SaaS Customer Acquisition: The Complete Guide

Published on

November 8, 2023

Growth
8 min

SaaS Customer Acquisition: The Complete Guide

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When it comes to scaling a SaaS business, customer acquisition is key. 

But the truth is, most people’s approach is all wrong—and you might even be one of them!

If you spend your time chasing leads and managing countless short-term marketing campaigns, you’re going to want to pay attention. 

SaaS is a finicky business that requires long-term strategy and way less focus on sales activation than you might have been led to believe. 

In this article, we’ll explain two key neglected aspects of customer acquisition as well as top SaaS customer acquisition channels and strategies. 

Let’s get started.

What Does SaaS Customer Acquisition Encompass?

Customer acquisition is all about how marketing and sales work together to bring new customers to your business.

In terms of SaaS, this includes everything from the first point of contact to when a customer finally signs up for your service. 

Identifying your market and customers are crucial first steps in customer acquisition. Then, you have to figure out how to effectively communicate with customers as they move through the stages of consumer decision-making.

Understanding this process is essential for scaling a SaaS business. It helps companies determine how to prioritize their time and resources in order to drive sales.

But to acquire new customers, you’ve got to spend money. The amount will depend on several factors including your marketing channels, advertisement efforts, sales team, and more. 

The total cost required for a business to get one new customer is what is referred to as the customer acquisition cost (CAC).

To calculate this key metric, you need to consider your total spending on sales and marketing during a specific period and measure against the number of newly acquired customers over the same period.

This includes:

  • Employee salaries
  • Sales commissions
  • Ad spending
  • Software tools
  • Vendor Costs
  • Etc.

CAC = (Total Marketing and Sales Expenses) / (Number of New Customers Acquired)

saas customer acquisition

The goal is to get loyalists and amplifiers for your business while keeping the average acquisition cost for your SaaS relatively low. 

Easier said than done!

SaaS: Why Your Customer Acquisition Approach May Be Wrong

As you know, SaaS is a very appealing business model because most customers have very high Lifetime Value (LTV) thanks to the subscription model.

It’s also (theoretically) infinitely scalable, since costs only marginally increase from 1 to 1,000 users or from 1,000 to 100,000 and up.

This, coupled with cheap money in the past 10 years, has prompted SaaS companies to focus on getting as many people in the door as possible with lots of short-term sales activation campaigns.

The goal was (and for most, still is) to generate as many leads as possible in hope that they’ll be converted into customers.

Here’s the catch: this approach is plain wrong for most companies.

You’ve probably heard that 95% of people are not ready to buy at any given time.

Focusing on people who are ready to buy through short-term sales activation campaigns (think “Get a free demo NOW!”) means that you’re not talking to 95% of your Total Addressable Market (TAM).

Plus, sales cycles tend to be long for SaaS categories out there since:

  • Costs can be high
  • Budgets must be approved
  • The tool is complex
  • There are a lot of options for customers to weigh.

Some marketers may try to tell you that you can usher people through the sales funnel, but this is simply not true—especially when it comes to SaaS. 

“Ok, great, that doesn’t work. So what should we do instead, random stranger on the internet?”

Glad you asked!

The 2 Most Important Parts of Customer Acquisition for SaaS

The question above can be reframed in much simpler words: why do people buy, and how do we get them to buy our stuff?

Luckily, modern evidence-based marketing has some clues to guide us there.

As Byron Sharp points out in How Brands Grow, we buy because of 2 things: 

  • Mental availability
  • Physical availability.

First, mental availability is important since only a tiny part of the market is ready to buy at a given time. You want your brand to be front-of-mind when customers are ready to buy. 

Physical availability comes down to the convenience of signing up for your product. Is your website user-friendly? Do you practice open pricing? Is it quick and easy to sign up?

Let’s dive deeper.

Mental availability: the key to modern marketing

Let me start by asking a question.

A superbowl ad spot costs around 8 million dollars for 30 seconds. Do you think major brands who spend their budget on this hope for a Return On Ad Spend of 5 or 6?

Another question.

AWS now sponsors the biggest Esport event on the planet: the League Of Legends World Championship.

Why is that?

Here’s the answer: they’re smart, and they get it.

AWS doesn’t have anything to sell to individual Esport viewers. 

But they have everything to gain in massive brand recognition and awareness in front of an audience who will, in the next few years, be in a position to buy from them.

In other words, they’re not trying to sell anything.

They’re trying to be the first thing that comes to mind when people think of “cloud services.”

What comes to mind when I say “soda?”

You get it now.

This is called mental availability.

Everyone has tons of stuff to deal with, both professionally and personally. It’s much easier to sell to people when they know the brand, and they remember you.

This is what your marketing should be designed to do. Be remembered.

Be memorable.

Physical availability: you there?

Physical availability refers to how … well … physically available you are.

Brands love to pay for spots next to cash registers, because they know you’re likely to buy gum, candy, or a can of soda when you see it right there, but very unlikely to look for it in the store.

