SaaS Marketing | Maximizing Customer Lifetime Value

saas marketingWhat’s the stronger driver of SaaS company growth: customer acquisition or customer lifetime value? The answer is yes. Rapid, sustainable SaaS growth is equal parts customer acquisition and customer lifetime value. Simply multiply these two numbers and you get your SaaS growth ceiling, the most revenue your SaaS business can ever achieve. Period. The end. If you want to change your future, you have to change one of these numbers. However, most SaaS marketing professionals think their job ends at purchase. In SaaS, the intital purchase is only the first of many. Keeping each and every customer around longer and making the most of the business relationship along the way has as much impact on SaaS company growth as acquiring more customers. Therefore, good SaaS marketing lasts a customer lifetime.

This is the third post in a series that paves the path to sustainable SaaS growth. The first post in this series introduced the three fundamental levers of SaaS growth: customer acquisition, customer lifetime value and viral customer network effects. This installment explores the second lever and provides three proven SaaS marketing strategies to drive SaaS growth by maximizing customer lifetime value.

Two Views of Customer Lifetime Value

There are two sides to every purchase: buyer and seller. Maximizing customer lifetime value isn’t something you do to a customer, it’s something you do for a customer. In SaaS, customer lifetime value is often expressed as average recurring revenue times the average customer lifetime (one divided by percentage churn rate), however, this is only the sellers side of the coin. When thinking about what you can do to maximize customer lifetime value, it is a good habit to think about it from your customer’s point-of-view. For example, reducing churn means giving your customer a reason to stick around, while upselling and cross-selling mean solving more problems, incresing satisfaction, and providing greater ROI. Getting paid is just an end to the means.

SaaS Marketing Strategy #5 | Reduce Churn

There is only one SaaS marketing strategy to reduce churn: Continue reading "SaaS Marketing | Maximizing Customer Lifetime Value"

Can I have a trial please…

This question was originally posted on Quora and I had responded. I am expanding on that answer in this post.

As companies push firmly into a SaaS delivery model, providing ability to do a trial/evaluation has become table stakes. In the new world order of technology procurement, buyers are more educated and prefer to touch-and-feel the technology before they even engage with the vendor. Gone are the days when salespeople used their relationship, pushed products to companies. Buyers usually would do all the upfront analysis and prefer talking to sales guys only to close the deal. This applies most industries now – technology, real estate, automobiles. The only exception to this might be the pharmaceutical industry where a pharma company “educates” the doctors into prescribing their solution. We all know how that works. Anyway I digress.

Technology world has, belatedly, moved all-in to a try-before-you-buy model. It is probably the

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