In Praise of Outbound Marketing for B2B SaaS Applications
One of my “side hussle” projects is a B2B SaaS application called ConnectGood - https://connectgood.net/
I have learned lots by launching this product. One of my key learnings is around CAC (customer acquisition cost).
PPC (pay-per-click) advertising will not work for ConnectGood. Or most B2B SaaS applications were the MRR (monthly recurring revenue) is <$100.
This is a great tool that helps show the ROI for PPC; https://www.entrepreneur.com/calculators/payperclickroi.html
The math does not work because the average cost for keywords in B2B is approx. $10. Click-through rates are 2 to 3% and conversion rates are 2 to 3%. You can optimize and drive some of these rates up. But you will not get the massive improvements needed to make the ROI for PPC be viable.
Many SaaS companies ignore the MRR. They base their investment decisions on annual recurring revenue (ARR) or assume a life-time value (LTV) beyond one year. Usually these assumptions prove wrong. Resulting in SaaS companies that are unprofitable like Marketo, HubSpot, SalesForce and Workday. The key to profitability for SaaS is to reduce customer acquisition cost.
Paid acquisition isn’t a viable model for most B2B SaaS applications with a MRR <$100.
So, you have to rely on outbound marketing. This is using traditional channels like email, cold calling and newer channels like social. Conversion rates are higher than paid acquisition and the customer acquisition costs are lower.
A key factor to success in any SaaS business is focus. Don’t bother even experimenting with paid acquisition if your MRR is less than $100. Focus on outbound marketing.
About the Author
Bryan spent over 20 years selling and marketing B2B products and experienced first hand how hard and onerous the traditional sales process can be. He has personally sold over $12M in enterprise software / SaaS, exceeding his sales quota many times. Bryan was on the management team at Matrox Graphics, one of the fastest growing Canadian startups. He has worked at 6 startups and successfully launched over 15 new products. A firm believer in continuous learning, Bryan holds a Bachelor of Arts in Economics / Political Science from McGill University and a Masters of Business Administration (MBA) from the University of Ottawa.