Archive for the ‘Closing Sales’ Category

8 Barriers to SaaS Customer Engagement

Monday, August 8th, 2016

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What stops customers from engaging with your SaaS?

If you have potential customers who come to your website and show interest in your product but don’t actually make the leap from prospect to full-fledged customer, it may be due to one of the following reasons:

Here’s a list of best practices for crafting a strong call to action. Subscribe to receive this extra resource.

They Don’t Have the Financial Resources

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One of the main reasons people do not purchase from you is because they simply don’t have the money to do so.

Is your product priced out of their budget?

While I’m not a big fan of competing with other businesses on price, I do think that you should understand who your target customer is and know exactly how much they’re willing to spend. That way you can create a price list that makes sense for your market.

This is the reason multiple tiers are such a popular payment model for Saas.

Without a doubt, you should offer different prices to the different groups of customers you have. If you haven’t already, look for ways to do just that.

But please remember that price automatically communicates value. The higher the price, the more value people will associate with it. While you should always make your price fit within your target customer’s budget, don’t strive to be the lowest offer.

They Don’t Have the Time

Is your SaaS complicated to learn or in some way time consuming?

While your customers may be excited to use your product initially, they can quickly become overwhelmed if there are a lot of moving parts. Plus there’s simply not enough time to learn. Your customers—just like you—are strapped for time. For this reason, many a free trial goes wasted.

The best way to combat this is by making an onboarding process that guides the user at a steady pace. It may make sense to automatically involve the user in an email series that is dispensed over the course of the trial and shows how to use your product.

They Don’t Trust You

I hate to break it to you but sometimes people stop engaging because they just don’t trust you.

The good news is that you can use basic visual elements to develop trust.

For example let’s take a look at your website design:

  • Is it easy to navigate?
  • Does it look good on mobile screens? (Most people are searching the Internet from their smartphones these days.)
  • Do you have social proof in the form of customer testimonials or logos of businesses that use your service?
  • Do you have easy access to frequently asked questions or a knowledge base?
  • Do you offer security certificates for credit card logos or even a 100% money back guarantee?

All of these things will help your customer trust you with their credit card.

Transparency also makes a difference. Some customers are interested to know where exactly the money goes when they pay you. The folks at Buffer have a completely transparent payment model. Buffer customers get to see exactly where their $10 per month goes. Check it out here: Buffer’s transparent pricing.

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Image Courtesy of Buffer

They Don’t Understand Your Product

Sometimes people simply do not understand how to use your product. They may think they know but once they get into the dashboard, they find themselves confused, bewildered, and maybe a little scared.

You don’t want that, they don’t want that, and luckily, there’s an easy solution out of that.

It’s called an email course.

I’m really surprised at the number of SaaS that do not offer an onboarding process via email.

I mentioned earlier that an onboarding email series can save time for your user. That’s the side benefit, but the main benefit is that it helps your user understand how to use your product to the fullest.

Don’t skip this step. It will help your customers feel empowered. It will also make them more likely to use your product when they know what the heck they’re actually doing.

They Don’t Know How You’re Different From Your Competition

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Maybe your customer gets your service, but what they don’t get is how you’re different or better than your chief competitor, Widgets R Us.

It’s your job to educate them.

Many smart SaaS create comparison pages right on their website. They may even create a separate mini site, such as www.comparingwidgets.com (I made that up just for this discussion) where they highlight the top brands, obviously skewing to their own brand as the best choice.

Of course you don’t want to do a hatchet job on your competition. It’s not about tearing down the competition, it’s explaining how you are unique and what you offer that your competitors may not.

They Don’t Know if Your Product Is Customizable

A lot of new customers want the option to customize your SaaS for their own business or purposes.

Adaptability is huge. Do you offer the ability to customize your service? If you do, make it a clear selling proposition on your landing page. Also make it a part of your onboarding process.

They Need to Test You Out

If you have a SaaS and you don’t offer a free trial you may be losing out. Come on, offer a free trial—all the cool kids are doing it.

Free trials help you introduce your service without risk. That lowers the barrier of entry for your customers.

Plus, it gives you something extra special: it gets people on your mailing list which you can then use to sell to them.

Demos are extremely important for any SaaS.