(That’s why you don’t see toilet paper near the cash registers—but don’t let the secret out!)

For SaaS companies, physical availability is more like digital availability: 

  • Do you have a self-serve demo?
  • Can people buy without going through a sales call?
  • Is pricing readily available?
  • Is your technical documentation available?
  • Do you have YouTube tutorials?
  • Do you have an academy?
  • Etc.

In short: are you playing hard to get?

If you are, you should stop.

You don’t need to look very far to understand why.

You know all these things that infuriate you when you try to buy SaaS products?

Don’t do them to your users and potential customers.

how to calculate customer acquisition cost saas

Navigating the SaaS Customer Acquisition Cycle

Before we get into the specific channels and strategies for SaaS customer acquisition, it’s important to understand the customer acquisition cycle as a whole. 

Let's say you're on the verge of launching your SaaS product. You've conducted extensive research to develop a product and marketing strategy, you've built an impressive software platform, and now it's time to attract your first users. 

How do you go about it?

One of the most critical lessons you can learn as a SaaS entrepreneur is how to acquire users in a sustainable manner. That’s where the user acquisition cycle comes into play.

SaaS Customer Acquisition cycle

The customer acquisition cycle is the entire scope of activities that take place within a SaaS company's efforts to engage, acquire, and retain users. 

This process entails:

  • Identifying prospective users
  • Attracting them to your software platform
  • Converting them into active subscribers or users
  • Sustaining their engagement and loyalty.

These stages of customer acquisition span from the initial interaction with your brand to ongoing usage and advocacy. 

This is all what makes up the "stages of user acquisition" within the SaaS realm.

Let’s explain them. 

Yes, these look a lot like funnel stages. We don’t believe in the idea of the funnel (check this out to understand why), but we’re still framing it this way here for simplicity’s sake. 

🙋 Awareness

The first step in the customer acquisition cycle is awareness. Customers become aware of your business and products through different channels.

At this stage, customers aren't looking for a solution, but they are learning about your company and what you have to offer. 

Considering the notion of mental availability, this stage is super important for a SaaS company. 

The focus should be on brand building, and it's key to securing customers down the line. 

A well-planned strategy can help you bring more eyeballs to your business and even create a buzz around it.

🤝 Engagement 

At this stage, customers are regularly consuming your content and engaging with marketing materials. They may download resources like white papers or e-books 

Potential customers are learning more about what you have to offer, becoming aware of the problem your product solves, and start wondering if they need your solution. 

🤔 Consideration

If customers come to the conclusion that they have a problem and need your solution, they move on to the consideration stage. 

This involves researching, looking at reviews, and learning more about your product’s features and benefits. They will surely also look at competitors' products to see how they compare.

Not to mention, it’s at this point that customers may view your pricing page, request a quote, reach out to sales, or sign up for a free trial. 

Once fully informed on what you have to offer, potential customers will consider signing up or not. 

🛒 Conversion

When a customer finally signs up, they've been converted from a visitor into a user. 

When a customer is ready to convert, this is when the mental and physical availability of your brand will be a huge factor. 

If you’ve done a good job at brand building during the awareness stage, your brand will come to mind for the customer (even if it’s way later) when they are finally ready to buy.

🔄 Retention

Retention is a crucial part of SaaS sales and marketing because it keeps customers using your product — even if they have other options available elsewhere online. 

Once you've acquired a customer, you want to keep that customer around as long as possible. Keeping them happy with exceptional service and making sure they succeed with your tool after making their purchase ensures that they’ll keep paying for your product. 

📢 Advocacy

After you've converted someone into a paying customer (and hopefully kept them around), you want them to recommend your product or service to others.

To make sure this happens, provide great experiences that encourage positive word-of-mouth marketing. 

They can help attract new customers through actions like referrals, reviews, or posting on social media. 

Top SaaS Customer Acquisition channels that work

By now, you should understand that channels matter way less than your actual strategy: knowing who to target, what to say to them, and how to say it.

Build mental and physical availability.

Depending on your audience and development stage, you may want to favor some channels over others. 

We’ll look at the ones most effective to build mental availability here.

1. Content Marketing

Content marketing is a channel that is crucial for SaaS brand-building.  

Through consuming content, potential customers will develop a relationship with your brand over time. 

For it to be most effective, content should be helpful to your customers and contain enough valuable information to build trust and authority in your domain. Ideally, you want them to view your brand as the industry expert.   

This is where you get intentional with your blog by creating organized content that aligns with your content goals and speaks to your customers' problems. 

For example, you can create:

  • Ebooks
  • Editorial content
  • Expert content
  • Etc.

Equally as important, make sure your content is original and memorable. This way, your content will stick in consumers minds and have them turning to your brand when they are ready to convert. 

We’ve got lots of content on content marketing, and we even have our own playbook available, so you’ve got lots to dive into. Be sure to follow Vince on Linkedin as well!

2. Organic and Paid Social Media 

There are 4.80 billion people using social media around the world. Considering this staggering number, social media has become a great customer acquisition channel. 

