving solid growth out of one acquisition channels. Your one article per week and attempts to run Facebook ads and Google ads at the same is competing with a three person full-time content creation team, and separate two Facebook and Adwords teams.

It’s always important to pick your battles, especially when running low on funds.

Once you start seeing results from one channel, refrain from trying something new. It’s time to scale. This can be done by doubling down on what already works.

  • Does cold calling work for you? Call more
  • Does cold emailing work for you? Send more emails
  • Social media ads? Increase the budget, increase geography, test more ads

 

Make testing a priority

I encourage data collection, analysis and testing all stages. Given you identified the channel you want to focus on and have a demand generation plan in place, testing should be a standard process incorporated into your sales machine.

Changing one aspect of your sales funnel is unlikely to lead to astronomical improvements. Instead of relying on one massive change or a completely new methodology, start with the low hanging fruit.

As an example, let’s look at the following sales process below.

 

saas b2b sales journey

 

In this example “follow-up engagement” refers to follow-up process on leads that were qualified but didn’t purchase after the demo.

Instead of simply saying “let’s improve sales”, start breaking down the sales funnel into its basic components of each stage and map performance metrics.

 

 

It’s important to have the correct benchmarks as we keep improving the process. Consider historic data or industry average performance to have a reference point.

Next, identify the most important and high impact aspect which needs to improve immediately – in this case it could be the prospect:demo conversions.

As we’re looking to improve sales on a tight budget, the mindset here is to optimize the process for increased sales, without increasing spending.

The current demos booked (15%) could be improved by improving the components of:

  • Cold email campaigns that trigger initial responses that lead to a demo
    • Personalization (more specific information in emails vs baseline personalization)
    • Number of follow-ups (increase follow-ups vs baseline number of follow-ups)
  • Demo reminders to keep engagement in the build up to demo
    • Reminder format (old format of automatic email vs automatic email with a brief professional video including a personal invitation from the sales rep)

After setting up experiments for one stage, prioritize improvements of other components based on its current performance and potential impact.

We’ll look at follow-up engagement and follow-up sales in the example below.

 

saas b2b sales process improvement

 

Improving the performance of each stage can be done by A/B testing different approaches, focusing on what works and eliminating what underperforms.

It’s important to be selective with the elements of your experiments. While testing is good, spreading yourself too thin and focusing on too many aspects at once can have the opposite effect.

If you applied all three strategies (product-channel fit, narrow focus on one channel, testing) to your demand generation strategy and you’re still not meeting your goals, it may the right time to revisit your product-channel fit and identify which alternative channels will be the right fit for your product and your audience.

 

Will you make the same sales mistakes?

I addressed solutions to three problems that are hurting sales and marketing efforts of many SaaS businesses we come across.

You may not like it, but competition in the SaaS world is growing and unlikely to stop.

Today, there’s more than 8, 500 martech companies alone in comparison to 500 only ten years ago. In fact, every new SaaS company will on average face 9.7 competitors at the time of launching.

As Peter Drucker said: “The business enterprise has two basic functions: marketing and innovation”.

Here I demonstrated my take on making your marketing and sales more efficient using three real-life solutions we apply while working with our clients at App Marketing Minds.

We are able to gain an edge over competition by utilizing existing resources and applying new methodology to create more profitable outcomes.

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5 Key Reasons Why Your Business Needs a SaaS CRM Solution

5 Key Reasons Why Your Business Needs a SaaS CRM Solution

Both SaaS and CRM have been major buzzwords in the business world for quite a while now, and with good reason. Numerous brilliant SaaS and CRM solutions currently available on the market keep completely transforming the way businesses work and will only continue to bring huge positive changes to the sales and marketing landscape.

One of the best things that happened to businesses all around the globe is the combination of SaaS and CRM solutions. Instead of utilizing on-premise CRM software that requires not only a significant initial investment, but also constant hardware and server maintenance and a lot of costs down the line, you can now utilize a SaaS CRM (cloud CRM) solution that can really take your entire business to a whole new level.

 

What Is SaaS CRM?

The CRM definition doesn’t really need much explaining, as CRM stands for “Customer Relationship Management”, meaning that this piece of software helps you manage your customer interactions and build strong, meaningful and long-lasting customer relationships. With a reliable CRM solution, you can seamlessly communicate with your customers and prospects, following them on their entire buyer’s journey and fostering excellent experiences with your brand.

When you add SaaS (Software-as-a-Service) to the equation, you get a magical combination that can significantly improve all your efforts and help you considerably expand your customer base. This is because SaaS CRM is based in the cloud, which means that you don’t need to invest a lot of money into its deployment and maintenance, so you can greatly reduce your costs and, thus, increase your ROI.

