Expand SaaS Growth Through Strong Distribution
As the cloud as grown and matured, the demand for Software-as-a-Service (SaaS) products has skyrocketed. In fact, a recent Gartner survey found that SaaS and other alternatives to traditional on-premises licenses account for more than 50 percent of new software implementations. But, you don’t have to take the analysts’ word for it; look around and you’ll see numerous software companies that have transformed their offerings into highly successful SaaS products, including Microsoft and its Office 365 suite as well as Adobe and its Creative Suite, among many others.
Growth is good, but it has created a landscape where competition is fierce and numerous SaaS products are jockeying for customers across almost every vertical. In this high-stakes environment, SaaS vendors need to understand the best methods for promoting, selling, and distributing apps.
Why SaaS Sales and Growth Are Different
Selling SaaS is different from selling other types of technology products in several key ways. The biggest is the fact that non-cloud offerings usually require a sizable upfront capital investment in infrastructure. As a result, more people within the organization must get involved in the purchasing decision, making it more complicated and time-intensive. In contrast, SaaS purchases typically involve lower upfront investment and a “pay as you go” model, which can result in easier purchasing decisions and faster return on investment.
A more agile, cost-effective sales model is a positive for companies that sell SaaS applications, but many still struggle with a critical question: “How can we more effectively market our solutions and expand their reach?” Here are some tips for competing and capturing more revenue in today’s fiercely competitive SaaS market:
1. Give it away
Walk into any large supermarket over the weekend and you’ll probably see the same thing: Employees giving away food samples. A free bite gives you a very low-risk way to try a new product, with the hope that you’ll like what you’re eating and buy more.
While SaaS apps and food aren’t really the same, the strategy used to capture new customers is similar. When you let customers sign up and try your solution for free—“giving it away,” so to speak—you allow them to experience the features and benefits of your products firsthand. This can help them decide whether your app is a fit for their needs, and make their purchase decision faster and easier.
However, some companies struggle with the idea of giving away free trials or offering other low-cost trial options. They worry that giving away or charging a nominal fee for their products may hurt their perceived value. But, there’s good news: As long as you strike a balance between the features you’re giving away, the length of the free trial, and cost of development, then a free or low-cost trial shouldn’t damage or “cheapen” your service offerings, or impact your bottom line.
For example, Salesforce.com, one of the world’s most successful SaaS providers, offers free trials for all of its plans. However, their trials are not one size fits all; the company offers trials that last anywhere from seven to 30 days, depending on the customer segment and product.
Another example is Sprout Social. They offer free 30-day trials for all three tiers of their social media management and engagement software (Deluxe, Premium, and Team), with the flexibility to change plans at any time. Moreover, none of the trials require a credit card, a factor that reduces barriers to signup.
To make trials even more appealing and help capture more customers, here are a few additional tips:
- Examine which features customers use the most, and make those free for a limited time
- Limit the number of concurrent projects allowed for free versions, and increase the number of projects with paid premium versions
- Ensure that your app integrates seamlessly with other offerings and solutions that are valuable to your users
Although free trials are a proven way to drive adoption, there are times when free options simply aren’t feasible. For example, global analytics solution Bridgei2i opted to take a different approach by not offering a free trial. Instead, the company focuses solely on value, providing a comparison of the service’s rich features and options. Signups may be slower with this approach, but Bridgei2i sees more initial user engagement because its customers have invested in the service at the outset.
Even without free trials, you can still provide features and benefits to reduce barriers to signup, such as a money-back guarantee. With this type of incentive, there is an upfront cost, but if customers aren’t happy with the service they can get their money back. Assuming you provide a great product with excellent customer service, the cost of offering the guarantee should be minimal.
Key takeaway: A free trial is the strongest option for onboarding new clients to get more people to try your app offers and convert to long-term customers.
2. Get in front of audiences through app marketplaces
Application marketplaces can enhance the customer experience by allowing buyers to research apps through a feature-rich storefront that helps them understand what an application is, what it does, and how it can solve their problems.
Marketplaces can also automatically suggest a mix of cloud services that are tailored to company size, industry needs, and other factors. Moreover, they can offer ratings and reviews that empower customers to share their experiences with different products. Finally, a marketplace can provide video demos and other materials so customers can get a better sense of how apps work before they sign up.
Whether you offer apps through your own cloud marketplace or list in a storefront operated by another provider, online application stores can be a great way to drive your SaaS distribution strategy.
Key takeaway: Streamline the application search process and expand your reach by selling applications in your own or a third-party app marketplace.
3. Optimize for maximum results
When planning your app distribution, don’t forget to optimize for app stores. Similar to the traditional SEO you would do for a website, your distribution efforts should include integrating the keywords that your target market is using when searching for solutions into the title and description.
Also, use social calls to action for building your app user base. Ask users to share their experiences with the app on social media. Promotions, discounts, and rewards can incentivize these social sharing efforts.
Key takeaway: Use keywords when promoting your app and create compelling reasons why existing customers should share positive details about your solutions through social.
4. Make signups easy
Many customers may be interested in your apps, but if you aren’t converting a high percentage of those customers, you’re missing a large opportunity. So how do you ensure that interested customers complete the required sign-up process? The answer is simple: Reduce the number of fields required to sign up.
Research shows that sign-up forms with fewer fields perform much better. In fact, Dan Zarella at HubSpot researched the contact forms of 40,000 of their customers and found that conversion rates improved by half (50 percent) when the number of fields required was reduced from four to three.