However, don’t let your trial linger too long. Depending on your service, 15 days offers enough time for your customers to sample your service.

They Don’t Know What to Do Next

If you have followed my advice, you’ve already inserted the trial user into an automated email course. When the trial is almost over, it’s time to show the users how to transition from trial to premium.

This is where a strong call to action makes the dream work. Be sure you that you guide them to their next step—don’t assume they’ll know what to do.

Speaking of which, don’t miss our downloadable resource on how to craft a compelling call to action that you can find below:

Here’s a list of best practices for crafting a strong call to action. Subscribe to receive this extra resource.

Clinching the SaaS Customer Upgrade

Monday, July 25th, 2016

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How many customers does your SaaS have lingering on a freemium product tier? How many trial customers simply never upgrade and go to a paid service?

For every SaaS, clinching the customer upgrade is of utmost importance. It’s about boosting the lifetime value of the customer for your company, as well as hopefully generating loyal users who are advocates for your brand.

We’ve touched on strategies for getting customers to upgrade before, but this time around we want to look at a few extra ideas, such as how getting inside your customer’s head can help you make the sale…

How can SaaS clinch customer upgrades? Grab our checklist here.

Psychology of the Sell

It doesn’t hurt to understand a bit about what goes on inside a customer’s head when it comes to clinching a sale.

ConversionXL published a great piece recently about psychology and lead nurturing. The law of reciprocity was one thing discussed. Quite simply this means that the more you give, the more you are likely to get in return because people like to return the favor. As they state, this is a powerful strategy and should be deeply ingrained into any lead nurturing program.

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Source: Content Propulsion

Practically speaking for SaaS, giving might look like all of those tips you provide in your lead nurturing campaigns to help customers achieve success. Look to deliver unique value, something through which a customer could really see results.

How does this relate to clinching upgrades? Reciprocity again. If the customer sees great results from the information or tips you gave them, they’re more likely to want to pay you back by upgrading.

Exposure

This is another psychological principle outlined in the ConversionXL piece: when we need to make a choice about some product or service, we will usually pick the one we’ve been consciously or subconsciously exposed to the most. Humans favor the familiar.

This proves the importance of those emails you’re regularly sending out, the social media posts and the paid advertising. You can’t afford to take your foot off the gas once a customer signs up because you need to be ensuring that you’re still featuring often in their minds.

Lifecycle Emails

“Lifecycle emails” simply means sending the right email to the right customer at the right time. In terms of clinching customer upgrades, this means being on top of where customers are at with their free trial and which milestones they have or haven’t achieved. (Note: this could also be known as a “behavioral email”, though Totango treats them differently in the image below).

It will be difficult to convince a customer that they should upgrade to the next tier if they’re seeming to struggle with the free trial. Activation is the goal of SaaS here and this means that the customer has taken critical steps or used crucial features to the point where they are realizing value from the product.

If you know when customers haven’t achieved those milestones, this is where lifecycle emails come into play. Not sure how to place the code on your website? Here’s a quick guide. Need to know how to set up a new product? Follow these steps.

Of course the other side of lifecycle emails is getting in when the customer has achieved milestones and seen results. What’s next? Did you know that when you upgrade, you can access (X features and how they help)?

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Source: Totango

Use Promotions or Not?

Whether or not to use promotions to encourage upgrades is often debated among SaaS experts. On the one hand, people worry about devaluing the product or having people sign up simply because it’s on promotion, on the other hand, a well-run promotion can help draw a large number of upgrades.

If you’re going to do it, we suggest being very targeted about how you go about it. It would be easy to blast a promotion all over social media then have all-comers sign up, but you probably won’t get the numbers sticking around which you aim to have in the first place.

A more effective way of using promotions can be to segment your current audience based on their activities and make an offer only where it is relevant. For example, you might offer freemium customers who use your product at least twice per week a free one month upgrade to test out additional features. This way, you’re only targeting people for whom your promotion will have relevance.

Reach Out in Person

Many SaaS are reluctant to pick up the phone. You’re busy with a dozen different things in your business and the online nature of SaaS can push more old-fashioned methods further out of mind.

