I believe the starting point is the trickiest.
Like acquiring your first SaaS customer.
Here’s one proof:
In 2011, Zapier founders had to troll many SaaS forums until they found their very first lead. Converting that lead required A LOT of effort.
But fast forward to today, they have more than 2.5 million active users. Incredible growth!
You’re probably here because you’re in the same spot. You need to get your first users, and you’re in the right blog.
We’ll discuss the actionable strategies you can use to acquire your first SaaS customers. Promise, we’ll not suggest stalking!
Read to find out.
What is SaaS acquisition?
SaaS acquisition is often discussed in two contexts: business acquisition and customer acquisition:
- Business acquisition is about purchasing other companies. The main goal of the strategy is to grow by acquiring a company that has a specific set of attributes and can complement your own. This is often preferred if you have the budget and want to expand quickly.
- Customer acquisition is the process of attracting and winning new users or customers. It’s a key to business growth since, without new customers, a company will struggle to expand or even maintain its current market share.
We’ll focus this article on the latter, the SaaS acquisition of customers.
In short, SaaS customer acquisition is gaining new subscribers for your digital tool. An indication of an efficient customer acquisition lies in the total cost incurred to acquire a new SaaS customer — referred to as Customer Acquisition Cost or CAC.
The total sales and marketing cost incurred to acquire customers during a specific period is divided by the total number of new customers acquired during that period.
For example: If a company spends $5,000 on sales and marketing in a month and acquires 100 customers, then its CAC is $50. The higher the CAC, the more it leads to profitability issues.
Here is the average CAC across all industries as per FirstPageSage.
A clear picture of your CAC helps avoid overspending on your marketing and sales efforts. So if you need to calculate your own, use the formula for CAC.
The vital role of customer acquisition in SaaS growth
If a SaaS fails to attract, nurture, and convert customers, all its investments will be in vain.
Here’s what we mean:
1. SaaS customer acquisition is the driver of revenue.
It’s not news. Customer acquisition is the primary revenue driver for every SaaS, especially the product-led ones. Attracting a consistent flow of customers who pay recurring subscription fees ensures a steady revenue stream.
2. It impacts the profit margin of each customer.
It’s not just revenue. Customer acquisition also affects profit margins. If your customer acquisition costs are high, it eats up your profits, making it difficult for you to grow and scale.
3. It improves brand awareness.
As more customers purchase or subscribe to your SaaS, your company’s name becomes more familiar to the public. This recognition leads to mass trust — which can inspire word-of-mouth referrals and recommendations.
4. It’s an indicator that you’re ready for market expansion.
A proven process to acquire customers efficiently and sustainably gives you the confidence to explore new markets. When you effectively acquire a substantial customer base, there’s demand for your product, and other geography or target groups can benefit from it, too.
5. It’s key for customer retention*.
If you acquire the right customers and give them positive experiences during acquisition and onboarding, there’s a good chance that you’ll retain them and upsell them. Acquisition tactics set the tone for ongoing user engagement. And only happy customers renew subscriptions, purchase add-ons, or upgrade to higher plans.
* Customer retention involves keeping existing customers engaged and satisfied to encourage repeat business. Almost 90% of companies attribute customer loyalty and retention to the customer experience.
Read more: How To Use AI To Predict User Engagement in Marketing (Guide 2024)
6. It’s a competitive edge.
Acquiring customers efficiently and at a lower cost (versus competitors) is a powerful weapon. Less CAC means a portion of the SaaS budget is freed up for more product development, marketing, or customer support.
Plus, a well-optimized customer acquisition process lets you reach potential customers before competitors. That’s an advantage, too!
What does the SaaS customer acquisition funnel look like?
Let’s keep this simple.
An effective SaaS customer acquisition strategy should be repeatable, meaning it can be consistently applied and scaled over time. Instead of a funnel, we opt to represent it as a cycle.
This is how it should look like:
The first step is demand generation. SaaS customer acquisition starts by creating awareness. This is usually done through inbound tactics (like creating valuable blog posts).
But don’t let those attracted prospects/leads turn cold. The next step is the logical progression — lead generation.
