Last Updated on September 1, 2023 by David
Guest Post by Lisa Michaels
In almost any business, acquiring new customers can be costly. Research shows you’ll spend more money gaining a new customer than keeping one.
For a startup, this presents a massive problem. You don’t have much cash lying around, but you need to bring new business through the door. This can be even more complicated if your startup is a SaaS (Software as a Service) company.
SaaS and Customers
The top limitations for a SaaS startup are:
- selecting the right market and delivering the right business solutions
- competing with established or fast-growing companies
- lacking proper business models or support systems
Customer acquisition is essential because it drives your sales and profit margins. It affects your ability to fund your business, clear the bills, and pay your employees.
Research and marketing expenses quickly pile up. You also have to factor in the price of the channel used, location, and the number of salespeople involved.
So, what can you do to lower this cost? Read on for some tips.
Simple Ways to Reduce Customer Acquisition Costs
With a limited budget, a SaaS startup has to be wary of how they manage their funds. Most times, SaaS startups offer innovative solutions that the public is unaware of. Unfortunately, that means they may have to spend a lot to inform and attract new customers.
Since you don’t have the option of spending freely, you have to use various tricks to do the job. Here are some simple ways of reducing your customer acquisition costs:
Calculate your Current Acquisition Costs
First, know your numbers. Calculate your current cost of getting customers. Next, determine the lifetime value (LV) those customers will bring to your business.
If it costs more to gain the customer than the lifetime value they provide, it will be an unsustainable business model and your business will fail.
You should start looking for ways to improve these numbers. For example, it may be that you are marketing to the wrong audience. Or, maybe, something is lacking in the service you are providing.
Your customer acquisition efforts will only pay off if you’re marketing your business on the right channels that your target audience frequently visits too.
You can also look at the competition for how they approach pricing and marketing their services. They might be more expensive than you, but how much value do they promise for this price? Are you selling yourself short or overpricing your services?
Ensure your customer service teams improve their customer engagement efforts. Have them boost the customer experience and increase the quality of the conversations.
The sooner you can convince leads to become customers, the cheaper it will be for you.
Tighten your Unique Selling Proposition (USP)
Look at your service and establish what your unique selling proposition (USP) is. Are you too vague when presenting your USP? Does it sound like it might represent any other company in your industry?
Having a clear idea of your USP and articulating it well will reinforce your brand message. Staying on brand creates loyalty and differentiates you from your competitors.
As a SaaS startup, you have to be different to attract customers. The more unique you are, the more your solutions will appear exclusive. Customers will always want to pay to access exclusive features or services.
Tighten your USP messaging and use it across all channels. Remember, people don’t want to buy a product — they want to buy a solution to a problem.
Chase Only Qualified Leads Using Detailed Buyer Personas
With your cost calculations and USP taken care of, it’s time to review your customer. Failing to identify and understand your customer will use up a lot of your budget. That’s because you’ll be chasing unnecessary and unqualified leads to no avail.
To combat this, create detailed buyer personas. Learn everything about your customers, such as their age, values, identity, and occupation. Decide what factors will make them the perfect target for the solutions you are offering.
Once you have this data, it will be easier to get more specific with your messaging. You’ll be able to tailor your solutions toward your targeted customers.
If you’re a B2B SaaS, this can be particularly important because you’ll need to approach the relevant people in a company with the power to make purchasing decisions.
Automate Marketing Processes
The best cost-cutting measure you’ll ever take is automating everything possible. Start by automating your marketing processes. Use various tools that will engage and nurture the customer throughout the sales funnel.
For example, automate getting new subscriptions and sending personalized emails. Set up landing pages and have multiple Call-To-Action (CTA) messaging. Review the data collected to spot any areas that need improvement.
A great tool you can use for customer service and engagement is Re:amaze. It supports and combines customer conversations from multiple channels, including email, social media, website chats, and mobile phone communications.
Re:amaze offers chatbots to engage customers when you are away. Once you are available, you can chat with your customers in real-time. Moreover, it can send automated retargeting messages to customers based on their choices.
Use Content Marketing and Search Engine Optimization (SEO)
Content marketing is a valuable and affordable strategy for SaaS startups. Combining it with SEO exposes your product to new audiences. Then, this optimized content works for you to convert new leads into paying customers.
Many startup business owners use content marketing to establish their brand. It helps them show their knowledge, authority, and credibility in the industry. It guides potential and current customers on how to use the company products.
In the beginning, you can create the content by yourself. All it will take is a computer, internet connection, and maybe a camera. Write articles or make videos about your business and your software solutions.
Consider at which stage in their journey your potential customers are and what they want to know. For new leads that have a problem and are looking for solutions online, write a post about overcoming that problem and mention how you can help.
If they’re already familiar with your product, an explainer video showcasing your unique features might be the final nudge they need.
The great thing about content marketing and SEO is that they continue to pay off over time and continually draw in new customers without you having to constantly inject a lot of cash into it.
Work on Customer Retention
Finally, remember that customer retention is cheaper than acquisition. Protect yourself from incurring future costs by treating your current customers well.
Offer discounts or extra services to your customers when possible. Allow them to be loyal to the brand by becoming affiliates or giving referrals. Keep in touch with personalized emails and updates on product upgrades.
Over time, your customers will become your best ambassadors if you consistently meet their expectations. This will prompt them to recommend your services further, and you’ll gain a new customer for a fraction of the regular cost.
Get New Customers and Keep Them
The biggest hurdle you will face in your business is finding and retaining customers. Without a constant influx of buyers, it’ll only be a matter of time before your startup shuts down. Even so, acquiring them should not damage your budget or cash flow.
Keep track of your acquisition costs. Ensure the customer’s lifetime value is always higher than the price of getting them. Once they become buyers, keep them loyal by ensuring their experience is positive at every level of interaction.
Use SEO content marketing and automate other marketing processes. Automation will lower your employee costs and maintain a healthy cash flow. With this greater liquidity, your SaaS startup will be able to meet its financial and operational needs.
About Re:amaze
Re:amaze is a modern helpdesk and customer messaging platform designed to help eCommerce businesses boost customer happiness and revenue. Re:amaze allows all customer-oriented teams to work together in a shared inbox through email, social, SMS, voice, and live chat. Re:amaze also comes packaged with automated messaging and chatbots so eCommerce brands can succeed at the front lines of conversational commerce.
About Lisa
Lisa Michaels is a freelance writer, editor, and a thriving content marketing consultant from Portland. Being self-employed, she does her best to stay on top of the current trends in business and tech. Feel free to connect with her on Twitter @LisaBMichaels.