SaaS Customer Marketing Basics

Since returning from Silicon Y’all, we’ve had several Beacon9 client meetings with something in common. They’ve all had adoption, usage, and retention challenges, and they all lack SaaS customer marketing basics. This is despite being quite mature (in SaaS terms) and despite achieving scale with double-digit millions in ARR. These are quality companies whose growth rates are being undermined by a lack of customer education and communication.

Two SaaS Customer Marketing Blockers

The fundamentals of SaaS customer marketing are relatively straightforward but often neglected. I lived this neglect and can speak to it firsthand. The reason for it is ever so simple — the marketing function in a growing SaaS is more than fully committed to customer acquisition. It’s everything to them. And typically where all of the incentives lie.

Before customer marketing can carve out 25% of marketing’s effort, values must be realigned from the CEO to the CMO and below. Adoption, usage, retention, and expansion must be understood as huge value drivers in revenue growth and organizational prosperity. So blocker number one is lack of resources and blocker number two is lack of incentives, rooted in underappreciation of the value of the function on revenue growth.

I was both the CEO and the CMO of our SaaS prior to its acquisition. So I was both the problem and the solution for customer marketing. Like many a growing tech company, ion interactive shared the myopic focus on capital-efficient customer acquisition. My marketing team was overcommitted on a daily basis and driven to deliver low-CAC. So when Anna came to me to say she wanted our Director of Customer Success to attend our marketing sprint plannings and standups, I wasn’t enthusiastic. We didn’t have the bandwidth to do more than the bare minimum on the customer side, and that’s what we were already doing. The bare minimum meant a customer version of our monthly email newsletter, an occasional customer-specific webinar, and product release communications — in-platform and email.

SaaS Customer Marketing Value Prop

Then we began to talk through the value proposition of customer marketing and the potential impacts it could have on our business — churn reduction, expansion revenue, reduced time-to-value, and increased usage. With a quick bit of revenue quantification, I went from cynical CMO to enthusiastic CEO in the blink of an eye. Marketing was ultimately in the growth business, and we could have more revenue growth by redirecting 25% of our effort to customers than by spending that same 25% on new customer acquisition. Yes, it was a bet and not a sure thing, but it sure looked promising.

So began the cultural reprogramming of our priorities that led to sizable benefits, not the least of which was a massive reduction in revenue churn. But before that could happen, customer success had to convince the CEO, who had to reprogram the CMO, who had to refactor his team to believe and deliver on the customer marketing promise. This is why so many SaaS companies have poor-to-no customer marketing.

But over the last week, I’ve found myself recommending a remarkably similar set of SaaS customer marketing initiatives. Since roughly 80% of a SaaS company’s dynamics are just like every other SaaS company, I thought today was a good time to share those SaaS customer marketing basics.

1. Customer Newsletter

Highlight your best content once a month — customer success stories, case studies, timely events, customer education webinars, benefits of new features, neglected staple features, and so on.

2. Pre-Adoption Drip

A series of 3-7 single-topic emails in a relatively rapid cadence (every day or two) can make a huge difference in initial adoption. Focus on the why more than the what, and the benefits more than the work. Share a success story or two, and remind them why they signed up in the first place. As soon as they adopt (initial usage), stop pre-adoption drip and move them to new-user drip.

3. New-User Drip

Another series of 3-7 single-topic emails (and in-product messages) in a wider cadence (once a week) to educate and encourage deeper adoption of features that correlate with retention and renewal. Content depends on your price point, space and feature depth, but the objective must be repeated usage of those high-retention features. Showing works better than telling and customer stories are more credible than marketing speak.

4. Customer Drip

Once new-user drip runs its course (3-7 weeks), customers move into a permanent stream of nurturing, usage-inspiring messages distributed via as many channels as possible — email, SMS, pre-login, and in-product post-login. If your new-user drip did its job, you have an adopted customer who should be seeing value from your SaaS. This means you have personal, data-driven messaging you can push to them in customer drip (pushing their specific results to them). Keep communicating what the product is doing for them and how it can help them do more of that. You should weave in generic educational messaging as well — via webinars, success stories, customer profiles, interviews, and so on. The customer drip cadence should likely be every two weeks and it should never end. That’s right, it should keep going forever.

5. One-Offs — Release Messages

Depending on your sprints and release cadence, you may be communicating a lot of one-off release notification messages. These are an opportunity to add value rather than a perfunctory burden. Too many SaaS companies phone in their release messages and invest too little customer marketing effort — forgetting that the value of the release must be communicated from the customer’s point of view.

SaaS Customer Marketing Segmentation

Those five basic customer marketing initiatives can have a huge impact on adoption, usage, churn, and expansion revenue. If you’re not already doing those, get on that. But they can go even further when fueled by customer segmentation data. Most SaaS companies know far more than they leverage about their customers. And once customers become truly adopted users, that data multiplies. So the next step, beyond the basics, is segmentation.

Segmenting those five basic initiatives is likely to significantly improve their effectiveness. Of course, each segment multiplies the customer marketing effort required. I found that basic A/B testing strategies and consistent measurement helped me understand the cost-benefit and make data-backed decisions on segmentation by stream. Perhaps you have real differences in pre-adoption users that can be used to segment messaging. Maybe the big differences kick in once you have fully adopted users. Somewhere in the customer marketing mix, it’s likely you have segmentation that matters. Find that sweet spot and the reward will be more than worth the effort.

25% of Marketing Effort Is Relative

You probably noticed that I’ve allocated 25% of the marketing department’s effort to customer marketing. That’s a relatively arbitrary number. In reality, we allocated 25-50% effort at different times. ion interactive had expansion revenue opportunities that made higher allocations of effort easy to justify. The percentage of effort you dedicate to customer marketing may be very different. Here are some ways to think through the allocation of effort:

• If you have a land-and-expand strategy, more customer marketing means more revenue, so invest more effort.
• Conversely, if your expansion opportunities are minimal then that axis doesn’t justify high levels of investment.
• If your initial adoption needs improvement, then invest more in that stream. You’re paying for too many leads that aren’t converting.
• If adoption is good, but ongoing usage is weak, then invest more in the customer stream and active SaaS principles. Renewals, as well as your valuation, will take a hit if usage is low.
• If usage is consistent, but the depth of that usage is shallow, focus effort on feature-driven success stories and customer education.

And as for the overall percentage? It comes down to what’s justified by the ROI of the effort. If getting churn down will add millions back into your P&L, then it’s probably worthy of investment. If usage is your Achilles heel that’s taking 20% off your valuation, then that’s a pretty clear opportunity. These are data-driven decisions, but results must have enough time to get traction. This stuff doesn’t work overnight. And, if you can’t afford to siphon marketing effort away from new business, then that means justifying new, incremental investments. That’s okay too. Again, justify ROI through testing and measurement.

Not-So-Rocket-Science SaaS Customer Marketing

For all of you snickering that my five customer marketing basics are too basic, you’re right (and wrong). They are basic which is why everyone should be doing them. But very few SaaS companies execute against those fundamentals. And many that do, don’t do it very well. Precious few make the appropriate investment to nurture, educate, and coddle customers as the precious and scarce resource that they are.

This takes us back to prioritization and the fundamental value proposition of customer marketing. Customers are precious. They are valuable. We often pay dearly to acquire them. And it’s incredibly costly to lose them and replace them with another, new customer. Without customer marketing, that churn-and-replace cycle is far too frequent — dragging down revenue, morale, and growth capital all at once. Moving the needle on revenue churn starts with moving your mindset and incentives.

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