As the Software-as-a-Service industry continues to evolve, the marketing challenges confronting companies become increasingly complex.
Fortunately, there are solutions to these challenges, and if you’re creative enough, you can turn them into opportunities to get ahead of your competition.
This post will explore some of the top B2C and B2B SaaS marketing challenges and how they can be addressed.
Intrigued? Keep reading to find out more.
1. Converting Freemium Users To Paid Users
Converting freemium users to paid users is a common marketing challenge for SaaS companies. Your freemium users are often attracted to the software due to its free features. This is usually great, especially for B2C SaaS brands that are desperate to get more people to use their products.
But it quickly turns into a problem when you can’t convert enough of those users into paid customers.
For context, freemium conversion rates range between 1% and 10%. But actually, anything above 2% is considered a good conversion rate. That gives you an idea of just how difficult it is to convert freemium users.
You can imagine how many freemium users you would need for the conversion rates to make a meaningful impact on your bottom line. In fact, SaaStr estimates that you need around 50 million active users for freemium to be a reasonable business model. That’s a crazy number.
But don’t give up just yet. Freemium has worked as a business model for SaaS brands like Spotify, Dropbox, and HubSpot. So here’s what you can learn from those brands to boost your freemium conversion rates.
Solution: How to convert free users to paid users
The first and obvious technique is not to make your freemium plan too robust. Instead, withhold a few key features that would make users want to upgrade. Just make sure you don’t kill the value of the freemium package by withholding too much value.
Next, you must utilize your product usage data to prompt users to upgrade to the premium plans. Spotify is a great example of a brand that does just that.
If you’ve used the freemium plan, you’ll notice that after skipping six songs, Spotify immediately prompts you to upgrade because you’ve “discovered” a premium feature.
This prompt is super contextual. It utilizes product usage data to pitch premium plans at the perfect time. That can translate to more conversions.
Of course, you can also enhance your SaaS email marketing strategy to target users in the freemium plan and market your premium packages. Grammarly does this, as shown below. They also give users a discount code to make the offer as convincing as possible.
Customer onboarding is also essential. Use this part of the customer journey to help the users understand the value of your product. Onboarding should also be personalized to build that customer relationship which will come in handy when you want them to upgrade.
B2B brands rarely take the freemium path. About 86% of B2B brands opt for free trials over freemium. This makes sense since freemium plans are only possible when you can keep your sales, marketing, and product costs as low as possible. That’s hard to do when you’re targeting enterprise customers.
Still, HubSpot is one of the few B2B brands that provide a freemium plan. But their plan feels more like a “freemium trial.” Essentially, they use limits to control how freemium users use their features. This helps balance things out.
2. Differentiating Your Product
With organizations using 130 SaaS apps on average, the demand for SaaS products is huge. But, with so many solutions in every niche, the competition in the SaaS industry is stiff. Making your product stand out is often a challenge.
Solution: How to differentiate your SaaS Product
To differentiate your SaaS product in your marketing strategy, you need to identify what makes your product unique. This could be an uncommon feature or a new approach to solving your ideal customer’s problems. Then, you can use this as the cornerstone of your entire marketing strategy.
Communicate your unique features and your value proposition clearly to your target audience. SaaS content production is extremely helpful in the B2B digital marketing world. Your potential customers will want to:
- Read blogs
- Download ebooks
- Watch tutorial videos
- Listen to industry-related podcasts
- See the reviews about your product, etc.
The unique nature of your product should be communicated across all these content types. This is especially important for the bottom-of-the-funnel content.
It also helps to speak to your customers: the early adopters and loyal customers in particular. Figure out why they chose your product. This eliminates assumptions and shows what aspects of your product or company your users actually value.
3. Pricing and Packaging Your Software
Knowing how much to charge for your product can be a huge challenge. Which pricing model should you follow? Should it be cost-based or value-based? Do you need to look at how much the competition is charging?
Solution: How to price and package your SaaS product
Sadly, there’s no one-size-fits-all solution here. This is mostly because how you price and package your product will hugely depend on the product itself, your target market, and your vision for the brand.
Essentially, the best approach would be to look at the different SaaS pricing models and see which one aligns best with your goal.
For example, freemium pricing is one effective way to attract new customers, especially for B2C SaaS. It can help you reach millions. But as you’ve seen above, converting those users into paid customers can become an uphill task.
Analyzing your competition is the other option. This can work well if the market is already full of similar products. Pricing lower than the competition could help you stand out. The obvious downside is you could be undervaluing your SaaS product. That’s because, technically, you’re not coming up with your own pricing here. You’re simply using the competitor’s.
Cost-plus is the other pricing model. So you’ll calculate the cost of running your product and then add your markup at the top. It’s a pretty straightforward technique. But the simplicity also makes it unideal for most SaaS companies, especially in the B2B industry.
You can use value-based pricing if you have a unique B2B product with a high perceived value. 39% of SaaS companies use this type of pricing model. Studying the market will show how much the customers are ready to pay for the product.
Offer flexible packages to cater to specific customer needs. For example, Proof uses a slider to help users evaluate the price.
You can have different plans for SMBs and another plan for enterprise customers.
Generally, I’d say it’s a good idea to evaluate your pricing strategy at least once every year. And yes, I understand that raising your prices is a sensitive topic to most founders. Still, use data from your market research to determine whether it’s time to increase your prices and ensure you’re not undervaluing your product. You can also experiment by raising the price for new signups. If this works, you can slowly do the same for existing customers.
4. Scaling Your Marketing Efforts
Scaling your marketing efforts is a common challenge among growing SaaS companies. As your company grows, you need to ensure that your marketing strategy grows with it. And sometimes, the goal is to achieve that without increasing the headcount significantly.
