Insight: SaaS (9) Marketing

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We discussed the duties of the SaaS sales team in the previous article ‘Insight: SaaS(8) Build a Sales team’, as well as the need to design a standard sales process. In this article, we’ll go over the marketing team's responsibilities of SaaS and the arduous tasks of scaling.

The Marketing department’s primary duty is to bring in as much MQL as possible for the company. If Sales can guarantee a certain conversion rate, the more MQL you have, the more customers you can get.

Marketing’s job is to pique people’s interest in your products and brand, generate more PROSPECTS, and then educate the market, converting PROSPECTS to MQL. The marketing team is in charge of generating PROSPECTS, the conversion rate from PROSPECTS to MQL, and the number of MQL as a final work result. In the article ‘Insight: SaaS(8) Build a Sales team’, the MQL and PROSPECTS were defined.

MQL: The customer’s needs are basically matched with the product, potential problems are waiting to be discovered, and some primary customer information is grasped. (Customers communicate their desires via email. / The customer has read the content on your website, created an account, and begun the trial period. / Become a free customer. / Filled out the form to inform you that he has a requirement.)

Prospects: Customers may be interested in your product(Customers visited your website / You received a phone call from a customer).

1. The MQL definition should be strictly followed, and the quality of MQL should take precedence over quantity.

Marketing is in charge of gathering some information about customers. Customer information, customer demands, position, whether there is a budget, and so on should all be included in MQL. People are always selfish. If a company’s MQL rules are too broad, the Marketing team will bring in a large number of MQL, many of which are not target or high-quality customers. If such low-quality MQLs are brought in, the sales conversion rate will be terrible, affecting the entire company’s operations. Sales spend a lot of time on uninterested customers, and those who are really interested will feel negligent.

If you bring in some non-target customers, even if they become your New ARR, they haven’t really used SaaS and can’t appreciate its value, and the likelihood of renewal is exceptionally low. So, if the NDR is poor, the first reaction is to improve the CSM department and your products. Surprisingly, the customers brought in by the Marketing team are not your target customers, which leads to crappy results.

As a result, the MQL definition must include some specific numbers, such as the customer’s size reaching 100 employees or the customer’s budget exceeding 100k. It can be adjusted according to the specific business of each company. You can define a customer registering as a trial or a freemium customer remaining active as MQL.

2. Attracting customers with expectation management,

Exaggerated marketing is not appropriate for SaaS products. The transaction of SaaS products has two characteristics: it is rational, and it is more realistic in terms of renewal. Customer purchases are based on rational decision-making rather than impulsive spending. Customers will undoubtedly scrutinize your goods. If your advertising is exaggerated, the MQL you bring over will be of poor quality. It will not only be lost in the market funnel but in other parts of the funnel as well. Early loss causes less damage than late loss. It is discovered that the advertised function does not exist at all, and the customer’s chances of renewing the contract are practically nil.

More AHA moments will come from expectation management, or managing customer expectations. The value of SaaS products lies in their ability to help customers succeed. If you can add $5000 in value to customers, you sell $3000 and advertise the value of $4000 to users, which will exceed their expectations and lead to more purchases. Renewal will occur if basic expectations are met. The goal of SaaS is to continually uncover the value of current customers.

3. Keep track of and optimize various channels

Calculate the ROI of each channel and experiment with new ones on a regular basis. Many people should be familiar with this, and the marketing funnel used by traditional B2B companies can also be applied to SaaS businesses. The marketing department should use various channels to contact potential target customers and compare the ROI of each channel. It would be preferable if the follow-up transaction renewal could be calculated in the future.

4. The Sales & Marketing Spend should be determined by your go-to-market strategy.

What stage is your business in? Is it to focus on product polishing or to increase market share? If you’re the former, you’ll need to keep a lower Sales & Marketing Spend under control, while if you’re the latter, you’ll need a higher Sales & Marketing Spend.

We can see that when ARR is $1M, the median Sales & Marketing Spend is 20%, indicating that most SaaS products did not expand much in the early stages and instead focused on product development. Corresponding to the ARR in the $10–20M range, the median Sales & Marketing Spend is the highest, demonstrating that once a product reaches a certain stage, it is necessary to sprint sales and continuously expand its market scale.

The dominant sales channels for the products are distinct, as are the Sales & Marketing Spend. Sales & Marketing Spend that rely heavily on sales teams are frequently on the high side.

We revealed that SaaS products that allow users to purchase spontaneously and self-educate have lower Sales & Marketing Spend and higher marketing efficiency. In comparison to the other three sales channels, the median Sales & Marketing Spend of Self-educated is much lower. Because there is no need for a large sales team, only marketing expenses must be paid, resulting in low marketing expenses.

Marketing must continue to invest at all stages of the company. Brand building benefits in the long term cannot be measured in a short period of time.

We could find that the proportion of marketing spending is always greater than 10%, regardless of the size of the SaaS company’s revenue. In the early stages of entrepreneurship, when the product is the most important consideration, the engineering team will play a larger role. Marketing work, on the other hand, must be performed at all times. After all, no matter how good a product is, it still needs to be promoted. The real success is a commercial success.

The next article ‘Insight: SaaS (10) CSM’ is published. Simply send me some claps and feedback if you enjoyed my article.