Building a Content Marketing Strategy For SaaS Company

Over 4 million blog posts are published on the Internet every day, but how many are actually effective or even worth reading?

Well, that’s something content marketing strategy helps you with.

Content Marketing is a vital part of every SaaS brand. Quickly scanning websites of SaaS companies will be enough proof for our statement. Almost on every SaaS website, you will find either a “Resources” or “Learn” section with varying content like blogs, webinars, ebooks, research and reports, guides. In short, everything a customer might be looking for.

The content marketing cost around 62% less than outbound marketing and generate 7.8x more traffic and 4x more leads per $1000.

For me, content marketing is creating resources that people can read, hear, see, and promoting them in order to generate traffic, leads, sales and referrals.

It’s bestowed with the power of converting visitors to paid customers by pushing them down the buyer’s funnel.

But what if visitors aren’t excited by your content? What if it’s not engaging?

Scary, right? Because content creation takes a lot of effort, time, brainstorming sessions and if the results aren’t satisfactory, all this will be a waste.

All you need is, to do content marketing the right way so that it maximizes your ROI and improves your brand’s reach.

Why SaaS Needs The Support Of Content Marketing?

If you’re not using the content or if the content you already have hasn’t been fruitful for your business, it’s not strange that your belief in this power tool has been shaken. You might be wondering if it’s even worth the investment.

The answer is “Yes”. (I might be a little biased here, being a content writer myself!)

You might have developed a great product with some awesome features and functionalities, but it won’t matter if your users don’t understand your product or don’t see the point of getting it.

So, content marketing provides you an opportunity to help them understand your product, its features, usability, and convinces them to eventually buy.

Your content plays a very important part in conveying how your product works, and how it can solve the problems your customers are facing. Educating your customers is a critical part of the SaaS strategy, which makes content the most important tool at your disposal to market your SaaS product.

Steps To An Effective Content Marketing Strategy

We’ve come up with 7 steps with which you can come up with your effective SaaS Content Marketing Strategy

Step 1: Know Your Audience

While buyer personas can be helpful, you should never forget that you’re writing for living, breathing people. So we suggest instead of sticking to fictitious personas, for a SaaS startup, you should focus on your potential customer’s intent.

Like John Romero, the Game Development icon said, “In marketing, I’ve seen only one strategy that can’t miss – and that is to market to your best customers first, your best prospects second and the rest of the world last.

When developing a content marketing strategy, the things you need to ask yourself is who are your best customers?

What are they looking for?

What questions they might have in mind?

What problems they might be facing?

What topics will help them with their tasks?

If you’re able to answer these questions related to your customers, you’re all set to build an effective content strategy.

Step 2: Set Goals And Format Type For Each Stage

When developing content, our main focus is always on customer intent. Whether it’s a casual visitor, a lead or your existing customer, you need to satisfy all of them with prompt information.

For a SaaS company, it’s vital that you create content for each stage of the buyer’s journey. So the first thing to do here will be to funnel your buyer’s behavior. We’ve narrowed it down to 5 stages:

Stage I: Awareness

Think of this process as climbing stairs. At first, you need to create a general awareness of your product or service.

At this stage, you can use long-tail keywords in articles, engaging infographics, and images to attract attention. You have an open field. Do whatever it takes to spread awareness.

Stage II: Lead Generation

Once you’ve created awareness, your next step will be engaging your audience and earning their trust. Here you can again use high-value and informative content and images, but the most useful weapon you’ve are the testimonials.

Stage III: Sign-Up or Subscribe

After the first 2 stages, your customers should now be willing to sign up or subscribe for a free service like a newsletter or even better a product-trial or maybe walk them through a demo session of your product

Stage IV: Convert Customers

Give your customers enough time to figure out the benefits of your product. Now that they’ve tried your product, convince them to switch to the paid version. This can be made possible by exposing them to the additional valuable features and tools within the software.

Stage V: Retain Them

Don’t forget your customers once they’ve paid for a service or a product. Keep them posted and continue providing them with valuable features, tools, and above all support.

For example, HubSpot, their content marketing strategy focuses on their blog and premium content offers. They’ve engaging content for each part of the funnel that helps them generate over 1 million page views per month.

Step 3: Use More Infographics

Content with visuals gets 94% more total views and is 40x more likely to be shared on social networks. Visuals have longer retention than text, so if you’re creating content, make sure it’s worth remembering and they’re able to clearly understand your product.

SaaS startups are viewing infographics as a better way of sharing their product details. They’re a great way to give customers a walkthrough of your product for which you would’ve to create a 4-5 minute video.

