Marketing for the SAAS Industry: Everything You Need to Know
We’re living in the golden age of SaaS… at least for customers.
Right now, SaaS users have more options than ever before to choose the perfect solution.
SaaS brands, on the other hand, have to work much harder to reach, convert, and keep their ideal users. Marketing for the SaaS industry has never been so sophisticated — or so competitive.
If you’re trying to grow your software-as-a-service business, you can’t afford to play guessing games with your money and your team’s resources. You need to know what works, and relentlessly focus on that.
Marketing for the SaaS industry: top 4 questions
For today’s article, we’ve researched some of the most common questions about marketing for the SaaS industry — and did our best to answer them, using examples from some of the fastest-growing SaaS companies around.
You’ll learn about:
- Top 5 marketing channels for SaaS…
- Conversion rates for different SaaS business models…
- 3 specific strategies that deliver high ROI…
And more. Let’s get started!
“What are the best marketing channels for my SaaS brand?”
We wish we could give you a simple answer to this question. Like, “Focus on content marketing!” Or, “Drive some well-targeted paid traffic!” Or, “Do a neat giveaway to generate buzz around your brand!”
But the truth is, there is no one-size-fits-all solution.
That said, if you look at some of the fastest-growing SaaS companies in the world, you’re going to see that all of them focus on the same critical few channels to drive their growth:
- Word-of-mouth and referrals. Creating a SaaS product that “sells itself” remains the most effective path to growth. You don’t need a sales team or a marketing budget to do this — just an awesome product that people are eager to talk about. Making it easy to share and creating a formalized referral program doesn’t hurt, either.
- Content. Marketing for the SaaS industry is all about creating valuable, high-engagement content for your core user base. It’s the engine that powers Hubspot, Intercom, Salesforce, Blinkist, and many other wild success stories in the SaaS world.
- SEO. Search engine optimization works best in tandem with smart content marketing — but even by itself, it can be incredibly powerful. Best-in-class SaaS businesses rely on a combination of organic and paid SEO to drive high-quality traffic to their websites (more on that later).
- Partnerships and sponsorships. The most direct way to attract your ideal users is to partner with another brand that already serves them. This can come in the form of promoting your SaaS brand through specialized deal websites like Appsumo, sponsoring content creators, or partnering with other businesses to bring you leads (e.g. the way Shopify and Unbounce partner with marketing agencies).
- Email marketing. Email marketing for the SaaS industry is the best way to nurture new leads, convert them into paying users and retain existing customers, hands down. All the current data on email marketing reveals that it gives your brand the biggest bang for every buck you invest in it — $40 for every $1 you put in. Hard to beat this kind of ROI!
Of course, there are lots of other channels you could use to market your SaaS brand, but these are “the big five” — having lots of room for growth, proven to work, and responsible for some of the biggest software-as-a-service hits in the world.
“What’s a good conversion rate for a SaaS business?”
Once again… It depends (noticing a theme here?).
Namely, it depends on how much you charge for your software, and your business costs.
For example, an enterprise-level B2B SaaS company could be converting only 0.1% of its leads into paying users — and still generate a profit. But a more low-priced B2C SaaS business might struggle even with a 20+ percent conversion rate.
But you didn’t come here for “it depends,” did you?
So let’s take a look at some industry benchmark conversion rates, as described here by SaaS marketer Lincoln Murphy:
- Opt-in free trial — at the end of the free trial term, users have to consciously decide to keep using your product and fill in their payment details. For this model, 25% and up is considered a great conversion benchmark.
- Opt-out free trial — users give payment details in advance and start paying for your software as soon as their free trial expires… unless they opt out. For an opt-out free trial, the “ideal” benchmark conversion rate is 60+ percent.
- Freemium — all new users get a “basic” account that’s free forever, with an option to upgrade to a paid account. Freemium SaaS brands convert in the single digits (9% and lower) and make up for it by attracting more users overall — because who doesn’t love a free-forever account?!
