December 21, 2016
You want to rely on a business that you know is bound to stick around. David Skok, of Matrix Partners, found that most software as a service (SaaS) marketers focus on team, product and market, but overlook the cost of acquiring customers. While product/team fit torpedoes thousands of businesses, cost of acquisition is the second largest killer. Skok observed hundreds of business and found they got their product/market fit right, but bailed because they failed to acquire customers at a low enough cost.
Business viability boils down to balancing two variables: Cost to acquire customers (CAC) against the ability to monetize those customers (i.e., Lifetime Value of a Customer (LTV)).
SaaS costs are high today. Our challenge is to lower acquisition costs in order to monetize clients.
Here’s 10 Ways To Help You Lower SaaS Customer Acquisition:
Marketing wastes money unless you know whom you’re targeting. We create a buyer profile that typifies our targeted client and directs our marketing efforts. We consult it to shape our campaigns and script our content. Creating and using better profiles helps us get more promising leads and makes us avoid dead-end acquisition channels that only sucks our money.
How can you create the perfect buyer persona?
HubSpot has the free Make Persona generator that leads you through a series of questions to develop your targeted buyer. Use it to lower your acquisition costs.
Too many businesses tend to underestimate their CaC, so that when the rubber hits the road they suddenly find their costs were far higher than expected. How do we estimate a realistic CaC ahead of time?
We consult our CaC history, which has been logged by dividing marketing expenses against the number of new customers acquired in that specific time period. We see the approximate amount of money we have invested in similar campaigns and factor in possible challenges that can stretch our CaC. Most important: We double or triple our CaC estimates to prepare for wriggle room.
Pareto's famous approach is capitalizing on the 20% of efforts that give you the best use of your money or time. His 80/20 rule says that 20% of your effort produces 80% of your results. Focus on that 20%, prioritise it, and you're spending your costs on the marketing endeavors that give you the highest return for your investments.
This 80/20 rule can be applied across the spectrum, from focusing on the most prospective marketing channels to focusing on the 20% of customers that drive your 80% profitability. Investing energy, time, and resources into what matters most, whittles your acquisition costs to a fraction of what they may otherwise be.
Our USP, or unique selling point, is the elevator mission that guides us and tells our clients who we are. Put another way, it differentiates us and tells prospective customers how we can help them better than our competitors do.
USP is the reason customers buy from us. As we shape our business to meet our USP’s targeted selling point, our CaC takes care of itself, since customers get what they need and are more likely to refer others. This lowers our acquisition costs.
This is a free SEO tool that helps us slash costs. Potential customers search for us using specific long-tailed keywords in their Google searches. We incorporate these in our content.
In this article, for instance, the long tailed keyword was “customer acquisition costs”, with the idea that most of you may be seeking advice on this topic. The keywords lead you to our articles. If the content tantalizes you, we lower our acquisition costs by doubling our conversion rates - for free.
People want to know we’re actually helping them and our product is as great as promised. What better way to convince them then to have representatives of prominent companies say so. We feature these testimonials on our website so that prospective customers can read these success stories and feel more assured.
Tips to doing this right are: Tell the story, keep it short, simple, and stuffed with facts and figures. Never sell. If you’re stories are convincing enough, customers will come.
Over and again, you’ll find articles that tell you that content is king. But content needs to be far more than that. It needs to be ten times better than anything on the search result for a certain keyword. Content needs to help you improve your business, get more clients, make your service more profitable. In other words, we go for content that sticks out, that gives readers a “wow” moment, that makes them want to refer us to others and through that get more clients.
The cost of acquiring a new customer is always higher than the cost of up selling an existing one. We practice retargeting, where we communicate with potential customers who visit our website but don’t make a purchase.
Pierre Lechelle of SaaS found that when he advertised to such visitors on Google Display Network or Facebook Ads, he converted them to a free trial of less than $1. Converting these users is cheaper and easier than converting users you don’t know at all.
We are always looking for ways we can meet your needs and help you grow. We realize that with value comes word-of-mouth advertising and that this is the cheapest and best sort of marketing available.
Ways we test include A/B testing, evaluations, and surveys. Items we test include our marketing funnel, homepage, and homepages. Simply changing things is not enough. We constantly innovate and test our innovations to make sure we're accomplishing our mission and meeting your needs.
Top internet companies, such as Moz, Shopify and Squarespace, offer free trials to get customers. Free consultations are another tool. It makes sense: Potential customers may be afraid to invest money. Once they sign up for the free trial or consultation, they sample our experience and may become hooked.
There’s a psychological trigger for selling, called “the reciprocity principle”, which says that people want to give back what they receive. Offering a free trial could increase conversion rates and decrease customer acquisition costs.
A lower CaC leads to greater profit. It’s been a journey for us. As we’ve grown, we’ve acquired tools for hacking our acquisition costs. In turn, this has made us a more profitable company and better able to come through on our promises.