When you think about the standard kind of SaaS onboarding process, it tends to be very low-touch, especially in lower-priced SaaS who are not necessarily targeting an enterprise market. Often the process goes something like: customer signs up to free trial or freemium tier after finding your SaaS through some kind of online marketing, customer receives a few emails telling them how to use the product or giving success tips, trial period ends, customer either signs on or leaves.

It absolutely makes sense to have a process like this because that’s how you get to scale a SaaS, but if you don’t talk to people, how do you know what they’re really thinking or feeling about your product? The advantage of picking up the phone, even for just a sample of your clients is that you get actual immediate feedback. The customer may be more inclined to provide extra feedback which they might not if they’re filling out a survey or typing up comments.

Talking to your customers over the phone is also a good way to build relationships and increase trust. You’re putting an actual concerned voice behind your SaaS and are there to listen to the customer. You get to address any concerns they have and can more easily speak to the advantages of upgrading by relating directly to the customer’s own situation.

Value is Number One

The twenty extra features you provide with an upgrade might seem like good value to you when you consider your development costs, but that does not mean they will equate to value for your customers.

Value is rooted in customer success and may look slightly different for any given customer. The savvy SaaS stays in tune with customer sentiment and understands exactly what their clients are looking for in terms of value. They’re not going to upgrade for the extra twenty features, it’s more likely that they will upgrade for that one feature which signifies value to them because it makes something significantly easier in their lives.

This is where taking the time to reach out in person can yield very useful information. Are there any common themes coming out across your customer base? In a Price Intelligently study for example, they found that the model of allowing extra users on an upgrade is rarely perceived to be where value is found for users. What do users care about instead? Generally measures that impact their bottom line or ability to accurately measure, such as new contacts, extra sales or reporting functions.

For most SaaS, if you build a model based on upgrading for extra users, there is a natural ceiling in terms of number of upgrades that you get. Say your SaaS product is a reporting or analytics tool, how many people in one company realistically need to use it? This is definitely something to consider when creating your pricing tiers.

How can SaaS clinch customer upgrades? Grab our checklist here.

Final Thoughts

There’s no way around it, clinching customer upgrades means a lot of work for SaaS in terms of following through with effective lead nurturing strategies.

The psychology of getting the sale really underpins everything that you do in the pursuit of customer upgrades. Making sure you have sufficient exposure and deliver value with timely lead nurturing efforts is key.

How does your SaaS ensure sign-ups are realizing value?

Product/Market Fit for SaaS

Monday, July 11th, 2016

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Most SaaS spend quite a lot of time agonizing over product/market fit. It’s not surprising really, we all know it’s important, yet everyone has their own opinion on what exactly it is and when it has or hasn’t been reached.

Are you a premature self-declarer of product/market fit? There are some commentators (and yes, they have some evidence of this) who claim that this is a rife condition among SaaS. We all know what happens when you’re prematureyou don’t reach the goals you’re really meaning to hit when it comes to growth.

Marc Andreessen is the guy largely credited with posing the term “product/market fit.” His definition: “Product/market fit means being in a good market with a product that can satisfy that market.”

The three main components which fall into the equation for any SaaS are their team, their product and their market. If you agree with Andreessen, market will always win. For example, a terrible team can still do well in a buoyant market, an excellent team with a top product which has no demand in the marketplace will fail, while good teams with an amazing product who have nailed a market demand will do extraordinarily well.

Everyone has an opinion, so let’s look at a few prominent ideas on product/market fit.

Ben Horowitz – Myths of Product Market Fit

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Ben Horowitz – Source: Salon.com

Ben Horowitz is of course a partner and co-founder of the Andreessen Horowitz venture capital firm, along with Marc Andreessen. Together they also founded the hugely successful Loudcloud and Opsware, both of which were sold for large sums of money. So, you know, Ben brings solid experience to any discussion about SaaS and product/market fit.

The “myths” we’re talking about here were actually from an excellent article he wrote back in 2010 to debunk some of the popular notions of product/market fit. Largely, what he’s saying is that a popular view of “find product/market fit then raise a stack of cash to build a big company” is often not that simple, even if it would be nice!

What simple tools can you use to test SaaS concepts? Grab our free guide here!