There are many benefits that SaaS CRM software can provide your business with, but take a look at the most important ones that will certainly make you utilize this type of software as soon as possible.

 

Great Cost-Efficiency

As already discussed, SaaS CRM requires no great initial costs, as well as no costs for maintenance, updates and backups, since you don’t need to install any hardware whatsoever. Your SaaS CRM vendor is the one responsible for all the technical stuff.

With SaaS CRM, you can pay-as-you-go or subscribe to use a particular service, and almost all the solutions available are more than affordable, so you can save even more money than you may think. When utilizing a particular software solution, all you need to do is pay to use the service, and you can completely focus on your core competencies.

 

24/7 Access

Since SaaS CRM is based in the cloud, you can access any necessary information you need anytime you want, anywhere you are, regardless of the device you are using. With this tool, you can work on-the-go and communicate with your teams in real-time, significantly improving team collaboration, efficiency, and productivity.

It goes without saying that this 24/7 availability can help you reach your goals much faster, not to mention that it extremely helps your remote employees, as well as field teams, who need to have constant access to customer information.

 

Seamless Integrations

As technology keeps advancing at a very fast pace, integrations of various tools are becoming more and more vital to business success. Instead of having multiple tools for different kinds of tasks and projects, which not only increases costs (deployment, training, and monthly fees), but also requires more time for tasks completion, you can now use only a few tools for most of your daily operations.

This is where SaaS CRM absolutely shines, as it seamlessly integrates with a great number of tools, so that you can streamline all your daily operations and make sure that everything is running smoothly.

 

Flexibility and Easy Scalability

CRM solutions offer excellent flexibility when it comes to all the features that they provide. You can choose only those features that fit your business needs and customize your CRM so that it will perfectly align with your business goals.

As you scale your business, you can scale your SaaS CRM as well, so you can add more features or more storage space, or even completely change your subscription plan. This means that you can scale your CRM both up and down, depending on your changing business needs.

 

High Data Security

Security is a major concern for businesses, which is why a lot of them still refuse to rely on any kind of web-based tools. However, SaaS CRM vendors understand how important it is to have your sensitive data, including all the customer information, safe and secure at all times, so they offer solutions that provide high levels of security. Their success basically depends on data security, which is precisely why they make it their main priority.

There are certainly many more benefits of SaaS CRM software solutions, but these are absolutely the most vital ones that you should take into consideration. Of course, on-premise CRM does have its advantages, but SaaS CRM is definitely the future, so embrace that future and get ready to play with the big guns.

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Beyond User Acquisition: How To Grow Through User Engagement and Decreased Churn

Beyond User Acquisition: How To Grow Through User Engagement and Decreased Churn 

SaaS companies that achieve the elusive product-market fit and successfully scale their sales processes encounter a new problem - churn. Churning customers and lost revenue at scale have far greater financial impact and strain on sales teams which need to replace the lost revenue.

Sales objectives will change with each organization's growth stage. Early stage startups are more likely to focus on top-of-funnel activities, acquiring more bookings, and conversion rate optimization. However, once these processes are established and work, the focus often shifts on aspects which were somewhat neglected and not finessed to the same extent. At this stage, companies take a more serious look on aspects such as their onboarding process, churn, user engagement or time to first value.

This simple model below published by David Skok demonstrates the impact of different churn rates across revenue growth.

The red and yellow lines indicate lost revenue due to churn at 5% and 2.5% respectively. We see that as revenue increases, 5% in comparison to 2.5% churn represents a significant dollar amount difference. For instance towards the end of Year 5 (Month 58), 5% churn represents $90,000. 

7%

Great SaaS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year

100%

The very best SAAS businesses have a negative churn rate and will have a Dollar Retention Rate greater than 100%

How to increase user engagement

Decrease Time to First Value 

Time to First Value (TTFV) is the amount of time it takes for your users to receive and realize value of your product. TTFV is not to be confused with the time it takes for the vendor to receive value (money) from their users.

Decreasing TTFV is important, as quickly and consistently delivering value will stimulate continuous product use, therefore doing so quickly and faster than your competition will be a critical aspect in delivering enough value which will eventually lead to purchase. 

The competition in the SaaS world is intensifying with conservatively estimated 10,000 SaaS companies in the marketplace today. And as a result of competition, customers benefit from increased quality and number of vendors.

SaaS sales journey

The image above shows a typical SaaS customer purchase journey. Your users are most likely to be in the evaluation stage when they sign-up for a free trial.

