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5 Ways to Reduce SaaS CAC With Marketing Automation

By Will Steward on Tue, Nov 25, 2014

reduce-saas-cacThere are two key metrics when it comes to building a SaaS business. Customer acquisition cost (CAC) and customer lifetime value (LTV).

Usually if you can acquire a customer for less than 30% of their lifetime value, then you've got a good opportunity on your hands -- assuming the market for your product is big enough. 

It's therefore important that your SaaS company is working hard to keep a hand on its CAC. Whilst in growth phases it's acceptable to have a seemingly high CAC in order to corner a market (and therefore extract more value later) -- the cheaper you can acquire each customer, the faster you can grow with the cash you have on hand. 

In this post I explain how SaaS companies can reduce CAC by using marketing automation.

1) Nurture Leads into Trials

Marketing automation software like HubSpot can be used to help you convert more leads into trials. When a visitor downloads a piece of content on your website, for example an eGuide, or case study (I hope I'm right to assume you're using inbound marketing to generate more leads) you can use marketing automation to send follow-up emails. 

The focus of these emails should be on educating your leads, until they reach a point where they're ready to consider a free trial (or demo). I discuss the types of content, and how to nurture leads into trials in more depth in a previous post here: How to Turn More of Your SaaS Leads Into Trials & Demos.

2) Maximise Trial Activation

Marketing automation software like Intercom can be used to help you activate more trials. An activated trial is a trial user who has performed the minimum setup tasks required within your software to start getting value from it. 

For example, if you sold social media management software, activation might consist of adding at least one social media account, and scheduling at least one message to be posted.

Intercom can be used to track how well your trials are progressing through the activation process, and send specific automated emails to help them achieve activation tasks. Emails are custom tailored depending on user activity to date (so users aren't sent emails that won't be useful), and customer support/sales rep notifications can be triggered to help prospects get the most from their trials, should they need more help. 

3) Identify Top Sales Leads

Marketing automation software like HubSpot can help your sales team to identify your best leads. Once a visitor to your website converts into a lead, HubSpot begins tracking their every action as they browse your website, interact with your emails, or download your content. 

By using HubSpot's lead scoring functionality, you can assign scores to specific actions (for example taking a look at your pricing page, or downloading pieces of content). You can also assign scores for specific lead characteristics, e.g. their position within their company, or the number of employees their company has. 

HubSpot integrates with most popular CRM systems, so your sales team can then see a lead's HubSpot score within their CRM. This makes it easy for your sales team to prioritise securing conversations with the leads which are most likely to go on to be customers.

If you're not yet using a CRM system, find out why it's essential software for SaaS companies in my previous post: 4 Reasons Every SaaS Company Should Invest in CRM.

4) Measure Funnel Performance

Marketing automation software offers you the opportunity to much more closely monitor your funnel performance. From the first website visit, through to the actions trial users are taking within their accounts, the software allows you to much more accurately measure: 

  1. The percentage of website visitors which go on to become leads. 
  2. The percentage of leads which go on to become marketing qualified.
  3. The percentage of marketing qualified leads which go on to start free trials/request a demo (become sales qualified). 
  4. The percentage of free trials which become activated. 
  5. The percentage of activated trials which are closed into sales. 

All of these numbers are numbers that you can run tests on, in order to decrease your CAC. For example, you could test changing your website homepage, to see if a new headline results in more people who read the page converting into a lead. Likewise, you could test an automated Intercom email sent to free trial users, and see if that increases the percentage of free trials that go on to be activated. 

Marketing automation allows your organisation to become more scientific with its marketing. You can finally take out the guess work, and run tests which will enable you to significantly reduce your CAC, and increase the volume of customers that drop out of your sales & marketing funnel.

5) Identify Trends Early

Following on from point 4, marketing automation software enables you to quickly see trends emerging within your company. For example, using HubSpot you might see that specific emails are engaging leads at a much higher rate, and determine that you need to create more content on that topic as part of your inbound strategy. 

Using Intercom you could quickly see if your customers are beginning to use your software to achieve new things, and use this information to develop new use cases to use in your marketing material.

Using HubSpot you might see that your leads are rarely going on to become marketing qualified. You could use this information to determine that you need to create more educational content to help convince leads of the value of your product offering -- e.g. by creating more product specific content or case studies. 

These insights can help you to bring your CAC down, close more customers, and beat the competition.

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