Effective communication is key. What happens when you don't?

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| Last Updated: October 10, 2015 |

Reading time: 6 minutes

What Happens when you fail to communicate

Customers are the lifeline of SaaS businesses and provide the recurring revenue. Therefore, there is a need for SaaS VPs and CEOs to focus their efforts on customer acquisition and retention, perhaps more than on other areas of the business. Why is strategic communication with prospects important for any subscription business?

Strategic communication with prospects can help to reduce the friction to trial or paid signups as well as encourage renewals.

Perhaps even more than other types of businesses, SaaS startups need to communicate more with their prospects to improve their chances of success. Unlike product based business where customers can easily equate their spending on the product purchased, SaaS businesses offer services, which are not easy to quantify in terms of monetary value.

Getting prospects in front of your service is not really a major challenge. You can use inbound marketing techniques such as blogging, social media marketing, and pay per click (PPC) to get prospects to see your service. The big test is getting the prospects to actually try or buy your solution.

You may be thinking that the Free Trial SaaS model will immediately get you a large number of signups. Hypothetically, yes. But, having a large number of signups is a vanity metric. Instead of tracking the number of signups, you should track how many people are actually using your app, even on a trial basis. The usage metric is a better indicator of the interest prospects have in your service. The metric gives a better indication of the likely paid uptake and retention of your service.

Most SaaS companies fail before they even begin. This is mainly because they concentrate on building a great product and hoping that customers will automatically sign up without any effort from their part. Well, this may be true for a select number of companies. However, unless you have a great app that customers will be raving about, you might as well start to communicate with your prospects even as you develop the app to improve the chances of getting paying customers.

Here are the major things that occur when you fail to communicate with your prospects:

Low Conversions

Conversions…this is one of the metrics that every SaaS VP wants to know from the sales and marketing team. There are many factors that affect SaaS conversion rate. Price model, quality of app, and perceived derived value can affect the conversion rate.

The problem with many SaaS companies is that they invest in brilliant programmers but forget perhaps the most crucial team: the prospect/customer outreach team.

Without strategically communicating with your prospects, your conversion rate is bound to be low. Prospects want to know more about your app, how it can help them in their work, how it is different from other similar apps in the market and so on. You already know what sets your app apart from your competition. But do your customers know? Probably not.

It is your work to educate the prospects on the benefits of your app and differentiation. Make it easy for prospects to adopt your SaaS service. Remember, people buy because they are looking to solve a problem. If they know your app can solve their problem in a better way than what they are currently using, they will sign up.

But again, prospects want to know other fundamentals that will affect them when they start using your service. This is where concerns like prices, updates, upgrades and the like should be addressed. This information should be coming from your end.

Higher Churn Rate

Apart from low conversions, another metric that VPs look at is the churn rate. A higher churn rate can mean two things:

  • Your app is not solving your customer’s problem well.
  • Your customers don’t understand your app.

If your app is not good, you need to go to the drawing board to determine what customers what. Don’t assume customers have a problem that you can solve. Not all problems have to be solved. Only problems that prospects are willing to pay for a solution should be solved.

The next point is about educating prospects about your software or service. The more prospects understand how your app can help them, the higher the chances of them signing up for a trial or paid account.

You should communicate with your prospects through different avenues that will bring your message out clearly. Most companies keep blogs where they share important news about their products, user tips, and so on. Blog content can come in different formats including articles, slideshows and videos among others.

When creating content, keep your target users in mind. Your content should be written for different audiences. For example, if you are targeting prospects to sign up for a free account, you can offer general advice on how your software can solve the problem that they have. On the other hand, if you are targeting existing trial or paid users, you may want to focus on content about getting the most out of the app.

Knowing your target audience and segmenting them based on their needs and interest in your application is crucial to knowing the kind of content to produce.

Low Brand Awareness

Brands have a major impact on the drive to purchase products. Strong brands can easily sell their products, even without investing heavily in marketing. As a SaaS company, developing your brand should be part of your marketing mix. A formidable brand helps to improve sales and lowers the resistance of prospects to take the next step.

While offline advertising helps to create brand awareness fast, it is online marketing that creates relationships with prospects and eventually converts them. Online branding does not refer to your logo or SaaS colors. Instead, it is a holistic view about your company and services. Basically, it is how prospects and customers see and think about your company.

You cannot control what prospects think about your company. But, you can influence their thoughts. From your website design to Facebook page, blog articles to videos, you can project your SaaS startup in any particular fashion you want. Your branding strategy should be part of your overall content marketing strategy. When done correctly, branding can help you overcome concerns about startups that do not go the whole nine yards to become successful.

To identify your brand, simply answer this question: what do I want users to think about our services and company?

One of the secrets of successful brands is consistency. For example, consistent use of particular colors for your SaaS will enable users to easily identify the company across different avenues. Predictability is good in branding. It helps to etch your company in the minds of your prospects, giving them more confidence to interact and purchase from you.

The key takeaway is that you should communicate and do that often. Communication, whether via blog posts, email or other content, can be used to educate prospects about your app and at the same time warm them up for future purchase.

Author of the post

John Solomon

Marketing Leader / Sales Enabler. Head of India Operations for @Infrascale / @sosonlinebackup.

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