CAC Strategy is the Key to Scaling your SaaS Company

aaron bird bizibleStarting a SaaS company and scaling a SaaS company are two very different things.

The same is true for “scaling” a SaaS company in the very early days vs. scaling a SaaS company through the growth phase.

And since every company is different and experiences those “phases” at different times in different ways, you have to be careful with blanket statements about what works and what doesn’t.

Everything is situational, which is why when you read a post where the author says Customer Acquisition Costs (CAC) doesn’t matter, you need to understand the big picture.

Perhaps what you missed was when he said they don’t matter in the early days.

Or maybe you missed the part about how that post was talking specifically about heavily-funded startups with 6-figure Annual Contract Values (ACV) and an Enterprise sales model.

The reality is, every person that writes about SaaS metrics is doing so with certain situations in mind and if you aren’t in the situation the author is talking about, then you may wish to consume that writing with a pinch of reality salt.

Not because what the author said isn’t true, but because it might not be true for your current situation… for your current reality.

Which is why when my friend Aaron Bird, CEO and Founder of Bizible (they’ve raised $10.5M since mid-2011), was talking about how a SaaS company’s Customer Acquisition Costs (CAC) Strategy (and Efficiency) is key to scaling I asked him if he’d share that with the world… and he did.

I have a couple of things to add in the Afterword below, but for now I’ll turn it over to Aaron…

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Let Your Customers Write Your Marketing Copy

sujan-patel-when-i-workI spend a lot of time talking to SaaS companies about how they should identify their Ideal Customers, understand how they operate, know what their Desired Outcome is, listen to what they say, etc. etc.

Whether it’s a focus on acquiring new customers, working to engage prospects already in the pipeline or customers you’ve just acquired… or nurturing and growing your long-time customers, knowing how they operate and the words they use in those operations is critical.

Well, a friend of mine took this idea of “listening to what your customers say” to the extreme by literally getting his customers to write his marketing copy for him. Genius!

His name is Sujan Patel and he’s VP Marketing at When I Work, an HR SaaS product specifically for companies with hourly employees (and the scheduling headaches therein) and I’ll let him share exactly what he did and how it worked out.

Take it away Sujan…

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Exposed! A Top-Secret “Enterprise Pricing” Growth Hack

enterprise-leadWhen it comes to SaaS, you basically have two sales models: high-touch and self-service. Small, bootstrapped SaaS companies often like to go the low-touch, self-service way.

Large, venture-backed startups often like to take the high-touch, Enterprise sales approach.

And sometimes it’s the opposite of that. It depends.

There are just so many different factors that come into play in making the decision about which model to use – not the least of which is who you’re selling to – that it’s simply beyond the scope of this article.

While high-touch Enterprise SaaS vendors could certainly learn a thing or two about sales process optimization from what’s below, this is more aimed at low-touch or self-service SaaS vendors that have a “contact us for Enterprise Pricing” option on their Pricing page.

But why is this necessary if you have a self-service sales model? Well, read on…

I’ve given this advice to my clients over the years and countless times via Clarity, so I thought I’d just share it here once and for all.

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The Only 3 Acceptable Pricing Page Discount Tactics

discountsI get this question from time to time:

“Lincoln, is it okay to offer discounts right on your pricing page?”

Short answer: No.

The longer answer, with some nuanced yesses thrown in,  along with some tactics that you can employ, is below…

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Engaging at Scale: The Secret to Automating Personal Emails

Customer Success bot transparentAbout a year ago I shared my super top-secret way to automate personal emails more effectively – called the “Customer Success bot” method – with the awesome folks on my mailing list.

Since then, I’ve come up with several new uses for this framework that have proven to be incredibly effective ( I’ve shared those below) that go far beyond just the welcome email that started all of this.

Now some people will wonder why I share these things publicly when they’re obviously incredibly valuable – and make no mistake, they are INCREDIBLY valuable – but releasing them publicly won’t diminish that value.

And personally, putting these things out there for the world to see just forces me to get even more creative to stay ahead of the pack.

But first, let me give you a little context…

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5 Growth Hacks to Supercharge your Invite or Referral System

invite-a-friend-or-7When was the last time you referred your friends or invited co-workers into an app after you just signed-up for the free trial?