Here’s why:

Product/market fit is often not one big event

There is such a thing as getting only a partial fit and perhaps getting to a more complete fit in stages:

“By the time it got acquired, Opware had achieved product market fit for a category of software called data center automation.But it wasn’t at all obvious that was going to be our destination while we were getting there. We actually achieved product market fit in a number of smaller

Sub-markets…”

We’ve known dozens of other SaaS with similar stories, where they’ve had to “tweak” to find an overall fit as they went along.

Briefly, here are Horowitz’s other three product/market fit myths:

  • “It’s obvious when you have product market fit.” What measure do you use? How do you know? It’s not obvious for most.
  • “Once you achieve product/market fit, you can’t lose it.” Not true and Horowitz experienced this with changes in the cloud services market.
  • “Once you have product/market fit, you don’t have to sweat the competition.” Hey, some of the best markets to be in are the hottest for competition. You’re always going to have to be on your toes.

Product/market fit might happen in a nice tidy line for some SaaS, but for many it is not linear at all. Sometimes it happens in a more circular fashion as SaaS discover that true market fit as they go along.

At the same time, you’re always going to have to be monitoring the market and your competitors. Things can change in the world of technology in a heartbeat, so a good fit today doesn’t mean that won’t change next month!

What If You Don’t Get It Right the First Time?

Many SaaS don’t get product/market fit right straight out of the gate. Joel York suggests adopting “try, try again” as a motto in this instance, though of course you may need to rustle up another funding round.

You don’t want to be in this situation as outlined by Marc Andreessen:

“…you see a surprising number of really well-run startups that have all aspects of operations completely buttoned down, HR policies in place, great sales model, thoroughly thought-through marketing plan, great interview processes, outstanding catered food, 30″ monitors for all the programmers, top tier VCs on the board — heading straight off a cliff due to not ever finding product/market fit.”

There’s often a lot on the line for a SaaS, so if you haven’t quite got product/market fit right, systematically try things based on better customer alignment is a good way to get closer to your fit. As Joel York says:

“In other words, you need to create a continuous loop of SaaS customer feedback and SaaS product development that increases product-market fit on each iteration: listen, build, deliver…listen, build, deliver…try, try, try, again.”

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How Do You Know You Have It?

Brad Feld posed some interesting points in his article “The Illusion of Product/Market Fit For SaaS Companies” last year. In his experience, many SaaS are prematurely declaring that they have product/market fit without really having a clear science around the concept.

It’s definitely a buzzword term which gets tossed around Silicon Valley boardrooms a lot, though Feld argues that what many perceive to be product/market fit is merely the illusion of it.

He proposes a hypothesis of product/market fit based upon MRR (monthly recurring revenue), which builds upon the myths identified by Horowitz. See what you thinkwould you agree with these parameters?

$0 MRR: You have no product/market fit. Can’t argue with that!

$1 to $10k MRR: You have the illusion of product/market fit. Someone is paying you for your product but Feld proposes that this level is a long way from true product/market fit. This is where you should keep going with you customer feedback loop and systematically testing.

$10k – $100k MRR: This is the point where raising a series A isn’t so difficult. Feld does warn that if you’re not growing at 10% per month compounded, you haven’t quite got it right just yet.

$100k – $500k MRR: Sweet! However, don’t think you’ve nailed it just yet. According to Feld this is where you can be in danger of thinking you can’t lose product/market fit (myth #3), whereas you could just be one bad sales hire away from doing damage.

$500k – $1 million MRR: Eureka! You have product/market fit, though you are never out of the woods as far as maintaining it. Keep an eye on your growth rates, changes in the market and what your competitors are doing. If you are at this level, there will always be someone else gunning for you.

Feld describes the search for product/market fit as a never-ending quest. Every time you put work into developing a new feature, you are searching to remain relevant, to build that incremental product/market fit.

In other words, like any other business, SaaS cannot afford to rest comfortably, secure in the knowledge that their product/market fit is stable. Remember what happened to American railroad companies in the early 20th century?

It was the classic case of believing that they were in the “railroad business”, therefore automobiles were not a threat. The thing was, really they were in the “transportation business” and developments such as trucks for moving freight and cars that were not stuck to set tracks sent many of them bankrupt. Always be monitoring and innovating!