Step 4: It’s All SEO

For SaaS Startups, onsite SEO is very important. Not all SEO keywords will generate the same results. To get traffic that converts, search the High Intent, Low Volume keywords, they’ll give you an idea of the most looked-up feature of your product.

Use competitor analysis to learn what keywords are working for them. Use Google’s AutoSuggest for keyword suggestions, Ahrefs, or Moz for competitor analysis and Keyword Planner for the frequency of your shortlisted keywords.

Step 5: Keep Them Updated

It’s good to keep your visitors posted whenever you launch a new service or product or add features to your existing product. Remember, this strategy works on existing customers better. Inform them about the new features they haven’t tried yet and encourage them to do so.

Don’t spam their inbox!

Just remind them about the recent upgrades, for example, whenever HOTH, an SEO service company, adds new features to their keyword ninja or ranking checker, they never fail to share it with their existing users and motivate them to stay on board.

Step 6: Free Trials And In-App Upgrades

Ask your visitors to first try your product by signing up for a free trial. Let them try before they buy. The freemium model is known to work the best for SaaS companies.

If your visitors have used and most importantly liked your product, they might be willing to switch from freemium to the paid version as well. Apart from free trials, offering extensions will amplify the customer’s visits and purchase of your product too.

In addition to this, you can use in-app upgrades – this will help users use the app even during their upgrade and it’s a great way to keep making improvements. However, it’s not necessary to buy those upgrades. Content like Emails, Newsletters, infographics will work wonders whenever you get a new feature for your product.

Step 7: Customer Retention

Learning and Improvising are the keys to retain prospective cancellers.

Get feedback from your customers, especially the ones who are canceling their subscriptions. With predictive analysis (tools like ProfitWell, ChartMogul, Insight can help here), you can understand which customer is most likely to cancel the subscription to service.

This will help you understand which features of your product work the best and which don’t, so you can work on the loopholes and provide them with better solutions and services in the future. Curate content for Emails, Blogs, and Newsletters accordingly to answer their queries.

Planning and developing a robust content marketing strategy and a smart execution, using the proper tools and tactics, and keeping an eye on the analytics can help SaaS companies reach out to target customers and shoot up their sales.

It’s needless to say that every business needs incoming cash flow to survive. That’s pretty obvious, isn’t it? This makes Pricing strategies crucial for your business as they possess the power of making or breaking your business. Higher prices can repel your potential customers and lower can pricing can lead to false perception about the product and also affect your overall revenue.

So first things first, you need to understand that “Pricing is a function of Marketing”. Coming up with a pricing strategy for your SaaS product requires a lot of thinking as it’s not a one-time job.

While coming with a pricing strategy for your SaaS product, you need to keep in mind that it’s not static but dynamic in nature, i.e., it is ever-evolving and changing like your Marketing Strategy and the pricing strategies depend on the Market Forces, Feedback from customers, etc.

According to Price Intelligently, pricing strategies have a huge effect on the overall revenue generated by a SaaS company. In fact, about a 1% improvement in price optimization can result in 11.1% more profit.

Before coming up with a pricing strategy, you should know what objectives do you want your pricing strategy to serve.

So the first thing you need to know is what is a pricing objective and how you can set it for your business.

In this blog, we try to cover what pricing strategy is and how you can design and implement it for your business.

Pricing Objective

You can consider Pricing Objective as a compass that acts as a guide for your pricing strategy and ultimately helps you achieve your goals.

When we talk about a Pricing Objective, what’s the first thing that pops in your head? Profit.

That’s obvious. Every business wants to generate huge profit and this is especially crucial for a SaaS business.

So what is Pricing strategy?

While coming up with a pricing strategy just remember that it is a profit-maximizing decision. It is the lever of your business growth and reflects and affects everything you do as it is the heart of a SaaS business.

An optimal pricing strategy takes your costs (fixed and variable), demand, competitors, and buyer personas into account.

Here are a few prerequisite steps that can help you identify the best and most suitable SaaS pricing strategy for your product

If you have a competitor whose product is similar to that of yours and is successful too, you can keep their price point at the threshold value and vary your price around that. Higher or Lower that will depend on the features of your product, if you’ve any add-ons.

The second thing will be feedback from your customers. For this, you can conduct a survey asking them what they would pay for a product like yours.

Last but not the least, and this you’ve to always remember that pricing strategies are dynamic in nature, and you might need to test a few before you understand what works the best for you. In the SaaS industry, you need to discover your own truths.

To help you choose a better pricing strategy, we have enlisted 6 pricing strategies

1) PENETRATION PRICING

Implemented by companies like Slack and New Relic, Penetration pricing is a strategy where you can keep you can enter the market with lower prices, and once you’ve found the relevant market segment you can go raise the price. It’s just in order to rapidly gain adoption in your target market.

