How much should you invest in marketing your SaaS solutions? There’s no one-size-fits-all answer because marketing budgets change throughout the lifecycle of a SaaS company. Here’s what we’ve seen over and over again with our SaaS clients.
Pre-Startup and Startup Phase: Validate With Minimum Waste
A SaaS startup would typically have limited funds and limited resources. As they develop and test their product, they also need to validate marketing channels. Should they target their audiences on Facebook, or allocate their budget to Search Ads?
In this stage, the goal is to make as few mistakes as possiblе and spend as little as possible to learn what works and what doesn’t. Early-stage SaaS companies need to establish CAC from paid advertising and vet marketing channels without burning through too much of their budget.
Not only should they look at which channels work best, but also consider which marketing approaches are best suited for their campaigns. In validation mode, SaaS companies should be frugal with marketing budgets, yet invest enough resources to identify which communication channels and messages truly deliver.
The Scale-Up Phase
Once they’ve figured out how to make the unit economics work and established a good product marketing fit, SaaS companies start evolving into the scale-up phase. And this doesn’t happen like the flip of a switch.
At some point SaaS companies have their LTV: CAC locked down, their product ready to go, and it’s time to expand. As SaaS companies mature and get unit economics under a more predictable level of control, the goal then becomes scaling the success formula to the largest addressable audience as fast as possible. After all, there is another 99% more addressable audience out there to go after and get.
The scaling stage is often accompanied by investor funding. At this phase, the ‘spend-small-and-learn’ approach is replaced by ‘spend a ton and keep KPIs under control.’
They need to move much faster than the competition and win the market. Aggressive spending helps you also secure market share and accelerate to the maturity stage.
When you scale this fast and budget is less on an issue, don’t take your eyes off your Return on Ad Spend. Make sure to read our article on how to properly calculate ROAS for SaaS
Your best way to track ROAS with off-site conversions after the free trial, is to use Google Analytics to Create a Single Customer View. To do that, first you have to implement the user-ID functionality and start collecting the unique IDs of your customers in a special Google Analytics user-ID view. Whenever there is a transaction associated with a user, generate a request using the Google Analytics measurement protocol.
This way all the data from your users can be tracked back in Analytics, and even imported in Google Ads. With such a solution in place, you can measure the true ROAS and optimize campaigns for paying customers, not just for free trials and tire-kickers.
Your success may be another story like our SaaS client, Output.com. They managed to raise $45 million in series A funding and scale from 0 to 100K subscribers in just 2 years thanks to a smart marketing strategy, mixing Google, Facebook, and YouTube Ads.
There is another SaaS marketing aspect some businesses overlook – organic traffic and Search Engine Optimization. See our 4-steps SEO strategy for SaaS to start getting valuable organic results.