SaaS marketing cost varies from SaaS product to product; each product is different and has its own set audience, which leads to generating leads challenging.
Here are the following challenges –
- SaaS products are intangible and often sold online, making it harder to establish personal connections with potential customers.
- The market for SaaS products is highly competitive, with many companies offering similar solutions, which makes it difficult to stand out.
- Customers may not fully understand the value of a SaaS product until they try it, making it challenging to generate interest and commitment.
- The sales cycle for SaaS products can be longer than for traditional products, as customers need to be convinced of the benefits of the product and may require more time to evaluate its features and pricing.
All of these factors combine to make lead generation for SaaS products a complex and challenging task.
If we talk about products, such as in eCommerce, they could pass out coupon codes or advertise sales on Facebook because there’s a preexisting understanding of the product they are selling.
On the other hand, B2B SaaS products are generally based on subscriptions, are hard to upsell, and are promoted based on whether they offer value to organizations. This is hard to do using conventional marketing channels. That is why B2B SaaS providers are fond of SEO and content marketing.
These marketing techniques involve educating their potential customers through evergreen content about the issues that their product can solve. This includes blog posts, podcasts, and webinars, all clarifying the value and problem-solving potential of the product.
Given the complexity of SaaS marketing, you might wonder how much you would have to spend on your SaaS product marketing.
Here are some statistics on how much SaaS businesses spend on their marketing:
Average Marketing Budget for SaaS Companies
According to a report by SaaS Capital, the average marketing budget for bootstrapped SaaS companies average 7% of total revenue, whereas, for equity-backed SaaS companies, it is 10%.
Source: SaaS Capital
Also, the marketing team budget is generally half of the sales department’s budget. And as per Meritech Capital, the average sales and marketing budget for application-based companies is 44% of their total revenue. This means their marketing budget should be roughly 14-15%.
Source: Meritech Capital
Factors Affecting the SaaS Marketing Budget
The marketing budget for SaaS companies differ and majorly depends on the following factors:
- Stage of company growth: Younger companies may need to invest more heavily in marketing to build brand awareness and acquire customers, while established companies may have a stronger brand and need to focus more on retaining customers.
- Market competition: Companies operating in highly competitive markets may need to allocate more of their budget to marketing to stand out.
- Sales cycle: Companies with longer sales cycles may need to allocate more of their budget to lead generation and nurturing activities.
- Target customer segments: Companies targeting enterprise customers may need to allocate more of their budget to account-based marketing and sales enablement activities.
These factors indicate that SaaS companies should carefully consider their unique circumstances and allocate their marketing budget accordingly.
How to Get the Best Out of Your Marketing Spend?
The point is not to spend the most on marketing your SaaS product. We have spent years in SaaS marketing, and what we have seen so far is that successful SaaS businesses try to get the most out of their marketing spend.
Here are some insights from their business strategy to help you drive the best ROI:
- Plan as per your go-to-market model: In order to ensure your marketing efforts drive the best results, you need to make sure that your marketing team is familiar with the corporation as a whole. This includes being aware of capital limitations, the market size, as well as the goals for growth.
- Make decisions backed by data: You should start tracking your lead acquisition channels and KPIs. Understanding the output per channel & KPI will help you help you take a better decision . For example, if 70% of your qualified leads are coming via organic channels, you should keep investing in that marketing channel.
- Don’t reinvent the wheel: Do make sure your team leverages the proven marketing strategies that are known for driving better results while keeping the cost low. For example, the importance of content marketing efforts are futuristic and will continue to get you leads even if you stop publishing too much content at a later stage.
Calculate ROI for every single campaign: Going micro in terms of calculating the ROI on your marketing will help you optimize your marketing cost. For example, if a webinar campaign drives you more leads while keeping your acquisition cost low, you should invest more in such campaigns.
Why Investing in Inbound Marketing is Essential for SaaS
While discussing the marketing budget of SaaS companies, examining the distinctions between inbound and outbound marketing is worthwhile. Outbound marketing is more direct and includes cold calls, large-scale promotional strategies, direct mail, and other classic tactics. Many SaaS business owners opt for outbound marketing due to the straightforwardness and more immediate positive results.
But the fact that inbound leads cost about 67% less than outbound leads, it’s considerable for SaaS businesses to allocate more to inbound strategies.
As far as inbound marketing is concerned, it might take a bit of time for sales to begin increasing, but once your plan has been perfected, the medium and long-term outlook will provide a steady flow of leads and also help you save a lot of money.
For example, creating content with a clear approach that aims towards key phrases related to your services can result in better leads.
First, Set Your Goals; And Then, Define Your Budget
Creating a budget for marketing a SaaS product is not a straightforward task, and no single formula works for all companies. Therefore, it is vital to know the stakes to get an accurate budget figure for your enterprise.
Clarifying the objectives of your business and having an experienced marketing team will assist you in developing the budget, making sure it will be the most effective.
If you need help deciding how to spend your marketing budget, contact Missive Digital. Our team of SaaS marketing specialists is ready to help you enhance your SaaS marketing strategy.