What simple tools can you use to test SaaS concepts? Grab our free guide here!

Final Thoughts

Ok, there’s a lot to consider when it comes to product/market fit. Those who don’t recognize that perhaps they’ve declared product/market fit too early or only have the illusion of it, can be in danger of a severe wake-up call.

Product/market fit is almost never a linear process; SaaS need to have strong customer feedback loops and be able to systematically test features to reach that fit.

Even if you’ve reached the heights of $500k+ MRR, that’s not a sign to sit back. Keep monitoring the market and your competitors so you don’t go the way of the railroad companies!

5 In-Person Ways To Bring In New SaaS Clients

Monday, May 2nd, 2016

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SaaS by their very nature tend to operate almost exclusively in a digital environment. Communication tends to be by email, live chat, social media, contact forms or over the phone, but in-person is much more rare, especially for SaaS not targeting the enterprise level.

However, old-fashioned interpersonal skills definitely have their place, especially for SaaS who are wanting to try different methods to bring in new clients.

There are times when remote communication falls short—it can be misunderstood, missed altogether or filed away for “later.” This is where making strong, personal connections can be a viable alternative.

Here are five ways to get out there and bring onboard clients in-person.

Where can you meet up in 2016? Grab our free conference list here.

#1. Events

Events could cover a broad spectrum of gatherings that your target customers are likely to attend. These could include trade shows, conferences, trainings or niche industry events. Your role there could be as a participant, exhibitor or guest speaker.

[tweetthis]Choose events carefully. How likely is it that your target audience will be there?[/tweetthis]

The Participant

You’re going to want to send someone who is very comfortable in social situations, personable and approachable. Their mission is to get out and meet as many people as possible, preferably people who are in your target group.

Tips:

  • Many conferences and events publish lists of participants ahead of time. You can always look through that list and target specific people to meet.
  • If you can, arrange to meet with people at the conference before attending. You could always grab coffee during a break or a drink afterwards.
  • Technology can still play a role. Usually you would be handing out business cards, so make it easy for people to get to your website or landing page by including a QR code on the card.

The Exhibitor

Relevant trade shows as well as many big conferences (like SXSW) provide great opportunities to set up a booth as an exhibitor. These can run to a fair bit of money to book and set up, so you do want to be very targeted about only attending events that should have a large number of your ideal clients.

Keren Phillips of Weirdly attended a conference in their HR niche and wrote about what they had learned from the experience. A key point she makes is that you don’t need to spend big to get noticed; the important part is keeping in perspective what you’re trying to achieve.

They needed to look lively and interesting, so they bought some blow-up palms rather than renting expensive potted plants. They needed a big screen to run demos and found that while two days hire would have cost just over $800, buying one cost around $400. They then gave it away as a prize on the last day.

Tips:

  • Again, send your personable people! It’s about connecting with people on a personal level.
  • Positioning is important. You don’t want to languish in the back corner.
  • Have simple ways to gather sign ups or prospects. For example, Weirdly put together one of their quizzes specifically for the event, tweeted it out, and had people complete it during their talk.
  • Make it fun. Have desirable merchandise and activities that keep people interested.
  • Be able to easily show a full demo and explain the value of your SaaS to prospects.
  • Get to know other exhibitors—they could end up being your customers.
  • See Keren’s tips on nutrition, hydration, clothing and pre-preparation. You may be in for some long days.

weirdly-artist

Here’s a cool gimmick idea from Weirdly: They hired an artist to do caricatures of anyone who wanted one (which was most people!). The artist drew on the plain side of a heavy card flyer, which also featured Weirdly’s logo, and which had info about their product on the other side.

The Speaker

Whether your SaaS is hosting its own conference or you are speaking at someone else’s event, the important part is that connection you want to make with potential customers. Speaking tends to be more about exposure and personal branding, but it can be a good way to build up a following who could become customers later.

Tips:

  • Provide relevant, actionable tips and try to get some audience interaction going.
  • Try speaking at events where there are other key players you would like to meet, for example, in order to form partnerships.
  • Make it easy for the audience to find you. Use slides and have website details up.

#2. Get Out To Prospects

If you’re looking to onboard some bigger clients (enterprise, for example), actually getting out and meeting with prospects can be a good strategy.