When was the last time you imported your address book right after you opened an app for the first time?

Right.

So why do you expect your users and customers to behave differently?

Unless you have specific intel indicating they will share your app with everyone immediately after first interacting with you (like, for instance, my Mom is your target audience), then you should probably assume they won’t.

And if you sell to a B2B Audience, you should double-down on that assumption.

Here’s why and how to overcome that…
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The Myth of Unavoidable Churn

Screen Shot 2014-12-09 at 10.05.51 PMWhen it comes to customer churn, there are two kinds: avoidable and unavoidable.

But I guarantee that the amount you label as “unavoidable” is actually much smaller than you think.

I know, but…

“Most of our churn is out of our control, so it’s unavoidable”

“We sell to SMB and in that market churn is inevitable.”

Accepting that churn is inevitable since x% of companies fail every year is like saying why workout, you’re just gonna die anyway.

But the excuses continue…

“We have a low price, so of course we have high churn.”

“We sell to [a certain market segment] so of course churn is high. That’s just how this works.”

“We sell to a very transient market, so of course churn is inevitable”

Unavoidable. Inevitable.

To paraphrase a monologue from this Seinfeld episode:

seinfeld-low-churn-meme“No matter how desperate we are that someday a better customer will emerge, with each notice of cancellation, we know it’s not to be; that for the rest of this sad, wretched pathetic quarter, this is who we sell to, to the bitter end. Inevitably, irrevocably; low churn? No such thing.”

The catalyst for this post was what Gainsight CEO Nick Mehta said on a webinar the other day on Budgeting for Customer Success in 2015 (check out the archive here), so I thought I’d invite Nick to elaborate on this a bit since SO MANY SaaS – and other types of companies – make this costly assumption.

Take it away Nick….

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Customer Success: Achieving their Desired Outcome

Desired Outcome - try again-2So… what does Success look like for your customer? That’s the question that’s at the base of my wildly popular “The Secret to Successful Customer Onboarding” article.

But it’s not actually a very good question. What does “success” look like for your customer? What does that even mean? Unless it’s a hard ROI, that’s a tough question to answer.

So I always found myself moving to different ways of phrasing basically the same question. And when you do that – when you have to say “in other words,…” next time just start with the “other words” and move past the confusion.

So now I ask about your customer’s Desired Outcome… but even that easier-to-understand concept has it’s nuances. Let me explain…

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The Secret to Successful Customer Onboarding

the-best-way-to-onboard-new-customersCustomer onboarding has come up a lot lately, which is great since having a poor onboarding experience for your customers can pretty much kill your growth… if not your business.

The first in-app experience your customer has with your product sets the tone for your relationship, and if it’s confusing, overwhelming, or otherwise puts up barriers to achieving success (or at least recognizing the value potential in your product), you’re in trouble.

As I say all the time, the seeds of churn are planted early, and those seeds are planted deep if your onboarding experience for new customers or your prospects during a free trial is terrible.

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7 Sanity Checks for Sending Cold Email

Screen Shot 2014-09-22 at 7.06.26 PMEmail Prospecting, the once-secret method (still) used (to great effect) by the hottest companies to get the attention of the biggest enterprises out there – even if all they talk about publicly is inbound marketing, adwords, and social – is no longer a secret.

Thanks to folks like Jill Konrath, author of Snap Selling, Aaron Ross, author of Predictable Revenue, and Steli Efti from Close.io, the cat’s out of the bag that sending emails to people you’ve never met before in order to get their attention and get your product in front of them doesn’t just work… it is often required and can be super-effective.

This isn’t to say that blogs, social media, AdWords, etc. aren’t useful… they’re ENORMOUSLY useful to accelerate deals, elevate and educate various personas at your Ideal Customers, etc. But it is to say that these methods may not be the way you reach potential customers initially, especially in the early stages of your existence. And in some cases, they may not be how you reach your potential customers ever.

Now, after they know about you, as a result of outbound “cold” email campaigns, or once they’re a customer to drive loyalty, your blog, white papers, webinars, infographics, and marketing website etc. are super-valuable; just sometimes not at first…

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