This strategy works on 2 beliefs:

  1. It’s to be applied for a short period of time.
  2. The product has enough customers to compensate for the lower price.

This strategy is sometimes used by companies in order to crush their competitors.

2) CAPTIVE PRICING

Selling your base product at an inexpensive price or maybe give it away even for free and then later charge for upselling, that’s what captive pricing is all about. It’s pretty obvious from its name too. Captive- to capture and that’s exactly what the company does. Here you can consider the example of Dropbox – that offers a certain amount of storage for free and later charges you when you need additional space.

You can also consider the example of LinkedIn – A free professional networking platform where you can send In-mails to people within your network and to reach out to people outside that you need to upgrade to the Premium version.

3) SKIMMING PRICING

Skimming pricing or promotional pricing is a strategy where a company initially sets a high price for its product(mostly when they’re not sure about their price) and they gradually start decreasing their prices. This strategy is generally followed by companies when they launch a new product in the market and is found to be appealing to different sub-sections of the marketplace.

The best example would be Apple products – they are famous for offering heavy discounts just months after their launch.

4) PRESTIGE PRICING

Prestige or premium pricing is a strategy of playing with the customer’s psychology, that “Good things are expensive”. Companies deliberately keep their prices high in order to convey a sense of high quality or luxury. With this strategy, although companies will have a small customer base but a high-valued one.

If your brand is well-known or your product is used by some popular companies, then you might be able to leverage this pricing strategy.

The best example to state here will be Rolex.

Although a $40 Seiko watch is a better time-piece and is far more accurate than $8,000 Rolex, due to its brand name Rolex is able to leverage the prestige pricing.

5) FREE TRIAL PRICING

Free trials are always appealing to customers and that’s what companies using free trial pricing focus on. They provide their product free for a limited time and obviously their trick works. I mean, who doesn’t like things free. Customers start using your product without even spending a penny from their pockets but once the trial period ends there’s a strong incentive to upgrade. It’s mostly like a trial period. Companies are increasingly using this strategy. Such trials are typically time-limited – 7 days, or a month. Companies like Netflix, Coursera have implemented this strategy.

6) VALUE-BASED PRICING

Here the perceived value of the product is used to determine a benchmark for price setting. Here the customer data is utilized and the entire focus is how the customer will respond to the product. Although this strategy isn’t a quick win but has a better LTV(Lifetime Value). In simple words, it’s the idea that the value your product provides should be ten times its price, providing a simple method for framing your pricing decisions.

Conclusion

Pricing is like a black box that can be illuminated through a process only. Take and utilize the knowledge we shared, apply whatever’s useful but systematically. Make sure that your LTV to CAC ratio is greater than 1, otherwise, you’re losing an enormous amount of money, and that will hurt you.

Every company dreams of turning their small SaaS startup into a billion-dollar company. For some, they might be able to achieve their desired goals within a very short span while some might struggle to make it big even after several years because of fierce competition in their niche.

Getting ahead of your competitors and that too at a low budget is quite challenging, but not impossible. That’s what “Growth Hacking” helps you with. The term “Growth Hacking” was coined by the CEO of GrowthHackers, Sean Ellis in a blog post in 2010, which is a concept implemented by companies for accelerated growth.

From using freemium models to redirecting traffic from another site, we’re surrounded by some crazy growth hacking tricks that businesses have used over time.

Here are the best 5 growth hacking strategies that have been implemented by some of the top SaaS businesses that you could implement too.

Viral Referral Campaign

Your potential customers are your best marketing channels. Once you’ve managed to gain leads, you can come up with referral programs wherein your users can earn some points or credits.

Viral Referral Campaigns work wonders for SaaS Startups as anyone would prefer trusting his/her friend’s recommendation in comparison to seeing an ad over and over again. That’s not something we say, but according to a Nielsen report, 84% of people prefer recommendations from friends and family which makes implementing a referral campaign one of the most effective growth hacking strategies.

While handing out $20 for referring customers as Uber did sounds like an idea for a viral referral campaign as it helped them expand over 50 countries within a short span of 3 years. But we recommend not to use this tactic if you’re a startup and don’t have huge amounts of money to spare. If that’s the case, giving a part of your service, such as a feature, an add on, free storage space is a better idea. That’s exactly what DropBox did.

They started a referral campaign that gave users an additional 500MB storage space for each successful referral.

Result?

Their user-base grew from 100k to 4M users in just 15 months skyrocketing their growth by 3900%. Now DropBox is valued at more than $12B.

Referral Marketing is something that can help you generate potential leads for your business, leading to a relatively high growth if only executed properly and deployed well.

