B2B Marketing For SaaS Businesses: Then And Now
When businesses wanted to buy software pre-internet, they would physically buy a CD-ROM, install it on everyone’s computer and pay a licensing fee. Like so many sectors, the rise of the web turned things on its head. Software as a Service (SaaS) is a way of delivering software online, paying a monthly subscription without installation costs.
Since the rise of Salesforce in the late 90s, the SaaS market has exploded. Lower costs, greater access to cloud storage and increased speed have moved the market away from an enterprise-only concern to a space open to businesses of all sizes.
The market has splintered, offering SaaS solutions to increasingly niche business problems - Mailchimp for email marketing, LastPass for managing passwords, Zoom for video calls, and many more - everything from cybersecurity to managing your health.
Increased competition and market disruption mean marketing strategies have to adapt. So how have things changed? What does great SaaS marketing look like now? And what about the future? To find out, we caught up with two leaders in the field.
Jean Moncrieff is a marketing director with over 20 years’ experience at the likes of Jibestream and Commonplace, who took one cloud-based firm from start-up to £5m revenue. Through The Marketing Centre, Jean works closely with business owners to develop strategies and navigate growth in the SaaS market.
Similarly, having worked across SaaS firms including Babble, Path Intelligence and Lumese, Jeremy Langley is known as the no-BS marketing director who helped grow a startup software company to a €500m SaaS phenomenon. We sat down with the two of them to find out a bit of history and some key insights around SaaS marketing.
Customer-first thinking in SaaS marketing
Salesforce may not have been the first SaaS product, but its launch in 1999 popularised cloud-based software more than any other business. In these early days, Salesforce was able to promise speed, security, flexibility and better pricing options than their enterprise competitors. The innovation itself sold the product, while the business marketed aggressively to pull customers away from competitors and increase their market share.
In 2019, SaaS products are so ubiquitous that new customer acquisition is no longer the main focus for marketing efforts, explains Jeremy. “In the early days of SaaS, it was all about grow, grow, grow,” he says. “Now, SaaS is an increasingly mature market. These days it’s about how you generate greater revenue from your existing base. The shift has gone from 100% new customer acquisition to about 30%. That changes the demand and the marketing mix.”
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When SaaS was new, the tech itself was attracting new customers - those early adopters - it was the promise of the groundbreaking software that appealed. The technology isn’t new anymore. Great user experience, nice visuals, cloud storage - these aren’t differentiators for potential new clients, they’re taken as given. Even Artificial Intelligence features like chatbots are losing their currency in creating excitement.
So, when SaaS businesses want to attract new customers, the sale shouldn’t be based on the software side of SaaS, it should be based on the second ‘S’ - the service. “Old school marketing was always obsessed with the product – what it did and how it was the best out there,” says Jeremy. “But now SaaS firms are much more free to base themselves on the customer experience and the customer promise. For instance, not just what tools are, but how they can be used, how they’ll make users’ lives easier.
“Too often I hear technology marketers talking about the channel, before they talk about the customer. They say: ‘we tried this, we tried that, this is our go-to-market model’. If you think channel first and customers second, you’re doing it the wrong way round.”
Once you understand the customer you can begin to map a buyer’s journey and the way that your marketing and sales teams guide customers along. “Companies should blur the lines between marketing and sales much more aggressively,” says Jean. “Stop thinking in terms of functional structures, with X as marketing’s job and Y as sales’ job. How does the customer want to buy? That’s what matters.”
Jeremy agrees: “This level of introspection should inform every level of SaaS marketing. For instance, if you discover that your target customer doesn’t attend many events, or isn’t influenced by them, then stop doing so many events. If you discover that your buyers are instead influenced by the opinions of industry experts, then perhaps you should be creating more expert content through LinkedIn or a company blog.
“This will likely change the approach needed in your marketing department. So you look at your team. If they don’t have the skills that your customer wants them to have, to create the marketing they need, then perhaps it’s time to retrain and re-skill your organisation.”
This customer-first outlook is a vital tool for SaaS companies, and it even filters through to things like pricing. For instance, the original SaaS products benefitted from what was - at the time - a novel payment model. As Marc Benioff, co-founder of Salesforce, said in 1999: “This [cloud delivery] model made software similar to a utility, akin to paying a monthly electric bill. Why couldn’t customers pay a monthly bill for a service that would run business applications whenever and wherever?”
But while the pricing was different, it was expensive, pricing out many mid-sized businesses and focusing on enterprise customers. This has changed. “Today there’s a much greater degree of flexibility in pricing,” says Jeremy. “Products are being configured for entry level, mid-size and enterprise pricing – focusing more on individual user subscription models than upfront fees or business licenses. This flexibility simply wasn’t possible in the early days of SaaS.”
For SaaS businesses in 2019 and beyond, smart pricing plans - defined by customer need and insight - are a fantastic way to gain a foothold in a market. Lower price points offer limited functionality, but this is perfect for smaller businesses. The goal for SaaS businesses is to then nurture those trial customers into bigger businesses with bigger plans.
To do this, great SaaS marketing should adopt the role of educator and community leader.
Customer retention and community building
Community engagement has become central to both product and brand development for SaaS firms, enabling providers to learn what a customer wants and gain trust by delivering it. Think of it as a form of R&D and brand marketing, all rolled into one. Jean goes on to explain: “The ability for users to communicate with the brand and feel a real interaction is incredibly important. It leaves people feeling like they’ve almost got a stake in that piece of software. With that comes transparency, trust, community – and eventually loyal customers.”
A great example is the CRM, Hubspot. Hubspot has thrown its marketing weight behind a body of content aimed to educate its target audience around all things marketing. But it went beyond that - offering digital marketing certifications through its Hubspot Academy, creating a network of Hubspot Partners, and hosting sponsored local events through this network via the thousands of global Hubspot User Groups (HUGs).
These events are great for creating awareness and acquiring customers, but also great at engaging existing customers and building loyalty. Another thing this activity builds is trust. “Communities and education are both really effective ways of gaining trust in your brand,” says Jean. “The role of educator positions you as invested in the customer and as an expert. The community aspect does the same, but also creates a space where you can ask users, ‘what’s your problem and how do we solve it?’ It’s an effective way to bridge the gap between a digital service and a more accessible, human side. Again, it’s all about knowing and helping your target customers”
And once you are in a position to deliver, there has never been a better time for SaaS marketing, Jean tells us in closing.
“If you’re an entrepreneur who is able to see an opportunity that everybody else has missed, we’re at one of those times in history where you can go and do it. You don’t need an army of developers to do it. Literally, two or three of you can get together and build an Uber or an Airbnb. Never before have we had so much processing power and so much technology at our fingertips to build businesses. The cost of deploying and marketing a SaaS business is negligible compared to what it was a decade ago. You just have to find the niche problem that your brand solves.”