Think about it. Your customers spend a significant amount of time on these platforms daily. So, it only makes sense that it would be another way for you to build awareness of your brand. 

Remember, the more engaging content you create, the more shares you get, and ultimately the more visibility for your brand. 

Social media can also be a way to share content produced on other channels. For example, you can use LinkedIn to share your brand’s blog content.   

If you’re trying to reach a wide audience, you could also leverage paid social media ads. For example, you can run awareness ads for your content or build your email list with Facebook ads

Pro Tip: You want to focus on social media platforms that resonate best with potential customers - i.e. where people are.

So, consider your audience, what platform(s) they spend more time on, and the best platform for communicating your brand voice and value. 

3. Search Engine Marketing

You want your web content to show up high on the search engine results page, so you’re going to need to create search engine optimized (SEO) content. 

When customers search for your products or insert a search term relevant to your brand into the search bar, search engine marketing helps your brand appear on the first page for searchers to click on. 

4. Email Marketing

Email marketing is one of the oldest and most effective ways to reach customers who have already expressed an interest in your product. 

For example, if you run lead ads on Facebook, customers that sign up for your lead magnet need to be nurtured till they become loyal customers. With email marketing, you can then connect with these people and work towards turning leads into conversions.

An excellent customer acquisition strategy with email marketing is to send out educational content that positions your brand as an expert in your niche. SaaS companies can also send out free trial offers or suggest upgrades to existing customers. 

5. Online Events

Hosting online events, such as webinars, is another effective channel for customer acquisition within the SaaS industry. When a SaaS company organizes informative webinars that delve into topics relevant to their niche, they're naturally drawing in the right audience, leading to a wealth of valuable leads.

Beyond generating more contacts, webinars can also further establish your brand's authority in the industry. 

That being said, it's crucial to ensure that your web events deliver substantial value to attendees. When done right, webinars not only enhance your brand reputation but also provide an excellent opportunity to demonstrate your expertise.

Best Customer Acquisition Strategies for SaaS

You know the best acquisition channels, but without proper strategy, you won’t reap the full benefits. 

Here are some crucial points to keep in mind when it comes to SaaS customer acquisition. 

1. Truly Know Your Target Customer 

Your target customer is the one with the problems and needs you aim to solve with your SaaS. 

The reality is, not everyone needs your service. However, the good news is: a lot of people do.

Knowing those who are genuinely interested in your offer will help you refine your strategy and understand which channels to use. 

A great customer acquisition strategy is to create a buyer persona that defines the characteristics of your ideal customer:

  • Age
  • Gender
  • Occupation
  • Interests
  • Values
  • Goals
  • Etc. 

Beyond defining your buyer persona, it’s also important to listen to customers who already bought your product. Understand:

  • Who they are
  • What their jobs are
  • Why they bought your product
  • What are the alternatives

This process will give you a true understanding of the problems your product solves based on first-hand evidence. You can use this knowledge, for example, to inform your blog content since you’ll know exactly what problems to target and even the type of language to use in your copy. 

2. Have A Set Of Defined Goals

The next step is to have a set of defined and measurable goals for your customer acquisition strategy. 

Yes, you eventually want to make sales, but there is a process to getting the job done—and a lengthy one at that.  

So, your first goal may be to increase your email subscribers or get more traffic to your website before you can even think about customer conversion.

Once you have a goal, you can begin to leverage the best marketing channels to help achieve them. 

4. Create A Strategy For Each Customer Acquisition Channel

Once you have selected your acquisition channels, you want to create a plan for each one. 

  • What kind of content do you plan to push out?
  • How often?
  • Do you need to leverage paid ads?
  • Will you be using a mixture of video and graphics in your content?
  • What content works best on each channel?
  • What is the best voice and tone to use on each channel? 

These are factors you consider when developing your strategy for each channel.

5. Analyze Your Current Customer Acquisition Strategy

By analyzing your existing strategy, you can learn what is getting the most results and how to improve on your current process. 

For example, you can monitor your insights on social media platforms to see how well customers engage with your content and follow your page. 

You can also analyze paid ads and email marketing to discover your ROI and how best to improve your customer acquisition strategy.

Now That You Know

If you aim to acquire new customers, convert them, and get the best ROI, your customer acquisition strategy must be on point.  

It’s important to keep in mind the particularities of SaaS. Make sure to think on the long term and avoid tunnel vision when it comes to your customer acquisition strategies.  

And with a great customer acquisition strategy, you can expect to reduce your customer acquisition cost, retain more customers, and increase revenue for your business in the long run.

Hopefully, our guide to SaaS customer acquisition helps you along the way!

📚 Recommended Reading

👉 Decoding the SaaS Magic Number
👉 SaaS Churn: The Ultimate Guide
👉 How to Calculate SaaS Retention Rate

Alexis Herrington

I’m the new SEO hire at ScaleCrush! A former teacher, I love transforming complex topics into easy-to-understand content. I’m always busy learning all about marketing and love sharing my thoughts along the way.

Marketing gurus are lying to you. Am I?
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