Inbound marketing for SaaS: putting in a lot to get a lot

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Published Apr 05, 2017 | Written by Jeremy Knight

In a previous post, we discussed how an inbound approach could help your software as a service (SaaS) company. We talked about the importance of SaaS organisations not only winning customers, but retaining them over the long term - a challenge inherent in the SaaS business model.

As a SaaS company, you will know that you have to wait a bit longer to enjoy the fruits of your labour than in other industries. When you win new business, the payoff doesn't come straight away. You need those customers to keep on buying your services and you also want to sell more services to them over time. 

In the same vein, when you first start out on an inbound marketing journey, you won't reach your destination immediately. Implementing inbound marketing is a commitment (with all the challenges that entails). 

However, in both instances, the potential rewards to be reaped are well worth the wait. So, let's explore why and consider how adopting inbound marketing for SaaS could help you to reach more of the right people and grow your business. 

The SaaS long game

SaaS companies talk a lot about customer lifetime value (LTV), which is essentially the profit made from a customer. Saasmetrics outlines a simple way of calculating LTV:

"Take the revenue you earn from a customer, subtract out the money spent on serving them, and see for how long they stay bringing you this profit before churning.

"LTV = ARPA * % gross margin / % MRR churn rate"

N.B: ARPA = average revenue per account
MRR = monthly recurring revenue

Ultimately, the longer a customer continues using your services, the higher their LTV. But, whether they stay for the long term or the short term, you nevertheless have to expend the time, effort and money in setting them up to use your services in the first place.

Essentially (excuse the colloquial phrase), you have to put in a lot to get a lot - and, unfortunately, sometimes you may actually get very little at all in return. It's a long game. And the same is very much true for inbound marketing.

The inbound long game

Inbound marketing requires a large investment upfront. Among other things, you have to establish your goals, produce detailed buyer personas, and create and distribute content. And then you have to analyse the results and repeat and amend as required. All of this requires significant time and resources – however, it is more cost-effective than traditional marketing methods, such as paid advertising.

Writing for HubSpot, Sebastian Gutierrez says: "Becoming a trusted authority doesn't happen with one banner ad or annual report. Succeeding with inbound marketing takes consistent effort over the long haul. 

“[…] Inbound really is the only marketing that's proven to be cost-effective, yet it takes time to see results. "

Over time, an inbound approach enables you to earn the trust of your target audience and to demonstrate to them why you are the best organisation to meet their needs. It allows you to show off your knowledge and expertise and to answer your prospective customers' questions on their terms. 

So, what are the benefits of sticking with inbound? According to HubSpot’s State of Inbound 2016 report, inbound organisations were four times more likely to rate their marketing strategy highly. Furthermore, outbound marketing (paid advertising) was considered the most overrated marketing tactic by 1/3 of marketers.

Clearly, inbound is working for many organisations.

Marrying SaaS and inbound  

So, we've established that building a SaaS business and adopting inbound marketing are both long games. However, there's another dimension to this similarity. In fact, it's precisely because inbound helps you to create strong and meaningful business relationships over time that it's the perfect fit for SaaS companies looking to acquire customers, who will keep on purchasing their services for the foreseeable future.

Through the power of content, inbound helps you to reach the right people, in the right way, at the right time; people who will genuinely benefit from purchasing your services. And, because they're such a good fit, those people are far more likely to remain loyal to your organisation.

Of course,this is not a foolproof premise, but there's no doubt that inbound results in more effective lead generation. It reflects the way that people buy today: researching a solution to their particular problem online, way before they even consider talking to a sales person. 

Both SaaS and inbound require you to put in a lot to get a lot, but the initial investments pay dividends. And implementing inbound marketing for SaaS is a dynamite approach.

The Guide to Inbound Marketing

Published by Jeremy Knight April 5, 2017
Jeremy Knight