Software as a service is a multibillion dollar industry that has grown by leaps and bounds since its inception. In several industries, like customer relationship management, the SaaS model has taken over traditional software distribution and has new players entering every day, trying to become the next Salesforce. Unfortunately, even with ample venture capital available, some companies keep making the same mistakes over and over when trying to market their services. Here are five such common mistakes.
1. Measure EVERYTHING.
What gets measured gets improved. There are certain standard metrics used for measuring SaaS – CAC (customer acquisition cost), MRR (monthly recurring revenue), LTV (lifetime value), NPS (net promoter score) and a few others. That’s a good starting point, but it’s not enough. The real critical metrics is HOW your service is used. What’s the main difference between free users and paying clients? Which features are most used? Which modules are underused? How many people are using mobile or desktop apps? Which countries/languages convert best? Where are your most profitable clients come from? Having answers to all these and other questions not only help you increase your revenue or generate ideas for news releases, they will actually help your SaaS stay ahead of competition by tracking changes real-time.
2. Thinking that a free plan will take care of marketing
The freemium model is very seductive. A lot of startups think that adding a free plan option will do all the heavy lifting for them – that is that people will start talking about the service all over the internet and recommend it to friends and colleagues, resulting in a flood of traffic, a fraction of which will convert to a paying customer base. Nothing could be further from the truth. If anything, you have to do MORE marketing in a freemium model. First, you have to convince folks to even try your free version, then you have to convince them to KEEP USING your free service, then to upgrade to a paid plan, then you have to convince to keep paying – the process never ends. Here is a golden rule for SaaS marketing – if nobody wants to pay you now, adding a free option won’t solve your problems. If you had no traffic when you were just trying to sell your service, a free plan won’t fix this problem. Finally, in order to be truly successful, your free version should be worth paying for. Ideally, your free plan should be better than most paid options available on the market.
3. Failing to provide a box/self-hosted version of your SaaS (when appropriate).
This is a really, really big mistake that a lot of services make. Bitrix24 generates over 30% of revenue through sales of the self-hosted version. And it’s not just the money. People worry about the safety of their data and if you don’t offer a self-hosted version, these clients are knocking on a locked door. Certain countries, like Germany, have very strict personal data laws that can put a high cost on conformance for cloud services. A self-hosted version can offer more customization options – and almost every large client will want to change something in order to better fit their organization. Having a (much) more expensive self-hosted version will help you grow your partner network, because there is a big difference in getting paid $100 a month for referring a client and $10,000 contract for deploying a custom solution. Finally, some of your best cloud clients will quickly outgrow your SaaS and unless there is a self-hosted version available, you are nurturing your best clients for competition.
4. Not offering personal support to new clients.
Unless your service is very basic, chances are it will be misunderstood. We’ve had a lot of clients who stopped using Bitrix24 after a day or two, because it could not do something they wanted. Except that it could. Sure, you have ‘Contact Us’ and ‘Help’ page, but new clients probably won’t use them. It might be impractical/impossible to offer a personal touch to all comers, but sorting out your key prospects and sending a personal email or calling them is essential – answering their first question and proactively asking whether they have more. They will. We now have several clients who said that the reason they decided to use our service because they knew there’s a specific person who’d quickly get them the right answer or solve the problem. A customer’s first week of using SaaS is critical. If a company stays with you for a week, they’ll probably stay with you much longer. It’s much better to introduce yourself right away, than to try to establish yourself after a client has come across a difficulty or even stopped use.
5. Get press coverage.
Public relationships are very important, especially if your SaaS is working in the enterprise segment. The problem is that no major publication will cover you unless you are very big, raised a lot of money, got bought/acquired by someone or GIVE A REASON to write about your service. And to give a reason, you need to stick to a specific format, namely you have to think like a journalist and provide NEWS. For example, we offer our product to startups for free. But our press-release title was “Bitrix24 Announces $2.4 Million Program to Popularize Social Intranet Among Startups.” That was newsworthy and we got covered. We’ve also released a report and infographic called ‘How small businesses use social intranet’ and again this resulted in multiple publications. Let’s say your SaaS has mobile apps for iPhone and Android. You can pitch your apps to mobile editors, but good luck with that. However, you can analyze use of those apps, as in Point 1. Let’s say you find out that iPhone app users generate 3 times more revenue than Android users. That’s news. Lots of iOS journalists/bloggers will cover how iPhone isn’t just about technology, it’s also about the audience. What about if your iPhone user revenue is identical to Android user? That’s news too, as lots of Android editors will be happy to write an article how Android’s reputation of ‘hard to monetize’ is actually a myth. Stop bugging editors with your press-releases. Become news provider instead.
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