A Prelaunch Giveaway

Creating a feeling of excitement and curiosity before even releasing the product in the market, that’s what a prelaunch giveaway does. Giving your product exclusively to a group of people either through referrals or contests is a great way to create hype for it and in exchange, you can ask them to spread the word. Try to make it as viral as possible.

Take the example of Pinterest, which has over 291M monthly active users today. It became the fastest standalone site in history to reach 10 million unique users in 2012. However, it wasn’t the same always. For the initial 3 months, they only had 3000 users, but co-founders Ben Silbermann, Evan Sharp, and Paul Sciarra decided to launch a “Pin It Forward” campaign.

Users make a pinboard and get more invites by getting friends to create the same. Today Pinterest is valued at $12.7B.

A Free Trial

Trying before buying is not a new thing. With the SaaS industry flooding with new product ideas and trying their best to drive their customer’s attention, you need to offer people more.

Like taking a test drive before buying a car. While we agree a car is far more expensive than a SaaS product, but it’s important that people want to know what they’re going to get before they invest money in it. Once your target audience gets the taste of your product, it’s easier to convince them to signup for a paid version. You can blast out emails, newsletters, and educate them about the product.

However, you need to be very cautious with the free trial, as there’s always a possibility that the needs of the users are completely satisfied by the free version, and they might not feel it necessary to pay for additional features.

Evernote, a simple note-making and organizing software made it to the Billion Dollar Club with its freemium model. One of the biggest achievements for Evernote is that they were able to convert their freemium version to a paid one.

The easiest way to get 1 million people paying is to get 1 billion people using.”

Phil Libin, CEO of Evernote

They have a conversion rate of 3.7% which is among the highest conversion rates for a freemium model. One of the things to which they say they owe their high conversion rate to high user engagement. Since people go on creating more and more memories on this platform, they find it difficult to opt-out of Evernote and end up signing up for the premium version.

Content Marketing Strategy

Another growth hacking strategy that works great for SaaS startups is having a robust content marketing strategy. It’s an easier and cost-efficient way to drive organic traffic reducing the CAC by 62%. Curating educational content for your target audience is a low-cost way to build brand trust and easily convert readers into customers.

While developing a content marketing strategy, remember that visual content generates 7.8x more traffic and gets shared 40 times more on social media, so try to use infographics, images, and videos within a blog or an article.

HubSpot, apart from being known for great growth hacking tools, is also known for its amazing content marketing strategy. From educational content to videos to ebooks, they’ve it all for various buyer personas and journeys making it the go-to place for marketers and PRs.

A similar example is Buffer, which is known for its blogs more than its social media management tool.

Once you’ve designed your strategy, make sure to use the right keywords as SEO will play a very important role. An effective content marketing strategy will allow your visitors to understand your product better and will guide them through each stage of the buyer’s journey. This will eventually improve conversions by generating a continuous source of leads.

Influencer Marketing

According to a survey report by Tomoson, “Businesses are making $6.50 for every $1 spent on influencer marketing

Based on Referral Marketing, influencer marketing is a way of leveraging experts and in your niche talk about your brand. This can work wonders at the initial stages of a startup and can help your business grow exponentially.

90% of marketers say that the ROI from influencer marketing is better than other digital marketing mediums.

One popular startup that used this and successfully acquired 10M users in just 5 years is Canva. This graphic design tool proved to be a lifesaver for many companies that don’t have an inhouse designer.

Canva – Canva is a graphic-design tool website. It’s a freemium tool and a total lifesaver for companies that don’t have an in-house designer or anyone that has to do design without any skill or knowledge. It used 2 of the best growth hacking strategies – freemium model and influencer marketing.

In 2014, 2 years after Canva was founded, they took to youtube in search of people who would’ve talked about their brand or made video tutorials. That’s when they found Guy Kawasaki – then Apple Evangelist made social media graphics with Canva. They contacted him and now he is Canva’s brand evangelist. Today Canva has been valued at $4.7B.

These are some of the best growth hacking strategies that can help you skyrocket the growth of your SaaS business. From generating more leads to more conversions to increase in followers to your page, website, this is the beauty of growth hacking – immediate results. Even the slightest improvements in your strategies can act as a step towards the success of your startup.

We all know how competitive SaaS industries have become. With initial public offerings (IPOs) being doubled over the last 12 years, the industry is projected to grow to a $76 billion per year sector.

Many entrepreneurs jump in the SaaS pool with the desire of making it big, but according to a report by Mckinsey, “Only about 28% of the Software and Internet companies managed to generate a revenue of $100 Million dollars and around 3% reached $1 Billion dollar revenue.” Out of the 3000 companies they analyzed, 85% of the companies were unable to maintain their growth.