Given that you're being evaluated against your category competitors solving the same problem, you're never too far from a churned user. 

To answer the problem of bringing users to value faster, we need to define what value means in the first place. The simplest explanation is that value refers to the promise your product makes - why users start to use the product in the first place.

Sometimes referred to as the Aha! moment, it's the point in time when users realize and experience how product solves their problem.

While defining the promise of your product should be quite clear, you need definition of the Aha! moment to be supported with further customer feedback, interviews and user questionnaires. 

Churn and the time it takes to reach and experience the Aha! moment are closely linked. The longer it takes to receive value from your product, the chances of churning increase.

The image below shows customers' interest in your solution and the time it takes to achieve the Aha! moment.



The image shows different times to realize value, where with increased time the likelihood of churn significantly grows. Every product will have different TTFV, however, it's important to proactively review this metric, and work on reducing it.

The first step is to analyse all the necessary steps that users need to take to receive value and reach the Aha! moment.

For example, users of a landing page building SaaS will reach the Aha! moment not when they sign-up and see all the beautiful templates, but when the page is actually live. This is the value they want to receive. These can be the steps they need to take to reach the Aha! moment.

It's necessary to map out your steps to the Aha! moment and work on eliminating all the in-between steps that are not necessary. Mapping out the least required amount of steps will aid further TTFV reducing strategies. For example, forcing your customers to fully complete their profile before they move on to select a template would be an unnecessary step in receiving value.

Another aspect that will help to reduce TTFV is the UI/UX of your product. Clean UI and latest trends in product design play a major role in how your users perceive and interact with your product. 

Even if you have all the features your users need, bad UI where using the product presents a major pain will inevitably cause more churn. Reducing the number of steps to realize value in combination with beautiful design will set you apart.

Follow the latest trends such as:

  • Global navigation
  • Hierarchy of importance in navigation - manage complexity of features through planning and simplicity 
  • Clear visual data
  • Font that is easy to read represents your brand

Lastly, providing adequate support as your users interact with your product for the first time will significantly ease the onboarding process.

Direct users to the next required step to realize value, or at least set them on the right course of action. Achieve this by sending documentation, walk-through videos, in-app messages or chat pop-ups that will outline the next necessary steps.

You can use products such as Intercom to set URL specific messages. This will allow you to identify when users reach different stages of onboarding and point them towards the next require action.

Encourage user engagement through behaviour-based reminders 

Some users will abandon the necessary process to realize value even if you have beautiful design and optimized path to the Aha! moment.

The only way for your users to realize value and then purchase is through rejoining the journey to their Aha! moment. 

Analysing individual product use will allow us to identify different drop-off stages and create behaviour-based campaigns.

If we consider the example from above, our users need to complete 3 success milestones to receive value.



However, through identifying the drop-off point, we can send targeted messages that will directly and in a relevant way remind the user to complete the next step.



This return path can be then repeated for all major success milestones. One important consideration is the frequency and positioning of these re-engagement messages. You need to very clearly understand how your users use your solution to gauge when is the right time to send the re-engaging message. 

For example an HR SaaS like breezy.hr which allows users to create and publish recruitment adverts on job platforms will have different timeframes to reach major milestones than a social media automation tool like Hootsuite.

There is notably more effort involved in crafting an entire job adverts than integrating a product with social media profiles (requiring just few clicks). 

Understanding the necessary time for your users to reach different milestones will help to create relevant and non-intrusive or annoying reminders.

A great example of this is Facebook's suite of business tools. 

Facebook uses multi-channel return path, targeting their users via email and Facebook notifications.

The end goal for Facebook is to collect advertising spend of their users. On the other hand, business users want to acquire more clients or gain visibility using Facebook. Therefore a major success milestone is creating the first post, as that will set them on the path to receiving value by gaining initial visibility.

When crafting the messages, it's important to focus on a variety of aspects of your product, and speak to your users' motivation to gain but also not to lose out, just as offering multiple support avenues (email, call, live chat) and education on how to complete the next step.



Use education to bridge the gap between users' capabilities and their desired outcome 

Your product is a vehicle that will bring your users from the current situation (pain) to their desired outcome.



However, the journey from the "before" to "after" state is hardly ever this simple. One element many SaaS organizations don't take into account is user's ability to perform the necessary actions outside the scope of their product which directly contribute to the desired outcome.

There is therefore a "user capability gap" between your product and the desired outcome.



To increase retention, it's vital to strategically close the gap and increase user capability. While you're probably already publishing top-of-funnel and bottom-of-funnel content that is required for acquiring new customers, your content strategy needs to also focus on resources that will close the gap.