Lead generation is identifying the potential customers or “leads.” The objective is to collect their contact information so you enter a nurturing relationship with them. Yes, lead nurturing comes next.
This is when you build lasting relationships with your leads and ultimately win their trust. If they find value in your product, conversion is inevitable. That’s proving that you’re with every cent.
The good news: For high-impact nurture campaigns, consider using marketing automation. It’s the automation of recurring marketing tasks. A tool like Encharge helps your marketing team become more efficient, while increasing your sales velocity. With Encharge, you can build visual marketing flows on auto-pilot so you won’t miss a lead to convert.
Customer acquisition by GTM strategy
Let’s get down to the real stuff! Let’s look at the actionable strategies you can implement right away.
There are 2 primary strategies for acquiring customers in SaaS. And that depends on your GTM strategy: product-led or sales-led.
- In product-led growth, the focal point is on the product itself as the main driver of customer acquisition(and retention).
- In sales-led, the spotlight is on direct sales efforts and engagement with potential customers.
Customer acquisition for product-led companies
Free trial/freemium plan
Offering a free trial or freemium plan is first on our list. Because product-led growth is often characterized by using a self-service entry to encourage sign-ups. According to OpenView, freemium models grow twice as fast as sales-led models. The magic reason is firsthand product experience is a major factor in driving conversions and growth.
Here is Zapier, which lets you experience self-service entries. Its premium features are free for 14 days, but you can also explore its core features without a time limit.
Self-service onboarding
After leads sign up for a freemium plan or free trial, you must nail the onboarding process.
Ensure that the experience is personalized, intuitive, and self-explanatory. Include in-app help options (like in-app chat, tooltips, walkthroughs, and knowledge base articles) where users can quickly find answers to their troubles. The key is to make it easy for users to access help without leaving the application.
Here is Encharge supporting in-app chat so users can reach out for help anytime regarding any roadblocks:
For more personalization during onboarding, use Encharge. The platform’s behavior emails let you send targeted onboarding messages triggered by the user’s app activity. You onboard, nurture and convert users through custom-tailored campaigns.
Website
Make a great first impression. Your website is the usual first touchpoint for prospects. Make sure it’s visually appealing, easy to navigate and use. But most importantly, it should immediately convey the value of your digital product. Also, ensure your website is optimized for mobile devices.
Check out Notion’s website for a super comprehensive example. The website explains what the tool does with lots of social proof to back its claim.
Content marketing
Demand generation is well complemented by content marketing. This involves creating high-quality content to build brand awareness, driving traffic to your website, and attracting potential customers. Regularly showcasing your expertise, establish thought leadership, and build trust with your target audience.
Xero, an online accounting software, keeps its target customers in the loop by regularly releasing news and in-depth blogs about the company and its services.
Product virality
Building virality into your product drives more customers. Let your users share your offering through referral programs or even give incentives for users to invite their peers.
Look how cute Trello encourages its users to share the platform. The platform may not explicitly say that, but it implies that you’ll get more from it if you recommend it.
Email marketing
Use this to nurture your captured leads.
Remember, email marketing remains one of the most effective customer acquisition strategies for SaaS businesses.
Share your product updates, discounts/promos, user stories, and educational resources with your email list to create engagement and build trust. Consider giving away irresistible offers to increase your conversions.
Check out this email from Grammarly offering a huge discount for its premium plan.
SEO
Organic traffic is a good friend for product-led SaaS. Optimizing your website for search engines so you rank higher in search results is vital. You need to know the phrases and words that potential customers use to find solutions like yours.
Here is HubSpot claiming the top organic search for the keyword “free CRM.” It proves that with the right keywords, you will drive more organic traffic to your website (and increase your conversions).
PPC Ads
Pay-per-click (PPC) advertising is an ideal way to acquire customers, more so for product-led SaaS companies. Because with paid ads, you can target specific keywords. This gives you a better chance of being seen by those already interested in your product.
ClickUp effectively uses targeted advertising. It’s the number 1 result for “top project management tool” despite numerous competitors.
Social Media
The first step in using social media for customer acquisition is to create a strong online presence. Social platforms like Twitter, LinkedIn, and Facebook are great places to engage with your audience. Use social media to promote your products to drive traffic to your website.