But why is it so hard to make your SaaS company a success?

One reason might be market saturation. This makes it vital for SaaS companies to keep track of their growth in order to stay ahead of their competitors.

 

1. Monthly Unique Visitors

This is probably the most important SaaS metric on this list – the count of the number of unique individuals who’ve visited your website in a particular month, i.e., if a visitor visits your website with the same device and browser (and doesn’t clear his/her browser cookies between the visits) a couple of times, it will be counted as one.

This metric is a great reflection of your audience size and its an effective way to understand the results of your marketing strategies. You can also sort all the visitors on source basis and this can eventually help you analyze which platform helps you drive the most traffic, so you can later focus all your efforts on that particular one for better and effective results.

Along with this parameter some other metrics like average time on site, repeat visits, downloaded content, no. of email subscriptions, etc. are also worth noting. These metrics will help you understand the quality of your traffic. There are a bunch of tools to analyze the above-mentioned metrics, however, Google has overtaken this market as well with its free Analytics tool. Other popular analytics tools are ProfitWell and MainMetrics.

 

2. Total Signups

The freemium pricing model is the most popular one in the SaaS industry. It offers what the company and the customers want, a good amount of traffic, and a trial of the software before actually paying for it, thus offering a win-win situation for both the parties.

For SaaS companies offering freemium or self-service, signup is the most important SaaS metric.

Whether you’re offering a free trial or a freemium plan, for any SaaS startup the initial marketing goal is to drive signups. Writing educational content for both existing and potential customers can help increase the signups and optimize your website’s conversion rate as well. You can sort this on source-basis to analyze which marketing channel is contributing the most to lead generation and to each stage of your sales funnel.

 

3. Organic vs. Paid Traffic ROI

Analytics has an altogether different jargon and while analyzing the metrics we’ve to familiar with it. One common term used is Organic and Paid traffic – Organic is the non-paid listing in the search result and Paid traffic is the visitors from PPC ads (Pay-Per-Click).

We recommend opting for PPC only if you desire immediate results and have the budget for it.

If not, you can focus your time and budget in generating SEO friendly content for better and increased steady organic traffic. But if you can afford both, do them.

While generating traffic is important, but that’s not the goal of SaaS companies. You want visitors to convert. So you need to keep a check on the conversion rate (especially the leads that are generated using paid ads). Either way, it’s important to keep a check on the amount of traffic generated using both methods and conversion rates of each.

To analyze this you can use tools like Google Analytics or HubSpot. These tools help you measure the amount of traffic your website gets on weekly, monthly, or any other basis as well, customer acquisition volume by each channel, and leads these channels have generated.

4. Support Tickets Created

Being in the SaaS industry, it’s pretty obvious that you will receive a certain number of complaints, questions, or suggestions from your customers. This metric tells you how many customers are requesting for your help. While knowing the total number of support tickets raised is important, you should preferably look for the average number of daily or monthly tickets.

To enhance the data generated from this, you can tag these tickets as bugs, questions, feedback, feature requests, or any other form of the ticket as well. This will give you a better understanding of what problems your customers are facing while using your software.

Staying organized is the key! It will help you quickly detect customer’s pain points and provide them a prompt solution. In order to monitor your support tickets, you can use services like Zendesk, Help Scout, or Intercom.

 

5. Conversion Rate to Customer

As we already discussed, being in the SaaS industry generating traffic is not your ultimate goal. Generating sales is.

Generating traffic or getting ‘x’ number of subscribers can be your objective but let’s face it, in the end, it’s the revenue that matters.

For starters, you might have divided your leads into the following categories:

In order to measure the conversion rate to a customer, we use the simple formula:

Conversion Rate to Customer = No. of Customers/Total no. of customers during that particular period of time.

The resultant will serve as a benchmark for how good a job you’ve done at turning leads into customers.

 

6. Customer Acquisition Cost (CAC)

CAC shows you exactly how much it cost you to acquire a customer and how much value it has brought to your business. In order to calculate this, you need to divide your total sales and marketing spend by the total number of new customers you added during a given period of time. In case you’re following a field sales model, then make sure you include salaries as well.

David Skok, founder of SilverStream Software has called CAC a startup killer because a large number of startups fail as they’re not able to lower this cost.

Once you’ve understood the CAC and identified which channel works the best for you – which one is the most profitable for your business, you can develop strategies accordingly to scale up your SaaS business.

A SaaS company, often finds itself struggling to balance the 2 variables – CAC and LTV. In order to make your business a success, you’ll always want that both the variable are balanced.