- Demo to paid — new leads get a sales demo and an offer to buy the full software. This one really comes down to what your market is, who your ideal customer is, and how amazing your salespeople are. So there isn’t really a benchmark conversion rate!
Tip: as we said, these example conversion rates are benchmarks — not averages. You want to grow your SaaS conversion rate to match them, but don’t worry if it takes you a long time. Just try for a reasonable conversion rate for now.
Or better yet, focus on other important metrics you could improve…
“What are the key metrics I need to measure in SaaS marketing?”
Want to know a guaranteed way to feel bad about your marketing skills?
Just look at someone else’s analytics dashboard.
You’ll see so many metrics it never occurred to you to track — or you never knew existed! Man, you’d better start measuring CAC, LTV, CHS, churn, engagement score and…
You don’t need obsessively track dozens of metrics to grow your SaaS business. Knowing those can be very useful, sure… but you don’t need them to succeed.
Instead, do what SaaS marketing startup CoSchedule did and focus on these 3 metrics:
- Your incoming traffic. Traffic is the lifeblood of your SaaS brand. You want to measure how many unique visitors you get every month, the quality of said visitors (you want as many of them to be your ideal customers as possible) — and the percentage of new vs. returning traffic.
- Your email list size. Your email list is your #1 marketing asset. It’s the best way to communicate directly with your leads, nurture them, and qualify them. In addition, you want to measure your list opt-in rate and monthly growth.
- Your qualified leads. Qualified leads are just one step away from becoming paying users. They might be free trial users, or demo applicants, or highly engaged free users (if you have a freemium SaaS). Regardless, you want to know how many of them you have overall, how many you add every month — and what percentage of your general pool of leads (i.e. your email list) they represent.
On the surface, this approach might seem too simplistic to work. But CoSchedule used it to grow to multiple 7 figures in revenue with thousands of paying customers in 100+ countries. See? You don’t need an analytics dashboard worthy of USS Enterprise to grow your SaaS business the smart way!
“Which marketing strategies should I use for my SaaS brand?”
Marketing for the SaaS industry includes hundreds, if not thousands of strategies and tactics — all of which you could potentially use. How are you supposed to know which ones are the best fit for your brand?
Well, if you’re just starting out, you want to focus on the obvious and, dare we say, boring stuff like hiring a couple of good salespeople and hustling up some outbound leads! Or building an email list. Or setting up a referral program.
But if you’re past that early growth stage, it’s easy to feel spoiled for choice and not know what you should do next. So here are 3 solid SaaS marketing strategies you can implement quickly:
- Create a helpful free tool. Static content isn’t as impressive as it used to be — there’s simply too much of it around! Go the extra mile and create a valuable tool that solves a problem your ideal users have. Something they can use again and again. Calculators, quizzes, headline/subject line generators, copywriting or design templates — anything that relates to your product, isn’t too complicated to put together and makes your target market’s life easier!
- Bid on your competitor’s brand name. Usually paid traffic gets really expensive, really fast. But if you know your direct competitors, you can bid on keywords like their brand name or “[competitor’s brand name] alternative” and put up some effective search ads for cheap. Then you can direct those searchers to a dedicated landing page that explains to them why your SaaS brand is superior to that competitor and nudges them to sign up. Here’s an example of how Intercom does it.
- Create an engaging animated video. A well-produced explainer video for your SaaS brand can drive traffic to your website, generate free trial signups, boost retention, and even help you with hiring. Most importantly, it can convey your value proposition with clarity and power, and in the shortest amount of time possible. For a great example of what a video like that can look like, check out this ad from Slack.
We’ve chosen these 3 strategies for two reasons: 1) because they work, and 2) because we liked how ingenious and simple they are. But you don’t have to limit yourself to just them — experiment and find out what works best for your SaaS business. The world is your oyster!
And if you want to create the best possible marketing video for your SaaS brand (strategy #3), we invite you to check out our free checklist: