Insider Tips on Reducing Customer Acquisition Cost

A question often asked is, “How can SaaS marketers reduce customer acquisition cost?” Well, SaaS companies face numerous daunting challenges, some of them being how to get to market, how to breakeven and dominate the market before things turn ugly. While marketers can only do little about getting the technology built out, they can help to skyrocket sales without blowing their company’s budget. Unfortunately, a “budget” is often the deal breaker.

SaaS marketers and sales teams must pay close attention to customer acquisition cost (CAC) if they want to remain competitive. Marketing only forms one part of the total CAC. However, cost-effective marketing plays a key role.

Insider Tips on Reducing Customer Acquisition Cost

Generating Marketing Qualified Leads

Any successful SaaS company knows there is more value in working hard to reach likely subscribers rather than working with large volumes of inbound leads that are nothing more than marginally qualified. This involves both demand generation strategies and targeted inbound marketing designed to help increase Marketing Qualified Leads (MQLs). Let’s say an MLQ already knows about your brand and is now either exploring or evaluating your SaaS offering and could possibly make a purchase, but hasn’t yet signed up for a free trial demo. But first, how do you get more MLQs moving through your sales funnel?

Exploring Content Marketing and SEO

Your key strategy at this point is to hone your site messaging, subscriber emails, blog, and other communications to ensure your buyers’ needs are satisfied. Your first step, perhaps, is to develop accurate buyer personas with real customers through interviews. Then, create engaging and interesting content that will appeal to targeted buyers and get them interested enough to convert to email subscriptions and content offers.

The content should be optimized for SEO – with on-page factors – using the most recent best practices and relevant for your most likely buyer search phrases. This is what successful companies continue to do and use marketing automation to effectively track lead generation and engagement and get them into and moving through the sales funnel with now more customized, problem-solving content. This approach only is very effective in attracting new buyers via search.

While SEO is currently (by far) the lowest cost-per-click (CPC) strategy, you need to understand that creating engaging high quality content for your site can be very expensive. However, you can reduce CAC in the following ways:

  •  Get the entire company involved in your content promotion on their professional LinkedIn, Google+ and Twitter networks
  •  Get your thought leaders and various subject area experts to come together and boost the blogging effort
  •  Collaborate with other industry thought leaders in co-sponsored/ co-authored blogs, interviews, speaking engagements, and webinars
  • Pursue content syndication networks for your blogs/ other content to be published to a wider, yet still targeted audience.

SaaS customer acquisition cost in its entirety means everything it took to acquire a particular customer – advertising, marketing, sales, and on-boarding costs and support through the Free Trial. It also includes costs involved in attracting prospects or non-prospects that failed to convert to paying customers.

PPC and Demand Generation

While the inbound marketing technique or methodology is very important for long term lead generation growth and brand awareness, it might take a lot more longer than just a couple of months of relentless and consistent publication to circle around and penetrate a new market, leave alone develop a solid pipeline.

Targeted demand generation is also pursued by most fast growing SaaS companies to ramp up faster and begin generating revenues. In a pay-per-click campaign, costs per lead are easier to see than it is for content marketing, as there can be more freelance costs/ in-house labor cost in creating and designing content, as well as promoting it. In a highly competitive market, however, costs per click can also escalate, making the option less viable.

Moreover, if campaigns are managed with vaguely defined goals, costs can quickly get out of control. Some insider tips for reducing customer acquisition cost in demand generation include:

  •  Starting with stringent budgets in multiple channels, test for highest conversion rates for MLQs and leads
  •  Based on likely buyer personas, create narrowly focused but relevant ad campaigns
  •  The next thing for you to do is shift budgets into the best performing channels, carefully managing PPC campaigns, as you pay attention to irrelevant searches with negative keywords and suppressing them in the process.
  • Watch PPC costly closely, especially cost per conversions

Note: It is not just about shrinking budgets and controlling ad spend and costs but it is all about getting more and more qualified leads for every dollar you spend on marketing.

Converting More MQLs to SQLs

At this point, we have qualified buyers streaming in through inbound and demand generation campaigns and our target is to pass them through the sales funnel fast without alienating them. It is all about conversion rates and you can reduce CAC in the following ways.

  •  In interviews and other buyer discovery processes, inquire from them what would lure them to a free trial sign up
  •  Find out (from them) the barriers to sign up
  •  What outcome are they looking for from a free trial sign up
  •  Do they need anything or any help to complete the trial?

Conclusion

For SaaS companies – particularly those in their expansion stages – CAC is the key metric to focus on. Therefore, most companies and their COOS and CFOSs concentrate on making this digit as low as possible. However, it is not just about paying less to get a customer; it is more about CAC efficiency.

Generate marketing qualified leads and get them flowing through your sales funnel. You can also explore content marketing and SEO, making good use of site messaging, blogs, subscriber emails, and other communications. CAC means everything it took to bring the customer on board, including the costs involved in attracting prospects, as well as non-prospects.

Through asking several questions you might be able to get customers to open up to you and get them to sign up. Utilizing these tips can help you reduce customer acquisition cost for your SaaS business and improve overall profitability.

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Omri Erel
Omri is the Head of Demand Generation, as well as the Lead Author & Editor of the SaaSAddict Blog. Omri established the SaaSAddict blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to SaaS and cloud migration.
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