Some companies are already figuring this out. For example, FreshBooks requires only two fields to sign up for a 30-day trial. They also highlight that no credit card is required (more on that in a minute). Social media tool provider Buffer takes a similar approach, requiring only two fields to get started.
Key takeaway: Scrutinize every field that you require and pare them down to the fewest possible.
5. Take a strategic stance on requiring a credit card
Many SaaS providers at some point ask whether it make sense to require a credit card upfront during the sign up process. Obtaining a number is great for capturing revenue at the end of a trial period, but dropping the requirement can boost sign-ups, which can lead to higher sales, not to mention more cross-sells and upsells later on in the customer lifecycle.
The best way to understand how credit card requirements affect your signups is simply to test it by running an A/B test with the different requirements. This will quickly reveal which approach is better for your business.
For example, Woopra gives a quick outline of the sign-up process and explains that “no credit card is required.” Although their form is longer, HubSpot also tells prospects upfront that they won’t need a credit card (under the blue button).
Regardless of your decision, it’s important to be upfront about credit card requirements. The need for a credit card should be clearly indicated on any sign-up form. This builds trust and prevents customers from feeling blindsided when they reach the next step in the process and suddenly see a required field for a credit card number.
Key takeaway: Question whether you really need a credit card upfront for registration, and back up your stance with testing.
6. Set customer expectations at sign-up
If you offer a free trial, engage with customers right from the start by letting them know what the free trial includes. For example, if they get access to premium features for only 30 days, clearly include these details at sign-up.
Boost satisfaction and loyalty even more by helping customers understand what to expect from a sales perspective. For example, let them know that a sales representative may contact them within 24 hours. Some customers will welcome the call because they may already have questions, while others may ignore the call altogether.
You’ll do better on both fronts if you give the new user a heads up during the sign-up process. Some new customers may even start a list of questions in anticipation of the sales call.
Key takeaway: Build more loyalty by communicating expectations clearly during your first engagement with customers.
7. Move customers through the sales funnel
Once you sign up customers for your SaaS application, it’s important to maximize the value that they receive and also move them through the sales funnel. Gartner reports that 80 percent of all future revenue will come from only 20 percent of your current customers. This is why it’s so important to maximize customer value through cross selling and upselling. In short, retention is critical to growth.
Pay attention to what offerings customers use most, and produce premium content or videos that explain how to get more from those features. You can produce blogs, publish best practices tutorials, and generate other resources that will help you provide great value and, as a result, build loyalty.
For example, HubSpot does a good job of this through their HubSpot Academy, which is a certification program that helps users stay on top of their game while earning credibility as experts. The academy resources (including certification) are free, which builds brand loyalty and also encourages users to continue using the platform and upgrading to new offerings.
Key takeaway: Discover what features your customers are using most, and find ways to maximize the value of these features to build engagement and loyalty.
8. Upsell often
Many SaaS sales teams upsell, but what they may not realize is just how powerful this strategy is for growing business. In fact, upselling is 20 times more effective than cross selling, and upselling your existing customer is 50 percent more likely to result in a sale than selling to a new prospect. But the tricky part about upselling is doing it effectively. Here are a few tips for success:
- Communicate your value proposition. For SaaS upsells, it’s all about creating value. What pain point are you addressing, and why does your SaaS solution solve the problem better than others do?
- Use the most effective marketing tools. How do you acquire the majority of your customers? For example, do the majority of your new SaaS customers come through email marketing? If so, use this channel to reach them for upsells.
- Time your upsell correctly. Should you upsell immediately (at the risk of annoying customers), or should you wait until their free trial is about to expire? The answer is simple. Always err on the side of upselling sooner rather than later. The longer you wait to ask for that upsell, the greater the risk of losing your new customer to churn.
For example, GoDaddy is a business that continues to upsell throughout the entire process, starting at the very beginning of the transaction by offering numerous add-on services. A few other tips for encouraging upsells include:
- Price upsells low enough to make them an impulse buy. This is helpful if you’re offering additional options at checkout (like a lower cost for a premium SaaS trial).
- Give the user more than one option. For example, you can have two or three different service offerings to provide additional choices and encourage upsells. However, be careful not to offer too much choice. Experts have found that too much choice can actually “subtract” from the overall customer experience with your brand.
- Pitch the upsell as the middle option of three different prices. When offering your upsell, strategically offer it as a multilevel choice with a strong middle offering.
- As a result, you will position the middle option as being more affordable.
And finally, put your happy customers to work by encouraging sales and upsells to your other customers. For example, create case studies and other pieces of content that showcase customers in similar positions and with similar pain points successfully using your services.
Promoting Future Growth
Technology is constantly changing, and the landscape is likely to get even more competitive in the future. But even so, smart companies that build loyalty and engagement with their customers will be positioned very strongly for future growth.
SaaS products that connect, engage, and build loyalty with customers will always come out on top, and it’s easy to see why: When you invest in a great user experience, it lowers churn rates and drives higher customer satisfaction, both of which are critical when growing application reach.
AppDirect’s cloud service commerce platform connects SaaS vendors with new markets and customers. With powerful sales, distribution, and support tools, we can enable any cloud company to not only grow, but retain customers and build loyalty.
Ideas @ AppDirect is a leading source for trends, statistics, and other information shaping the cloud service commerce industry.