Solution: How to scale your SaaS marketing efforts
Embrace marketing automation. B2B marketing automation tools, like HubSpot, Marketo, Zendesk, and GetResponse, will help you streamline and automate lead generation, email marketing, and even sales.
Automating your marketing efforts will save you time and money without affecting your reach or the effectiveness of your messaging.
As your SaaS company grows, you’ll have more data to work with. Upgrading your data management platforms can help you store and analyze data more effectively. This will ensure you can create more targeted and data-driven marketing campaigns.
With the use of some standard templates, your teams will be performing their responsibilities quickly and easily. Creating standard templates will also help to keep everyone on the same page. The below illustration shows how SaaS framework elements are related to each other.
All your marketers, sales reps, and customer service agents should speak with the same brand voice and tone.
The other option is to outsource some of your software marketing efforts. For example, outsourcing marketing activities like link-building to a reputable link-building agency can help you scale faster. This would be more efficient than building an in-house link-building team.
5. Navigating the Bureaucracy in Enterprise SaaS
Navigating bureaucracy in enterprise SaaS companies can be a tricky endeavor. Large SaaS companies often have many checks and balances that slow down decision-making and limit innovation. This can make it difficult for SaaS marketers to be agile and quickly develop strategies to meet customer needs.
Solution: How to navigate bureaucracy in enterprise SaaS companies
Start by understanding the system and the hierarchy of your organization. Knowing who the key stakeholders and decision-makers are and how to get their buy-in is essential to success.
Use data to back up your case when presenting ideas. Data-driven insights can help demonstrate the effectiveness and potential of your initiatives.
It’s also important to build good relationships with the key stakeholders. Find out their priorities and concerns, so you can craft solutions tailored to the right needs. This tactic will ensure everyone is comfortable with your decisions and on board with your marketing plan.
6. Long Sales Cycles
Long sales cycles are a notorious challenge in B2B SaaS marketing, where multiple decision-makers are involved. The process can take months and requires teams to coordinate various stakeholders across multiple departments to close the sale.
Solution: How to accelerate long sales cycles
Account-based marketing (ABM) can be very helpful in beating this challenge. ABM is all about creating highly personalized campaigns that target key decision-makers in a B2B organization. This approach is much more effective than generic campaigns, as it helps to build relationships with everyone in the buying committee of your target accounts.
Moreover, try to create an effective sales pipeline. By having enough leads/deals in the pipeline maturing at different times, the long sales cycles won’t be much of a concern.
So build your list of target companies you want to sell to. Identify the decision-makers and other stakeholders within those companies. Then start connecting with them.
It’s imperative that you don’t just target the one individual who has the final say. Your strategy should account for every stakeholder involved in the buying process including your potential champions. This is essential in B2B sales acceleration.
7. Customer Retention
Customer retention is a major challenge, especially for SMB SaaS marketing teams. Curbing your churn rate is critical to ensuring company growth and profitability. It also boosts your valuation, which can help with funding.
Solution: How to boost customer retention
The first solution is to move upmarket. Think about it for a moment. Small businesses fail at a much higher rate than medium to large companies. As those companies go out of business, they churn, and there’s really nothing you can do about it.
So one possible solution is to shift your focus from SMB to enterprise customers. Stats show the enterprise market has a much lower churn rate.
I’d recommend checking out our guide on how to get enterprise customers after this.
Creating a good customer onboarding process is another essential part of boosting customer retention for SaaS. You must provide your customers with an easy-to-follow guide on using the product with a walkthrough of its features. Make the users understand how to get the most out of their purchase through tutorials and educational materials.
It’s also essential for SaaS marketers to stay in constant contact with their customers. This could include sending occasional emails, offering discounts and promotions, and sending out information about new features and updates. In addition, keeping current customers engaged with the product reduces the chances of them churning.
Here’s a nice example of LongShot keeping in touch with its client.
Survey the customers when they’re about to churn. This shows you the reasons for churning. You can then proceed to seal those leaks and prevent further churn.
Also, you should consider investing in customer success teams to ensure customers get the most out of their purchases. These teams will provide your clients with value throughout their relationships with your brand.
8. Achieving Product Market Fit
Product market fit is a major challenge for SaaS startups that may not have the resources or knowledge to accurately assess the market needs.
Solution: How to assess product market fit
The first step in assessing SaaS product-market fit is to understand the needs of your target audience. Conducting market research and talking to potential customers will help you understand the pain points they are experiencing and the features they are looking for in a product. This information can then be used to adjust the design and features of your product to meet those needs.
It also helps to start by launching a minimum viable product. This allows you to test your software’s product-market fit before spending tons of resources on a final polished product.
Once you have developed your product, you should conduct further market research and user testing. Use that feedback to pivot the product for a better P/M fit.
Here’s a guide on SaaS product-market fit for more details.
SaaS Marketing Challenges FAQs
The main inbound marketing challenges for enterprise B2B SaaS include differentiating your product in a crowded market, navigating the bureaucracy of B2B companies, adjusting to long sales cycles, and improving customer retention.
Security is a top concern for SaaS industry clients. SaaS companies also need to provide easy integrations to other popular online systems.
Now you know the top SaaS marketing challenges and their solutions, your SaaS marketing efforts can gain a competitive edge.
Start today by identifying which of these challenges you’re facing. Create an action plan to address them. With the right strategies in place, you can impress your stakeholders, attract new paying subscribers and retain the current ones.
Nico is the founder of Crunch Marketing, a SaaS marketing agency. He works with enterprise SaaS clients like Writer, Right Inbox, and Surfer SEO, helping them scale lead generation globally across EMEA, APAC, and other regions.