Here is Will Canon, CEO of UpLead, using his LinkedIn account to boast about UpLead’s great progress.
Customer acquisition for sales-led companies
Targeted outbound prospecting
Outbound prospecting is a proactive approach. The goal is to reach high-value customers who match your ideal customer profile. This method involves researching potential customers, identifying decision-makers, and contacting them via cold email, phone, or even social media.
Warning, though: Avoid going overboard or appearing spammy, as this could negatively impact your prospects’ perception of your company.
Product demos
Product demos are very effective tools for you for SaaS acquisition. In the digital world, it’s common for customers to request a product demo, especially if your tool is complex. Or, if it’s a part of your sales pitch, a product demo lets you showcase your product’s features, benefits, and value in a live setting, allowing you to destroy their objections in real-time.
Looking at the website of SailPoint, you can easily feel that what they do isn’t simple. Well, you might as well expect that to be a SaaS Management tool. The website offers live product demos only.
Account-Based Marketing (ABM)
Account-Based Marketing lets you focus on high-potential accounts and targets them with personalized marketing and sales campaigns. This works well for sales-led companies because it lets you prioritize the accounts that will most likely convert.
Best practices when building your SaaS acquisition strategy
Identify your SaaS marketing advantage
The secret to building a successful SaaS acquisition strategy is to identify your unique marketing advantage. Just answer: What sets your business apart from other SaaS companies? Knowing this helps you zero in on the tactics most beneficial to you.
Further reading: Discover the 5 steps to keep SaaS marketing planning effectively simple. Hint: This also covers finding your marketing advantage!
Know your niche and customers
Getting to know your niche and customers on a deep level is key to building a winning acquisition strategy. Do market research, create buyer personas, and study your customer data to create messaging and campaigns that speak to your audience’s pain points and desires.
Diversify your customer acquisition channels
Relying on a single channel for driving customer acquisition is RISKY. Instead, you should use multiple customer acquisition channels to reach a wider audience. So, even if you’re sales-led, it doesn’t mean that you can’t try content marketing. Or product-led SaaS can’t do cold outreach. Have a well-rounded strategy and expand your reach.
Enhance user experience and onboarding
Once you have attracted free trial customers, the next step is to ensure a seamless onboarding experience. Prioritize an exceptional user experience and onboarding process in retaining customers and driving referrals. Make sure your product is easy to use, intuitive, and offers value to your customers.
Leverage tools like Encharge to automate and visually build user onboarding flows. These flows will have segmented users guiding them through the initial stages of using your product. A smooth onboarding process increases the likelihood of user retention and conversion into paying customers.
Goal marketing and sales collaboration
Let’s go smarketing! Marketing and sales teams play crucial roles in the SaaS acquisition journey. It is essential to ensure they are aligned. Establish a feedback loop where information from sales flows into marketing and vice versa. This synergy refines your customer acquisition approach and provides a unified message to potential customers.
Optimize based on SaaS metrics, but don’t forget customer retention
Finally, optimize your SaaS acquisition strategy by keeping an eye on the important metrics. Constantly monitoring key performance indicators (KPIs) like
- Customer Acquisition Cost (CAC)
- Churn rate
- Customer Lifetime Value (CLTV)
Make data-driven adjustments to improve customer acquisition. Focus on both acquisition and retention equally, ensuring the longevity and growth of your business. Remember, it’s five to 25 times more costly to acquire a new customer than to retain an existing one.
Read next: 5 Common Customer Acquisition Mistakes — and how to avoid them
Acquire your first SaaS customers effectively
Acquiring those crucial first customers and achieving remarkable SaaS growth may seem impossible, but it’s entirely attainable. As Zapier’s journey demonstrates, hard work pays off in the long run.
The actionable strategies outlined in this article can set your SaaS business on a path to sustainable growth. So, identify your GTM to leverage the right tactics effectively.
When you are ready to start your customer acquisition journey, use Encharge.
It simplifies and gamifies user onboarding by guiding your users to product value faster with behavior-based onboarding emails. With it, you can personalize user onboarding journeys with targeted emails, ensuring that your customers receive the right messages at the right time.
Accelerate your SaaS growth with Encharge. Try free today!