To reduce CAC, you can try A/B testing, to improve the conversion rates and minimize the follow-ups required. To track and calculate CAC you can either use the traditional spreadsheets or use QuickBooks and track the number of new paid users.

7. Monthly Recurring Revenue (MRR)

Recurring revenue is the soul of SaaS businesses for which you need to keep a track of the MRR – a single, consistent number that helps you summarize all the revenue you receive from your paying customers.

To do this, you can multiply the total number of paying customers by the average revenue per user.

What types of MRR should you calculate?

8. Customer Retention Rate and Life Time Value

As a SaaS company, you’ll always want that you have a better customer LTV and a better customer retention rate. You want people to continue using your product for a longer period of time.

The customer retention rate is a metric that indicates what proportion of your current customers have continued using your product. In order to calculate this, look for the repeat customers in the past month and compare them to the numbers from 2 months before.

The next thing will be the customer LTV – calculated as the “inverse of the Customer Churn Rate.” The result will help you make some important business decisions about sales and marketing and even product development. The number, hence generated, is also vital to check if a particular business model is viable for SaaS company or not.

In a completely balanced business model, CAC will turn out to be less than LTV while in the case of an imbalanced business model, CAC will exceed LTV.

Obviously all the aforementioned metrics can be applied to all types of businesses and should be tracked and monitored on a regular basis, but they’re necessarily important for SaaS businesses.

Now that we’ve reached the end of the blog, you’ve got a lot of work to do. Also, make sure to put the necessary reports in place and set benchmarks for each of the above metrics.

Who doesn’t like free stuff?

Be it free Wi-Fi at coffee shops, free parking, free practice sheets for a test, free ebooks, free upgrades, or free software, you hear the word “free”, even if you don’t necessarily need it or use it, free stuff pulls you like a magnet.

Although Freemium models are very popular amongst the customers, they fail to find similar love from the company owners, for obvious reasons of not generating sufficient revenue. Despite facing lots of criticism, freemium models prove to be the best choice for SaaS startups as it provides a direct path towards a massive customer base and unleashes opportunities for substantial revenue.

However, there’s only one problem with the Freemium models, companies don’t know how to use it properly.

What is the Freemium Model?

Freemium is a business model that offers both free and paid versions of its product with limits set to the free version. The free version can have a preset limit on usage time, features, or users. Platforms usually have several tiers with prices increasing upon the addition of a new set of features. The common examples here are LinkedIn, Slack, Dropbox, etc.

Pros:

Cons:

While some experts claim that the freemium is extremely harmful to the company’s ROI and increases customer acquisition cost (CAC). Others are of the opinion that it’s an attractive method to generate users and nurture them into paying customers.

We say it’s not that simple.

That’s why even with the freemium pricing model, some SaaS businesses manage to become industry leaders, while others struggle to generate revenue and face heavy losses.

Rob Walling of HitTail can’t be more accurate when he said in a Wall Street Journal article, “Freemium is like a Samurai sword: unless you’re a master at using it, you can cut your arm off”.

How the Freemium Model works

To revive your faith in the freemium model, let’s consider the example of one most successful Freemium model, a game that was declared to be the “Game of the Year” in 2013 just a year after it’s release and that also received 2.73B downloads in just 5 years.

Candy Crush.

Although I never really liked the game personally, it’s business model appealed to me.

The idea behind it is pretty simple. You begin with 5 lives and lose 1 when you fail a level. Once you lose all your 5 lives, you can either send requests to your Facebook friends for more lives, wait for 30 minutes to replenish themselves, or purchase them for 99 cents. A lot of people cave in saying it’s just 99 cents and well who won’t especially when they are on the brink of finishing a level, right?

Well, that’s the trap.

King successfully implemented the freemium model and earned money from this addictive game in the form of in-app purchases.

So, it’s not just the lives you’ve to pay for, but also when you are in desperate need of a lollipop hammer, color bomb, a sticky hand, or any other add-ons or even for some extra moves when you’re on the verge of making it past a level. Everything comes with a price.

It was with these microtransactions the King managed to generate a whopping revenue of $1.5B in 2018 across iOS and Android.

That’s the power of a freemium model.

Risks in the Freemium Model

Don’t offer too much or too little”. That’s the first thing you need to understand while developing a Freemium model for SaaS business.

Also remember, if your product is designed for a tiny niche and only a very small percentage of people will be willing to signup even for the free version, you should most likely ignore the freemium model.

You might be spending too much

Freemium model is very risky and if applied in the wrong situation, it can act like a tornado and blew up your business completely. So initially, to justify a freemium model the formula is simple:

If the Customer Lifetime Value (CLV) to Customer Acquisition Cost (CAC) ratio (LTV: CAC) is +ve, freemium is viable. If not, consider alternative pricing strategies.