This gives prospects the chance to ask questions and for you to demonstrate in-person how your SaaS works. From your perspective, actually meeting with someone one-on-one can also give you a much better opportunity to figure out what their needs are and what value looks like to them.

Many early startup SaaS are on very tight budgets and aren’t inclined to travel a lot, but start with your local area, then always plan to meet with prospects when on any incidental travel. Often prospects find it easier to deal with a human face rather than trying to figure everything out remotely.

#3. Complementary Businesses

Which businesses in your area are complementary to yours and target a similar audience to your own?

Get out to those businesses and introduce yourself. Whether you form some kind of affiliate partnership or more of a “gentleman’s agreement” to promote each other, this can be a good way to tap into a new source of ideally targeted customers.

For example, if they are sending out regular newsletters or invoices, you could have an offer for your SaaS included in the email or physical letter. This can be a win-win-win: the other business gets goodwill from customers for offering an extra perk, the customers get a discount offer and you get new customers.

#4. Local Business Groups

Sometimes we forget that there is life happening beyond our computer screens. While digital methods can net you large numbers of customers, it doesn’t hurt to build your personal profile out in the “real” world.

Get involved in your community and join local business groups such as Chambers of Commerce or Young Professionals groups. While you may or may not find ideal customers are members, it’s about building connections—they probably know people who could benefit from your service.

Group members are often well-respected members of their community, so these are great people to get to know. It’s also where you can find out the latest business news for your area—are there new offices being fitted out and businesses coming in who could be good customers?

#5. Business Workshops

There are B2B workshops happening all the time, often hosted by organizations such as BNI. Find clients by being a participant or guest speaker, asking permission to post flyers, or making an offer to workshop participants.

Again, it’s about raising the profile of your SaaS among your target market. The more you are seen out and about (and all over the web), the more likely you are to come to mind when someone is looking for the service you provide.

We recommend you do your homework first though, as in-person meetings and events tend to take up much more of your time and resources than say, inbound marketing or paid advertising. Be very selective about the places you choose based upon the likelihood of finding target customers.

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Where can you meet up in 2016? Grab our free conference list here.

Final Thoughts

Getting out to in-person meetings and events can help to grow your SaaS by boosting your profile and by making a personal connection with people. It gives you the opportunity to showcase your expertise and really learn about the needs of the prospect.

Try attending events and conferences, joining local business groups, meeting prospects and complementary businesses in-person and having a presence at business workshops.

These things can take up a lot of time, but they can also be a valuable source of personal connections.

How To Develop The Right Loyalty Program For Your SaaS

Monday, April 18th, 2016

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How does your SaaS develop loyalty and effective referral pipelines?

In the competitive SaaS market, your business needs every advantage it can possibly use to get ahead. Developing rewards and loyalty schemes can both help you to grow your customer base and keep the ones you already have. They are also great for increasing your visibility, as we’ve discussed previously.

Many successful SaaS are turning to loyalty and rewards programs throughout different stages of the customer lifecycle. How do you decide what is right for your SaaS? We’ve got a few ideas…

Want some good SaaS reward examples? Grab our free guide.

Rewards For Loyalty

Outside of incentivizing current customers to refer others, rewards for loyalty to your SaaS can have good results. The caveat here is that you need to know what you’re doing—certainly not every loyalty scheme is effective, so let’s look at how you can create one to get better results…

Make it Meaningful

For a subscription-based SaaS customer, a loyalty program is not going to be quite the same as getting their coffee card stamped every time they purchase at their local café. What makes those coffee cards great? The reward is meaningful—it’s something that the customer already likes and can use.

SaaS could choose to reward loyalty over time, for example offering some kind of extra feature, free month, discounted pricing or other reward that aligns with the type of people who use your product for every year the customer sticks with you. The idea is that by offering them something closely related to the product (rather than say, sending them chocolates), you already know that the reward is useful to them.

Make it Attainable (and Simple!)

Ever seen one of those airline miles programs where the awards are so elusive, or so steeped in conditions for what you can redeem them for that they’re not really worth doing? This is just frustrating to any customer and will probably lead to them giving up.

