Monday, March 18, 2013

The 6th DO for SaaS startups – Fill the funnel

Here's another post in my series on DOs and DON'Ts for early-stage SaaS startups:


6th DO for SaaS startups
Fill the funnel
Or: Focus on inbound marketing, but
 try lots of things and double-down on what works


In this post I'm going to write about lead generation for SaaS startups. When I edit the series later on I might merge it into my 4th DO (Make your website your best marketing person) to have one post on marketing. Let's see.

To make it clear right away, unfortunately I can't tell you what's going to work for you in terms of getting a large number of potential customers to your site. In fact, my key message is that there is no magic bullet when it comes to lead generation and that you'll have to try lots of things, put in lots of time and effort, double down on what works and execute extremely well. I haven't seen a SaaS company yet which gets more than 50% of its leads from one particular distribution partnership or marketing channel (except maybe word of mouth if you want to count that as a lead source).

Compared to that, marketing for consumer Web startups can be relatively straightforward. If you are a travel startup or an online shop, for example, millions of people search for your products or services online so you can use SEM, affiliate marketing, banner ads and other proven tactics to acquire large numbers of customers. In addition you can do TV advertising as your products are interesting for a relatively large percentage of the population. Getting the economics right and making it work at scale is of course a huge task and a science of its own, don't get me wrong on that.

But the particular challenge in SaaS marketing is that in many cases there isn't a huge amount of demand (a.k.a. search volume on Google), so the number of customers that you can acquire via AdWords is often quite limited. And things like TV advertising obviously don't work because of the huge waste circulation ("waste circulation" was the best translation I could find for the German word "Streuverlust" – does anyone know a better one?).

Just because you have a great solution doesn't mean that people are actively looking for it. That's not to say that you have a solution in search for a problem, but people may not be aware that there is a better way of doing things. What that means is that you need to find – and be found by – the people who your product is geared towards, often at a stage when they are loosely interested but are not yet ready to try (let alone buy) your product. Give them something that is useful to them. Write about the topics that your target group is interested in and provide lots of useful high-quality content and tips and tricks in a variety of formats, e.g. blog posts, white papers, case studies, videos, webinars, infographics or podcasts. Make sure that you don't talk too much about your product and that what you're publishing is really interesting to your target group. Sooner or later, some of these people will try and eventually buy. That's the whole idea of inbound marketing and lead nurturing. If you're not yet familiar with those concepts you should start learning more about them. A good starting point is Hubspot.

Zendesk is of course a great example for excellent inbound marketing. On its site the company provides a wealth of resources that are valuable for anyone who's interested in customer service, everything from tips for hiring customer service reps, to a guide to multi-channel customer support to numerous case studies and much more (including funny videos like this one). All of this helps to establish Zendesk as the go-to site for the help desk industry.

As for other ways to fill the funnel, here are some thoughts on things that you can do (in no particular order and of course by no means exhaustive):
  • PR: Very important, and can get you off the ground in the beginning. Build relationships with the important bloggers, journalists and opinion leaders in your space and supply them with news. In the long term try to become an opinion leader yourself. Use Facebook, Twitter, Quora, conferences and events to reach out to the important people in your space.
  • Most products are not inherently viral, but think about whether there are (sensible) ways to build virality into the product. If you can't find any you can still launch a referral program and reward users for recommendations to increase referral rates at least a little bit.
  • Marketplaces, app stores, API partnerships, integrations, partnerships with hosters and the like: Don't expect huge volumes of leads from them, but they can be a meaningful lead source (and add value to your product).
  • SEM & SEO: While you shouldn't bet on it alone, this is a very significant lead source for almost all SaaS startups that I know, so it's worth spending time and money on it.
  • Ads on Facebook and LinkedIn: Personally I haven't seen great results with Facebook or LinkedIn ads for SaaS companies, but given the vast targeting options that you have there I think it's worth trying. If you've made it work I'd love to learn more.
  • Display ads: Similar story, most of the time it doesn't work very well, but if there are suitable industry sites or blogs you may want to try it. 
  • Retargeting: Can work very well. Obviously rather a nice supplement than a real needle-mover since the amount of visitors that you can target is limited by the amount of visitors who you've attracted in the first place.
  • Promoted tweets: I don't have a lot of experience with advertising on Twitter, but I think it's worth a try, too.
  • Distributors, VARs and similar channels: Tends to work better for traditional software with high license fees, setup and training requirements etc., but I've seen some good success in SaaS as well. Usually better for satisfying existing demand than for generating the demand in the first place, i.e. don't expect your channel partners to create the awareness for you.
  • Local meetups: Once you have a number of customers in a region, organize local meetups. Nothing beats putting a bunch of happy customers and prospective customers into one room!
  • Telesales/telemarketing: Hard to make it work, but if you can pull it off it can scale extremely well.

Finally...if you have trouble reaching your target group, try to put yourself in the shoes of the persons that you're trying to reach. Imagine how a typical day looks like for them. What websites do they visit, what might they be looking for on the Web? What magazines do they read, which industry associations might they be part of, what other products do they use, which people do they spend time with? Thinking about it this way will hopefully spark your creativity and let you come up with some fresh ideas.

7 comments:

Dr. Clarensyst said...

Chris,

Are you planning to talk about Product Adoption ?

I find this topic one of the most difficult problem saas startups ever face.

matthieu vaxelaire said...

Hi Chris,

Great post and list of potential customer acquisition strategy.

I would also add *webinar* as powerful way to acquire customers.

Looking forward to your next post on DOs and DON'Ts for SaaS!

Christoph Janz said...

Matthieu – agree on webinars!

Dr. Clarensyst – you mean in terms of getting trial users to actually use your product?

Ryan Baker said...

Thanks Chris - Rowan passed this article on to me and I'm glad he did :)

I get asked fairly often how we are acquiring customers for Timely and my stock answer has been "A bunch of ways, how long have you got?".

It doesn't really reconcile with the whole elevator pitch mantra - but we're pretty confident it's the way to go - and it's great to hear an experienced viewpoint that matches. :)

Dr. Clarensyst said...

Chris,

Yeap..I think getting trial users to engage your product could be a topic more than relevant to post

Looking forward to your next post !

Christoph Janz said...

Thanks for the suggestion, and agree!

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