Undervaluing your product

When you’re offering something for free, your customers have pretty high expectations from the premium version and if they don’t see much difference between the tiers, they might not upgrade at all.

Customer Satisfaction – but not completely

When you’re offering a product for free, it’s important that your customers should be, although not completely satisfied but happy to an extent that you will be able to upsell. If they didn’t like the free version, they’re less likely to pay for a paid one. On the other hand, if they’re completely satisfied with the free one they might not find it viable to upgrade.

Too much for nothing

You’ve invested your time, efforts, and money in your product. Value it. If you’re giving away everything for free, your customers might feel you don’t value your resources and hence, in turn, they won’t see the value in your product either.

Late profits

You won’t be generating immediate profit like in case of premium or subscription models.

But remember, “All good things to those who wait”.

Creating A Freemium Model That Works

“The more, the merrier”

This old saying fits right in the freemium model as the more number of potential users your product has, the better it is because only 2% – 5% will end up paying you. So your goal should be to attract as many customers as possible.

In 2014, Slack’s free-to-paid conversion rate rose to 30%. Because, Slack’s basic plan allowed you to create unlimited channels, share files, and even send messages. On the other hand, with the upgraded version you could get the customer support, full message archive, and much more. 

Nurture customers

Not everyone spends money spontaneously. To convert your freemium users to paid ones, you need to nurture them and convince them over time to upgrade. Show them the advantages of upgrading, maybe with webinars, free trials for some days, demo sessions, customer reviews, or anything else.

Separate them properly

Make an obvious and clear distinction between free and premium features within the product. If a missing feature is genuinely appealing to the customers, they’re more likely to convert.

Like Spotify. Although both paying and free users get to enjoy the music, the free users won’t be able to skip a bad song or play their favorite track on mobile. On the other hand, premium users enjoy unlimited skips, downloadable songs, listen to their favorite track on the go. So there you’ve it. The advantages of being a premium Spotify member are clear and worth to anyone who enjoys music.

Word of mouth

Although on average, only 2-5% of the freemium users convert, you still can use your free customers to create your own army of product advocates. This will only be the case when your service had provided them enough value in the free model.

Freemium is one of the most powerful pricing strategies if businesses use it for the correct purpose with a balance between value and incentive. With customer experience, becoming increasingly important, freemium companies will attain the top spots only when they give customers something they will be excited to buy — not something they will feel they were tricked into paying for.

Though SaaS and Ecommerce might sound similar, they are absolutely not!

One major difference between SaaS and Ecommerce Startup is that SaaS requires you to generate recurring revenue. You need to keep a check on the growth in your user base, profitability, market share, and cash flow.

As far as a SaaS Startup is concerned, the general metrics available on Google Analytics are not enough, as the goal for SaaS business is to turn these visitors into customers who will continue using the product and also significantly contribute to the revenue.

Ever heard of the phrase “What gets measured gets done”? Well, that’s a very common phrase in marketing and probably everyone has heard it. Being in marketing everyone values the importance of analytics, but just using it isn’t enough, using it properly to achieve the desired results is.

KISSmetrics and Mixpanel are some of the powerful Business Intelligence(BI) tools that can be considered as good alternatives to Google Analytics for SaaS if you want to track individual users but they are costly for a SaaS startup. The only problem with Google Analytics is that being a free tool, it’s poorly documented and people haven’t been able to uncover the real power of this tool.

It’s just like inserting the right key until you find a passage that leads towards a secret treasure!

That’s exactly why we shared this with you. After reading this blog, you’ll be dazed to see what powers this tool beholds and that too with just some tweaks.

Did you know Google Analytics allows you to add up to 20 Custom Dimensions per GA property?

Don’t worry, we have got it all covered.

Here we assume that you are already familiar with Google Analytic Services, I mean, you’ve already set up your GA account, if not you can check it here. It’s super easy!

Now, getting back to the business.

To start with, first, you’d want to analyze Marketing and Application pages separately since application pages are to solve user problems and marketing pages are to convert leads. Both the pages serve two different purposes and they should be tracked accordingly. So first things first, use different tracking IDs for them. This will help you get a more refined data and both the pages won’t be competing over custom variables, dimensions, and metrics.

For SaaS, create 2 views:

  1. People who are already your customers – Application Page
  2. People who aren’t your customers – just visitors – Marketing Pages

Create a different Tracking ID for Marketing and Application Pages:

Go to the Account List page in Google Analytics > Admin > Create New Property > Select Classic or Universal Analytics.

We recommend selecting Universal Analytics – It supports Custom Dimensions.

