We’re breaking down how to build a funnel for maximum growth.
Every step in the funnel is a chance to win or lose customers.
So, let’s explore the SaaS Customer Journey from prospect to evangelist and see how to improve top-line revenue through acquisition as well as retention; and ultimately evangelism.
Growth requires customer acquisition, as well as retention – but hockey stick growth comes from evangelism.
LTV, also referred to as CLV, is short for Lifetime Value, which is short for Customer Lifetime Value. Lifetime Value is an estimation of the aggregate gross margin contribution of the average customer over the life of the customer.
LTV = (average monthly recurring revenue per user) x ( average total months subscription length )
Evangelism goes beyond retention to create raving fans that will never leave, tell everyone they know, buy add-ons, and pay for price increases without blinking.
An evangelist is the pinnacle for the SaaS Sales Funnel as it not only ensures longer LTV but also pushes more prospects into the awareness phase without cost.
Cost Per Acquisition ( CPA ) is a common metric to focus on as a SaaS company and of course we want to understand how much it costs to bring on each new user.
But Lifetime-Value ( LTV ) should be the critical metric to measure.
Plus, if we increase LTV with evangelism, it will push cost per acquisition down as we gain referrals and word-of-mouth.
We have to look at each stage of our SaaS sales funnel as momentous and critical with understanding that those that leave it may never come back.
You buy an ad for your top keyword and create a great ad message – but each click is a win and each person that ignores the ad is a loss.
Those paid ad visitors go to a landing page – you either win with a conversion or lose with a bounce.
But, even if that visitor converts on a free-trial, you will either win them as a paying customer or lose them to becoming a ghost account.
This win or lose scenario happens the whole way through the funnel every single day.
The real challenge is to balance focus on improving specific metrics while connecting the long-term dots.
Improving click-through rates for ads or visibility for SEO is important, but we have to know what those visitors did 3 steps later in the sales funnel.
Who cares if you get visitors if none of them turn into trials.
Who cares if you get trials if they don’t turn into paid users.
And who cares if you get paid users if they cancel within a month.
We must connect the dots to know if traffic from a specific optimized key phrase results in paid users who do not cancel – and ideally even become evangelists.
Are metrics that can help predict the trajectory of our efforts. Increasing impressions is good if we have a successful demo to purchase conversion rate for our paid channel.
We want to look at how much these channels drive website visits. Again, a prospect does not always equal an MQL or SQL, but we do want to examine our success rate of driving traffic.
The channels above are leading to website visits and from there become a marketing qualified lead.
For SaaS, a trial can skip the whole MQL stage to deliver visitors straight into being a Sales Qualified Lead. Enterprise SaaS companies may still require MQLs because they have a demo and sales process.
To connect the dots, we would take one specific tactic ( as narrow as possible ) and evaluate its results across the metrics chain.
The key here now is being able to connect the dot to how many of those two trials became revenue positive. This often can be complex to achieve in analytics and if you convert to a sales demo, it requires strong connection with your CRM.
Optimizing for the right channels that are producing is the only way to win.
Testing, precedent and competitor monitoring should allow you to continually optimize for greater return on effort/investment.
Part of developing a marketing strategy is ensuring that you remove bias ( don’t lie, you just “feel” certain things don’t work ) for specific channels and continually test for opportunity.
Often it is not a channel that fails ,but the execution of it — the targeting, the message, the offer, the budget or the connected tactics are not right. Often SaaS companies give up on a channel before unlocking its secrets.
This is not to say that certain channels or tactics are not more effective, but more to point out that quick decisions, lack of testing and bias can cause a channel to be swept aside too quickly.
Get in front of people looking for a product versus interrupting them.
Visitors from Search Engines have a pain they are looking to solve. Often search visitors are coming with a specific agenda and some level of urgency. If you have optimized your site for SaaS SEO ( great content, page experience, backlinks ) and the right phrases ( buying intent ) the likelihood of driving ready-to-buy visitors is high.
Public Relations visitors arrive based off interest that was presented to them often on another channel. This could be an article, press mention, podcast interview or any other earned media. Visitors from these channels often have a higher level of confidence in your brand and business from the first interaction which helps drive a frictionless sale.
Affiliate visitors have been directly recommended from a trusted source. Like PR, this increases confidence early in the process.
The alternative is interruption marketing where there is low confidence and potentially low urgency.
The key is to be highly targeted to ensure that budget and time are not wasted here.
Advertising is often a necessary evil – search ads that can be more frictionless or use as brand awarness for the top of funnel. Outreach for highly targeted account-based marketing works once the message is honed.
We talk a lot about building confidence to get people to convert and the challenge with interruptive tactics is that often the confidence level is at zero when they begin to interact with your brand.
Much of this leg of the SaaS Sales Funnel is about building confidence.
As visitors learn that your software does what they are looking for, is used by others, has produced value for them, will be accept by others in their organization, matches their budgeting — these and more are all factors that build confidence.
This is why we love frictionless sales channels for awareness because they deliver visitors that already have some confidence.
Our goal is to get people to take action and often we must meet conscious or unconscious criteria they expect.
From first impressions to representation of your products sophistication, design can either instantly turn off prospects or get them excited. The difference between just ok and modern/sophisticated is subtle design choices that signal a level of professionalism that is part of the confidence equation.
The ability to find information quickly and traverse the site easily with logic is a reflection of your how your business operates. The harder to navigate, the harder to work with you. Especially for SaaS companies, user experience is representative of the product you sell.
Different than the content and overlapping with user experience is the scannable messages ( often headlines ) that tell a story to most visitors with very short attention spans. Few people read and there for your headlines have to say enough to convince.
A descendent of your high-level message is content that once their attention is captured by a headline is what provides the nuance about something they are interested. People read so little on a site that each word must be strategic.
CTAs are a science and need a clear strategy for conversion. Just a pricing page with trials or a request a demo page isn’t enough. Having multiple CTAs at different stages of the buying cycle, the right message, the right layouts, and more impact whether you convert opportunities.
The more content and CTAs align to the visitor’s pains and needs, the more likely a conversion.
Personalizing your SaaS sales funnel can be be done at each stage and in a number of ways. For websites, we primarily look at two methods.
Creating content for specific audiences and building a site structure that leads people to that content quickly can be an easy form of personalization to implement.
In some “all-in” approaches to this, you will see sites that are built around audience industries or roles entirely.
Is a programmatic way of leveraging data about a visitor based on how they got to the site, previously collected data, third-party data and website navigation choices to then change content on the fly for that visitor.
This is obviously a more complicated process to implement, but can make personalization feel more seamless.
Understanding the process and phases your buyers go through and incorporating them into your SaaS Sales Funnel is key to achieving MQLs.
Really this is about understanding that there are different levels of urgency. Imagine the two extremes:
One extreme is where a buyer was told by someone in their organization to see if there were solutions for a need. They don’t have a pain directly, don’t have a specific timeline, it may not relate to their primary job, they may have a knowledge gap of the subject matter and more.
The other extreme is that someone has an urgent pain that needs solved within a time frame. Fear, risk, loss or some other strong emotion is pushing them to find a solution to that emotion within the next few days or weeks.
The calls-to-action ( CTAs ) that you are presenting to visitors have to appeal to people that have different urgencies. The high urgency buyer needs a free trial right now, but the low urgency person just needs some information to pass on to their co-worker.
Our strategy is to often ensure that every page has three conversions that appeal to low, medium and high urgency SaaS buyers in the sales process.
In this moment a decision is made by prospects to commit and must be designed to streamline action.
…to be continued.