SaaS companies are notorious for spending a healthy chunk of their budget on building their customer base. Take a look at how much money some of the top SaaS providers spend on marketing and sales.
- Salesforce: $2,170,000,000
- Constant Contact: $125,810,000
- Marketo: $98,800,000
- Tableau: $216,670,000
- Marin Software: $47,700,000
Because so many SaaS companies are pouring revenues back into marketing, one of the biggest questions they have is how to lower the customer acquisition cost (CAC). Or, how to stop bleeding profits on marketing and sales?
How Can You Lower Your CAC?
Calculating CAC is basic math. You divide your total costs by your conversions. The number you’re left with is the amount you’re paying for each new customer who comes through your door.
There are only two ways to lower this number:
- Lower your cost-per-customer.
- Decrease your churn rate.
For SaaS companies to be successful at these two components, they must lower their cost per customer and increase their conversion rates. It’s basic math. If you can lower your cost to acquire a customer and have fewer customers leave you each month, you’ll outperform your competition.
Although the math is simple the concept is not. I’ll walk you through two ways you can get more free demo registrations without spending more money or increasing your CAC.
First, Get Their Attention
Attention in today’s digital world is called “traffic.” To capture the attention of your buyer, you need them on your website and sifting through your sales pages. It’s purely a numbers game. The more people you have on your website, the better the chances you have of increasing your free demo registrations.
Generating traffic to the website is one of the biggest areas of spending for SaaS companies. This is an area where you want to get more for your current spending but don’t want to risk losing traffic. In other words, you need to get more traffic with the same money you’re already spending.
What’s more important is the quality of traffic you’re getting. Get higher quality traffic and you’ll get more free demo registrations.
There are two core ways SaaS companies drive traffic.
- Google AdWords campaigns
- Facebook ads
If you’re not using one of these platforms, now’s the time to start. If you are, here are a few ways you can lower your spending while attracting more traffic.
Does your SaaS company need help capturing the attention of your buyer? We’ve got you covered. Reach out and let us know about the biggest hurdle you’re facing.To capture the attention of your buyer, you need them on your website and sifting through your sales pages Click To Tweet
Google AdWords is one of the best channels you can use to grow your business. It can also become one of the most expensive if not done right, with some bids getting as high as $100 per click.
To lower your CAC, you need to lower your Google AdWords spending. Here are three ways to do this.
1. Lower your bid
Your bid is the maximum amount of money you’re willing to pay for a click on one of your keywords. The higher your bid, the higher your spot in Google’s paid search results.
Many SaaS providers cringe at the idea of lowering the bid because they fear dropping too far down in search results. This is not always the case. Although you might drop a slot or two, as long as you’re in the top 3 or 4 slots, chances are good that you won’t see a drop in traffic.
After you’ve lowered your bid, keep a close eye on your traffic to ensure you haven’t dropped too low, or a lower bid hasn’t had a dramatic decrease on your traffic. Although it’s unlikely you’ll see a decline, it can happen. You won’t know until you test.
2. Go longtail
As a rule, the more competitive your industry, the more competitive your keywords. It makes sense why. There are more companies fighting to get the top spot on search results.
If this is the case in your industry, think beyond the basic one or two word phrases. Instead, think of keywords that are 4 to 7 words long instead. This can get you higher quality traffic for a lower price.
Here’s an example. If you have accounting software, chances are you’re advertising under the keywords, “accounting software” or “accounting management software.” These keywords can cost between $19 and $23.
Look directly below in other keyword suggestions and you’ll notice that the long tail keyword below it is $4 less. “Small business accounting software” is only $15.45 per click.
It pays to spend a little more time researching your keywords. Look for the longtail keywords that are relevant to your product and customer but cost less.
3. Focus on Quality Score
Google AdWords gives every ad a quality score. This is their numerical rating for how high quality your ad is and how relevant it is to the keyword. If your quality score is low, you’re going to have a harder time getting your ad seen, causing you to pay more for the traffic you do earn.
Focus on increasing your quality score. To do this, segment your campaigns into smaller targeted groups. This will increase the relevancy of your ads and in turn, increase the chances of getting higher quality traffic clicking through.
Facebook advertising takes a different approach. Here, you’re trying to interrupt your target audience and get them to click away from the newsfeed. This is a harder goal to achieve than trying to get someone who’s already searching for what you offer to click to your website. Therefore, you must take a different approach to get more, and higher quality traffic.
Here are a few ways to capture this attention and drive traffic.
1. Create Targeted Campaigns
Facebook lets you drill down to the details of your audience. You can choose just about anything from occupation to lifestyle. The more specific you can get with your target audience for each campaign, the easier it’ll be to craft ads that catch the attention in the newsfeed and get the person to click to your website.
2. Use Video
To capture the attention of your audience on Facebook, include a video in your ad. The movement will capture the person’s eye better than a photo. As soon as you get the person to stop scrolling, you have a much higher chance of getting that person to click through to your website. You’ll spend the same amount on the advertising to get more traffic.
Next Up, Convert That Attention Into Revenues
An influx of traffic won’t help if you’re not converting these people to subscribers. There are a few tweaks you can make to your landing pages to harness the increase of attention and use it to get more free demo registrations.
1. Create More Landing Pages for Targeted Campaigns
One of the biggest mistakes SaaS providers make is using the same landing page for a variety of campaigns. This makes it hard to tweak the messaging to speak to the person who just clicked to your website.
Tweak your landing pages for each specific campaign.
In Google AdWords, adjust your landing page to use the same keyword you’re using in the bid. This simple switch will make the audience feel as if the content was created for them.
In Facebook, use the same imagery and similar copy on your landing page as you do in each of your ads. This signals to your audience that they arrived in the right place, building instant trust and credibility.
2. Simplify Registration
The more options a person has, the less likely they are to sign up. That’s what one eCommerce website found when they revised their landing page. Instead of presenting all of the products at once, they presented three core categories. This simple change led to an increase in revenue of 300%.
SaaS can take a page from this playbook by simplifying the registration process. Make it obvious what the visitor needs to do to sign up. Don’t ask him to choose between products right away. Get him in the door and then present the detailed options.
3. Minimize Pricing
Although you’re trying to get free demo registrations, the customer might want more information on pricing to gauge what’s coming down the pipeline. If your product will eventually be too expensive for him, he won’t invest the time to sign up for your free trial.
Check out this example in a screenshot from Salesforce.com
If someone thought Salesforce was over $100 per month, it would delight him to see that there was a $25 per month option instead, which could be the difference between trying the product and leaving the website. Show your pricing up front so your audience can see what to expect when his trial is up.
You Don’t Have to Pay More to Attract More
Often in marketing, increasing your spending isn’t the only solution to a plateau of new signups. There are other tweaks you can make to how you’re advertising and how you’re getting visitors to sign up for your free demos. With a few small tweaks you can test and find what converts best, boosting your revenues without boosting your spending.