To better understand how you can leverage GA for a SaaS startup, we shall take Dave McClure’s help and will consider his AARRR model:

 

Leveraging-GA-For-A-SaaS-StartUp

Based on our experiences with various SaaS companies, we have come up with a model that focuses on retaining paid-subscription customers and will help you expand your client base through referrals.

(Note: This is a modified version of Dave McClure’s Pirate Metrics to fit the sales processes of SaaS businesses since it relies on revenue from subscriptions.)

Acquisition

Your attempts have succeeded. With ads, emails, social media, or maybe word-of-mouth, you’ve got people to visit your website. But, is that your goal?

Certainly not.

Being a SaaS company, you want to convert a non-user into a paying, long-term customer. At this stage, it’s crucial to understand how many people are interested in your product. You also need to understand what channels brought them to your website. GA tracks 6 main acquisition channels: Direct, Organic, Social, Paid Search, Email, and (Other) and analyze each one of them to understand what is working best for you.

Acquisition → All Traffic → Channels

This will help you keep track of unique visitors.

At the end of this phase, you should be able to understand which customers are interested in your product and where they are coming from.

Activation

Customers who are interested in your product or the product you sell will start researching about it, the features it has, the cost of your product, maybe even sign up for a free trial. Here you have a chance to enhance their knowledge and subtly advertise your product as well through Webinar, Video Tutorials, Blogs, Chatbots, etc.

Acquisition → New Users report and Behavior → Behavior Flow report to identify their behavior patterns.

Retention

How many customers are returning to your website to make yet another purchase after making a purchase, is crucial for you as it tells a lot about the quality of your product/service?

For a SaaS company, you always want to keep your customers happy and satisfied. With every company, the retention policy varies. While some might check in for daily active users, some might check monthly active users. You should set what retention metrics apply to your business and then track them.

Referral

Referrals are a great opportunity to generate additional revenue for your business. Because word-of-mouth is the best way to get additional customers if someone they trust recommends it. It closely relates to the halo effect. It’s a tendency that allows people to view something positively if they have received great feedback and are introduced to it in a positive way.

Using proper URL tagging(utm_source, utm_medium, utm_campaign), you can trace the campaign with the best referrals. You must also keep a check on the number of these visitors who converted and which source/channel that helped you get the maximum number of conversions.

Revenue

The basic purpose of any SaaS company when creating a website is, it’s obvious, generating sales. Driving people’s attention and getting them to perform a particular action, can be considered as micro-conversions but they aren’t the reason you set up the website in the first place, are they?

For a SaaS StartUp, you’ll notice that the cost of acquiring your first customer is overwhelming. As a SaaS Company, you ideally want your customers to move on from Free Trials to Paid Version. And to keep your company viable, you must focus and design a proper strategy for how you can properly nurture your leads for the bottom of your funnel.

It’s not enough to measure the amount of money you’re generating. You need to check whether your strategies were fruitful. For this you can:

Conclusion

We hope that we could clearly state what to track in google analytics for SaaS. Now that we’ve discussed all the key SaaS metrics, and analysis strategies you need for individual parts of the funnel, you can get started with analyzing your data. Analytics gives you some crucial insights that can assist you in designing effective strategies that can help you scale your business and generate genuine results.

When I started this business on November 18, 2014, a mentor told me that if your business survives the first 1000 days, it can someday thrive! I didn’t really understand what she meant until we were five years in as a company.

It meant discovering a niche in which our team can be truly world-class at; a niche that we can truly be passionate about!

After building a lot of software and running hundreds of marketing campaigns for clients in various industries and of various sizes, we have now become specialists in developing and growing “SaaS” Products.

SaaS Products come in two variances

1. Built for external users to help them grow their business in exchange for a monthly subscription
2. Built for internal users to improve business workflow and efficiency

We are game to partner to help with both! We absolutely love working with entrepreneurs to knock out features on their product roadmap and to increase their user base by employing a variety of Growth strategies like SEO, Content, and Sales Development. We love the challenge of partnering with CXOs to digitally transform their operations by building modern applications to run their businesses.

I am personally appreciative of every client, employee, and vendor for trusting us and helping us find our path. We grew by 52.8% in 2019. Even with a global pandemic that has had catastrophic consequences for businesses in 2020, we are on track to grow by 28% with the majority of our business being driven by existing relationships or referrals. Clients need a trusted partner more than ever and we are thankful to everyone that has decided to partner with us.

On the housekeeping end, if you are an HR and have stumbled upon a resume of one of our past employees and need to verify their employment at Armentum for both our US or India Operations, please do forward your requests to hr@firstprinciples.io.