SaaS is an attractive model because of the recurring revenue streams and returns to scale possible when you convince large numbers of customers to purchase the license to use the same tool for a monthly fee. But SaaS companies must justify their capital-intensive development cycles with adequate customer acquisition through marketing for the equation to square.
Currently, there is a tremendous opportunity for SaaS companies to acquire the customers they need to thrive through digital marketing channels, and to maintain positive relationships that lead to longer rates of retention through them as well. Digital marketing channels such as blogs, social networks, whitepapers, and webinars, provide an excellent way for these companies to demonstrate the rationale for using their services to a large number of prospective customers at a low cost. Blogs and social networks especially give SaaS companies a way to solve customer problems and understand new revenue opportunities, increasing the lifetime value of their customers.
The value digital marketing provides through its scalability is very similar to the value proposition of SaaS companies, because efficiencies arise as the same message created in digital channels reaches more and more potential customers, without the development cost increasing. SaaS companies that recognize the benefit of acquiring customers at scale through social networks and blogs will lower their customer acquisition cost, which is one of the most important indicators of the health of a SaaS company.
Another important financial indicator for SaaS firms is lifetime revenue per customer. The continued communication with customers once they purchase is also made much easier through established digital channels. Staying in contact with customers and providing an easy method for two-way communication through social networks gives SaaS companies insight into how they can increase the value they provide customers, and how they can address any larger issues that are causing customers not to renew licenses.
SaaS companies should move quickly to differentiate themselves from competitors through active digital marketing initiatives, because those that do so will improve their financial performance by acquiring more customers at lower cost and retaining them for a longer time.
