Marketing is one of the biggest challenges that SaaS companies face. Whether you have an established SaaS business or a SaaS startup, you’d agree that SaaS marketing is an altogether different game.

SaaS businesses have a single software that they sell to their entire target market. Product limitation creates a lot of marketing-related challenges that businesses in other sectors (like retail) don’t face.

You have to maintain a high retention rate due to the subscription-based pricing model. This means you have to offer free trials to potential customers to encourage conversions. Marketing free software is easy, but converting free users to paid customers is an even bigger challenge. Limitations like these make SaaS marketing different and difficult.

Inbound marketing reduces these challenges significantly and helps you reach and connect with your ideal customers at the right time on the right channel.

Here’s a list of the major reasons why inbound marketing acts as oxygen for your SaaS company:

It’s sustainable

Inbound marketing is sustainable as it relies on content creation and publication. The content you publish on your blog (or other channels) continues to drive targeted traffic through search engines for years to come.

The life of a piece of content is potentially unlimited.

What this means is that inbound marketing doesn’t require regular investment that you do with outbound marketing.

The content you publish on your SaaS blog today will rank and drive traffic for years with minimal maintenance cost. You need to refresh and update content, maybe once a year, which doesn’t cost a lot.

Scalability is another added benefit. You need to increase publishing frequency for scaling making inbound marketing an ideal long-term marketing strategy.

It’s cost-effective

Inbound marketing is quite inexpensive in terms of customer acquisition cost (CAC) which plays a major role in SaaS growth.

Research shows that it costs US$14 less than traditional marketing to acquire a new customer through inbound marketing and it helps SaaS businesses save as much as 62 per cent in marketing when they use inbound (vs outbound) marketing.

Inbound marketing saves the cost in multiple ways:

• It doesn’t require excessive use of landing pages (which are essential for online ads). It requires publishing informative content that ranks in search engines and drives organic traffic to blog posts without any use of landing pages.
• The maintenance cost of content marketing is quite low compared to the maintenance cost of PPC ads. When you publish evergreen content on your blog, it doesn’t need regular updates which save
• Content production can be managed easily in-house. This makes it quite cheap. For instance, you can ask sales, finance, customer support, and other teams to contribute one article per month for the company blog. This is something you can’t do with outbound marketing.

High customer lifetime value

SaaS businesses have to maintain a low CAC to improve customer lifetime value (CLV) which determines the profitability. A high CLV means you make more money per paid customer than the money spent on acquiring a customer.

You must have a higher CLV than CAC to maintain a positive and profitable SaaS business model. This is where inbound marketing plays a major role as it lets you acquire customers organically with minimal investment:

It costs a lot to acquire a new customer through outbound marketing. Think of a search ad campaign on Google Ads to acquire leads for your SaaS business. The problem with outbound marketing is that it stops generating traffic and conversions as soon as you pause your campaign.

Also Read: 3 stages of marketing for your startup that can drive effective results

That’s not the case with inbound marketing.

Let’s say you spend $1,000 to publish a high quality article on your SaaS blog. It will stay there for years and will generate leads for your business without any recurring cost. This significantly lowers CAC over a period of time (not necessarily in the short run) and leads to a high CLV.

Build relationships

Building and nurturing relationships is the backbone of inbound marketing.

Your ideal customers find you through content. This improves brand awareness and brand recall. When your ideal customers find your SaaS brand for multiple search queries (and if they like your content), they will continue to engage with your blog.

If you are actively generating leads via your blog (which you should), you can nurture leads and convert them into customers.

The idea is to convert organic visitors into leads and then engage with them via email marketing and move them down the funnel where they finally become your customers.

Better conversion rate

Inbound marketing is a non-intrusive form of marketing. Your audience visits your blog and engages with the content when they want to. This is a reason inbound marketing has a better conversion rate than outbound marketing.

When you run a social ad on Meta, your ad appears to be intrusive. People who scroll their news feeds aren’t in a buying mode. However, someone who has entered a search query in Google is looking to solve a problem – and might be in a buying mode (in-market).

Also Read: How marketing will be enhanced through generative AI

The probability of converting an organic visitor into a customer is much higher than converting a paid visitor. Statistics show that inbound marketing increases conversion rate, on average, from six per cent to 12 per cent and it’s 10x more effective for lead conversion than outbound marketing channels.

This is true for the entire funnel – not just the top of the funnel.

While outbound marketing is more effective for the bottom of the funnel as it takes a significant number of interactions for a potential customer to convert, inbound marketing works across the funnel with equal efficacy.

Inbound marketing should work with other marketing channels

The best SaaS companies distribute their marketing budget between inbound and outbound marketing – and this is what you should do. Inbound marketing sets the stage for long-term sustainable and scalable growth while outbound marketing provides your SaaS business with instant, targeted traffic and leads.

Don’t let PPC consume your entire marketing budget as you will rely on it forever without any presence of owned media across different channels. Inbound marketing should be a part of your SaaS marketing strategy from day one.

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This article was first published on October 29, 2024

The post Unlocking growth: The importance of inbound marketing for SaaS businesses appeared first on e27.