How To Overcome Marketing Challenges That Every Entrepreneur Have To Face In SaaS Business

SaaS or Software as Service offers a lucrative space for entrepreneurs, especially startups. Any aspiring entrepreneur with technical inclinations would waste no time to launch a business that provides SaaS solutions because of its immense profitability potential. There are more attractions for the company as it is relatively easy to approach and its inherent scalability. On paper, any SaaS product has the potential of setting money bags ringing provided you base it on a solid foundation of the excellent idea, immaculate execution and devote enough time.  All this can happen if you can touch the threshold of SaaS only after which you can see profits. Moreover, you have to create a sustainability model for the business to keep it up and running for many years.


Marketing Challenges

A large part of success for SaaS companies depends on effective marketing, but the task is far from easy as businesses in the niche have its own set of unique marketing challenges. Moreover, the marketing costs of SaaS companies can be very, very high as compared to the spending on the marketing of any other kinds of businesses. For SaaS companies, the product need not be much better to win customers, but the marketing has to be robust.   

High marketing Costs Of SaaS Companies

The norm used to be that any average industry had to set aside 10% as marketing budget but as per current trends; it has gone up to 12% in 2016 with a further increase expected in between. For SaaS companies, the norm is to allocate almost 50% of annual recurring revenue or ARR towards average marketing budget. According to industry insiders, during the first three years of setting up business, SaaS companies spend on sales and marketing almost 80% to 120% of their revenue earning.  After five years, the spending reaches a level of 50% that remains practically constant. If you are concerned at the high numbers in marketing spend then you should know that SaaS companies experience incredibly high growth. Let us now look into the reasons for the steep increase and what challenges SaaS companies have to encounter in their marketing endeavours.

Reasons for the high growth rate

  • The cost of acquiring new customers is almost nothing for SaaS companies which mean that they can acquire more customers just by investing the same flat amount. The challenge for SaaS companies is to create a sustainable growth model because this is where most companies tend to go down the spiral.
  • SaaS is a quick selling business because to make a sale you need not engage in lengthy interactions with prospective customers. The shorter sales cycle is ideal for fostering growth, but it also proves to create vulnerability as it is easy for customers to opt out.
  • It is easy to start up SaaS business because the market is yet to reach its saturation point even though there are numerous players.
  • Growth in SaaS business also comes from dependence on long-term revenues that revolve around strategies related to customer acquisition and customer retention.

Standing Out From The Crowd

The first marketing hurdle that you have to overcome is regarding making your business visible in a different light. Gaining attraction and visibility is a big challenge because you have to set your brand apart from the rest to grab eyeballs by overcoming the competition of numerous players in the field. As consumers have several options, creating a distinct identity for your business is important to separate it from the run of the mill types. Even if you are venturing into a relatively less competitive space of a different market, the initial feel-good factor will vanish quickly with growing competition, and you must stay prepared to fight it out.

Creating A Brand

Creating a brand

Creating a brand for your business is critical for SaaS business due to the subjective and intangible nature of the products that are not readily distinguishable from one another. Since the products are not visible, the brand becomes the embodiment of the products that you are marketing.  Research your products thoroughly to identify some salient features that make the brand distinctly different from many others that are almost similar to it. It all begins by creating brand standards that help to give shape to the brand and inject life into it. Create clearly defined brand personality and uphold the characteristics that make it unique. Infuse the right kind of emotions into the brand so that it elicits the proper response from the audience and strikes a chord with them.

Create A Value Proposition

Grabbing attention by being different from others helps to accomplish only a small part of your marketing goals because at the end customers have to buy the products to make the real difference. The challenge is to convert visitors into paying customers.  An exciting aspect of marketing SaaS products is that consumers rely more on logic when making purchasing decisions even though such decisions for other products usually tend to mix with emotions too. That happens because SaaS products are intangible and do not generate the feelings related to buying other tangible products. Customers do not enjoy a high when purchasing any SaaS product.  You have to create a value proposition for the product that seems very logical to customers for buying it.

Make People Feel Comfortable With Your Brand


Make people feel comfortable with your brand


The SaaS model of business has robotic traits that focus entirely on functionalities to attain the deliverables with almost no humane touch.  The need for human resources is the least in the SaaS business because the technology does not only do the talking but also sell products. From development to marketing, SaaS business owners take a technology-based approach only. However, the cold, technological, and corporate exchanges are not much to the liking of customers who are keen to interact more humanely and with humans. The challenge lies in creating a human face for the brand by putting people in the front to communicate with customers.

When you can create a distinct voice for your brand, it becomes easy for customers to visualize the people behind it that generates trust and brings them closer to the brand.

About Deepti Jain

Deepti is a senior content writer with AeroLeads. She spends a lot of time brainstorming ideas and writing marketing and sales content. She also has a knack for writing and reading about politics and prevalent social issues and regularly pens letters to the Editor of The Hindu newspaper. When she is not working, you’ll find her socializing with friends or binge-watching Netflix. (And devouring sushi).

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