Knowing your customers' pain points will help to understand what obstacles they encounter on a daily basis as they're trying to achieve their desired outcome.

If we consider users of a landing page SaaS, the value they receive from your product is a live page. However, the desired outcome is to acquire new leads, subscribers or sales through the landing page.

While the provider can offer a great product, the outcome (number of leads, subscribers or sales) falls outside their control. Therefore the question becomes how can we help them to achieve their desired outcome in addition to using our product? 

Some useful content is most likely to be around topics such as:

  • Landing page best practices
  • Conversion rate optimization
  • Copywriting 

We can then map out the journey from pain to desired outcome in this way:

This approach content marketing approach is seen across all leading SaaS companies:

Shopify - their survival and growth depends on successful merchants. Providing only an ecommerce platform doesn't lead to their users' desired outcome (successful ecommerce business). Shopify's blog educates merchants on how to generate sales, and therefore reach their desired outcome.

Hubspot CRM - Hubspot customers' desired outcome is easier sales management and increased sales of sales teams. Hubspot provide resources on sales, marketing, account management.



5-7%

Great SaaS companies achieve 5-7% annual revenue churn - equivalent to a loss of $1 out of every $200 each month 

2%

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

Decreasing churn

The first action step towards decreasing churn is identifying what your churn rate is. In some cases however, it may be difficult to pinpoint what constitutes "churn" in your business. 

We could identify churn as the loss of a customer – they became unsatisfied with your solution, or their need was satisfied. However, it’s not always this simple.

Here are just some examples of how the definition will vary and that you need to be very clear about how your users use your product.

  • Cart abandonment plugin for Shopify (ecommerce) – this product will work on the “set it and forget it” model, therefore churn can be identified as deactivation and then subsequent uninstall
  • Landing page builder – infrequent sign-ins or less/no new landing pages being built, or complete deactivation?
  • Form builder such as Typeform – in some cases users have one-off need, or infrequent need to build information collecting forms. For example, form for a monthly or annual company event. If this user stops their subscription, just to reactive in 6 or 12 months, is that churn?
  • Market places – similarly to the example above, if an HR marketplace platform (such as Upwork.com) loses a user that had one-off hiring need for a long-term project, is that a churn, despite the goal the purpose of the goal has been fulfilled and goal of the user met?

Once we identify whether the business model is subjected also to the “other churn”, we want to identify why and what are the causes - the churn drivers. In the case of Typeform for example, many of their churned customers are happy with the solution despite churning (according to NPS and questionnaires), but they simply solved their need to create a questionnaire by using Typeform.

There are many ways to segment your customers to understand churn. You can start by looking at different user segments (e.g. size, revenue, product use), or you can start by analysing retention to understand what types of customers are likely to churn at different time frames.

saas retention curve

We can then create categories based on the churn timeframe.

Once we segment users based on retention, we can start looking into important metrics such as:

  • What percentage of your users fall into each category?
  • Is the percentage breakdown of users in each category consistent over time?
  • How much revenue does each segment bring?
  • What is the ROI for each segment? Based on the segment which has the greatest ROI, you can start focusing on attracting this customer segment more over others. Below is a visual representation of plotting different retention curves in relation to customer segments
  • How does the total number of accounts in each segment compare to ROI they generate? (example, segment 3 and 4 could have similar amount of total users, but ROI could differ)

Segmenting the user base by retention curve and identifying commonalities among the customer profiles can far more greatly improve the ROI possibilities than looking at different customer segments and trying to infer why they churn. 

Once users with the best ROI are identified and common characteristics mapped out, you can start implementing lead generation initiatives to attract the type of users who are most likely to provide the best ROI.

Secondly, given this information is now available, there can be greater confidence in spending more to attract a specific type of user. On the other hand, sales and onboarding process can be made less resource consuming for prospects which are likely to bring less, or even negative ROI given their profile.

4x

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x 

55%

55% of SaaS companies rate Customer Retention Cost as the key metric to measure 

Optimize onboarding and minimize churn in your organization

App Marketing Minds specializes in onboarding, retention and monetization for SaaS companies. Schedule a confidential call today to discuss your current approach and challenges.



References:

http://sixteenventures.com/saas-churn-rate#pq=TOGfBg

http://www.forentrepreneurs.com/ltv/ 

http://www.forentrepreneurs.com/saas-metrics-2/

https://www.slideshare.net/totango/5th-annual-saas-metrics-report?next_slideshow=1

http://www.insightsquared.com/2016/02/benchmarking-quick-ratio-benchmarks-2016/


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