Loyalty and rewards schemes are much more effective if awards are clearly attainable and simple to cash in. If you set too many complicated rules around your program, you may as well not bother.

Consider Tiers

It’s often a matter of ego to think that we’re privy to a more elite reward class. This is one the airlines use all the time and it has the effect of encouraging more purchases. Could this work for SaaS? Well, you probably have different tiers of subscription already, so why not tie in your rewards?

Amazon Prime is a good example of how offering something extra to a more elite tier can encourage purchases. While they are estimated to make a significant loss on their free two-day shipping offer for Prime members, they make up for it by the significant increase in spending of Prime members over non-members.

Set Goals & Monitor

How will you know if your loyalty scheme is a success? Set specific goals for what you want it to achieve and monitor how it works over time. You want to remain relevant to the customer and ensure that your loyalty scheme actually does provide them with some incentive. If you’re not sure, ask. Send out a quick survey or call a few clients and ask them whether the loyalty scheme is a motivator for them.

Rewards For Referrals

Know Your Referral Stats First

As Tommy Walker points out for Conversion XL, before you implement any kind of reward or referral program, your best course of action is to understand your current referral data. How many of your customers came to you because another existing customer referred them?

As he explains, ideally you will have something set up in your analytics which allows you to track customers who are coming in from shared links. Alternatively, you can always simply ask customers how they found you to at least get a rough idea.

It’s important to know your current referral stats first because you want a baseline for any program you put in place. Most SaaS will already have some referrals coming in, whether you’ve officially asked for them or not, so it’s worth knowing about.

Find The Right Incentive

What makes people refer friends to your SaaS? Dropbox is well-known for its rapid growth over a short period of time, largely attributed to referrals, but funny enough, they found that their “free space” giveaway was what made people share, rather than what made people sign up.

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Source: ConversionXL

As Marketo show, referral programs could be:

  • One-way (the referrer receives a reward for successful referrals).
  • Two-way (both the referrer and the referee are rewarded).
  • Third party (a referral offer is made when you purchase something from a partner company).

What’s going to work for your SaaS? It’s worth testing to find out, but we would start with knowing your customer profiles very well and taking your best idea of what would be a good motivator for them. Again, you can always ask them! “What motivates you to refer friends to (our SaaS)?”

yesware-referrals
Yesware is a good example of a one-way referral program. Referrers earn redeemable points for successful referrals. Image source: Referral SaaSquatch on Slideshare.

Make it Easy

When you think about designing the flow for how your referral program will work, consider how easy it is for both the customer to refer and their friends to accept the referral and join up. Generally, the less clicking about and different screens involved, the better to ensure people follow through.

How can you make it easy? The Yesware example above is a good one, with fields pre-populated to make the process faster. Simple social share buttons is another good way, such as shown by Free Agent below…

referral-share-buttons-badge

Again… Meaningful Rewards

If you’ve got an excellent product, you’re probably finding that happy customers want to refer others who could benefit too anyway, but still ensure that any rewards are meaningful.

Some companies have used incentives such as drawing entries for electronic prizes, gift vouchers or vacations, but beware that these won’t always have the desired effect. If you use a reward that everyone wants (hello ca$h!), you could end up with a bunch of “freebie seekers” signing up who don’t really fit your ideal customer profile.

A solution to avoid this could be to reserve those juicy prizes for existing customers and use incentives such as a free month for new sign-ups.

Want some good SaaS reward examples? Grab our free guide.

Invest In Retention First…

There is no sense in initiating a referral scheme if you don’t have good retention strategies in place first. This quote from Robbie Kellman-Baxter sums it up well:

“Don’t invest in acquisition until you know you can retain them. If you do, you’ll end up with a sieve, not a funnel.”

Final Thoughts

Rewards and loyalty schemes can be a great boost to both your acquisition and retention, as long as you have set them up well.

Any rewards offered need to be meaningful to the customer and you need to have a simple system for them to cash-in.

Be very clear on your goals and what your baseline measures are to start with, so that you can clearly see whether or not your program is successful or needs work. That includes understanding whether or not you are drawing in appropriate customers with your reward scheme.

Finally, retention needs to be a priority before investing in any referral scheme for acquisition. You want to be able to keep those who come onboard…