If you’re building a SaaS business, then you probably already know that marketing is the key to success. You can have the best product in the world and offer it at a great price, but if no one knows about it, you won’t have any customers. This guide will help you understand how to build your SaaS marketing funnel so that more people know about your company than ever before!
What is a SaaS Marketing Funnel?
Before we dive into the stages of a digital marketing funnel, let’s go over what exactly a SaaS Marketing Funnel is.
A SaaS Marketing Funnel is a set of stages that every single customer goes through when buying your product. They start by finding out about you, then eventually purchase your product. This can be done through different channels like Facebook Ads or email campaigns. The purpose of these channels is to convert leads into customers by educating them on how great your product is and why they should use it!
The goal of any SaaS company (software as a service) is to get new users who will pay you for using your products. This means that if people don’t buy from you then no revenue will be generated so obviously this has huge implications, especially for startups where costs are high but revenues are low compared with larger companies who have more resources available such as revenue share agreements with big partners etc.
Importance of marketing funnel for your SaaS?
You might be thinking, "But why do I need a marketing funnel when I'm just starting out?"
The answer is simple: customer acquisition is the most expensive part of running a SaaS business. And if you're not acquiring new customers at a sustainable rate, you'll run out of cash before you know it.
By creating a marketing funnel for your SaaS, you'll be able to identify which channels are working best for your company and optimize the entire customer journey from acquisition to revenue accordingly. You'll also be able to measure the effectiveness of these channels so that they can grow over time as well as plan their timing in order to maximize their impact on your bottom line.
SaaS Marketing Funnel Stages
SaaS marketers need to understand the customer journey, from acquisition to referral and beyond. They also need to know which metrics matter most in each stage, so that they can optimize their marketing efforts accordingly. In this post, we'll take you through each stage of the SaaS marketing funnel and explain what metrics are important for measuring success at each stage.
Acquisition
The acquisition strategy also known as top of the funnel is a marketing process that determines how a business will attract new customers or clients. It's important to know the different stages of the funnel and how each stage affects your business.
Acquisition strategy can be broken down into four main categories:
- Attracting new customers through paid advertisements, such as Facebook ads or Google AdWords.
- Building relationships with current customers through social media, email marketing, and direct mail campaigns.
- Leveraging other businesses' marketing efforts to drive traffic to your own site (known as affiliate marketing).
- Sending out newsletters to a list of contacts
Metrics
- Site visits: The number of times a user comes to your website.
- Shares/likes/tweets: The number of times people share, like, or retweet content on social media.
- Email signups: The number of emails you collect from users who want to be alerted when you launch an update or add new features.
- Landing page conversions: The percentage of people who visit your landing page and fill out their information in order to get early access to the product or service you offer (also known as "conversion").
- Trial signups: How many people started using your product during its trial period?
Activation
Activation is the first stage of your SaaS marketing funnel, and it’s an essential step to ensure that customers are able to successfully use your product. When a user signs up for a free trial, they enter into this stage and begin their journey with you as a customer.
When measuring activation metrics, don’t focus on just one or two metrics; instead look at multiple different ways that users are interacting with your product so you can gain insight into what works best. One thing all these measurements have in common is that they should be tracked over time—this gives you an idea of how well (or poorly) each metric performs over time.
Metrics
- Trial-to-paid conversion rate: This measures the percentage of people who start using a free trial but choose not to convert after 30 days have passed (which means they stop using it). You can also track this metric by week or month if needed—it depends on how frequently your customers will use their trial accounts before making any purchase decisions.* Activation rate: The percentage of trials that turn into paid accounts after some amount of time has passed (often 14 days).
- Churned accounts: The number of accounts no longer active due to cancellation by either party (canceled by the company because they didn't want them anymore, cancelled by the customer because they decided not to).* Churn rate: How many people stopped being customers over some period--usually monthly?* Net new sales velocity--how much money was brought in through new signups during last period's measurement window?
Retention
The second stage of the SaaS marketing funnel (after lead generation) is retention. This is where you keep your customers as they start to use your product and grow their relationship with you.
You can measure retention by calculating the number of paying customers who are still actively using your product at a given time. You can also look at lifetime value, which measures how much revenue each customer generates over their lifetimes.
If you want to increase retention rates, try:
- Optimizing onboarding experiences for new users so they understand how to get value out of your app faster and more easily than before
- Creating an effective user experience that encourages engagement with content and functionality within the app itself
Metrics
Daily active users (DAUs) are the number of people who use your product on a given day.
Monthly active users (MAUs) are the number of people who use your product in a given month.
Customer churn rate is the percentage of customers who stop using your product—it's one of the most critical metrics for SaaS companies because it affects revenue growth and expansion into new markets.
Referral
Referral marketing is a type of marketing where a customer refers another person to a business.
The benefits of referral marketing include:
- It’s free. Instead of spending money on advertising, you build your brand by getting people excited about what you do and letting them share it with others.
- Referrals are more likely to be interested in your product or service because they know someone who’s used it before — making the sales process easier than if they were coming from an ad or cold call.
- It helps grow your customer base without breaking the bank, so referrals are great for small businesses that can't afford to spend lots on advertising (like SaaS companies).
Metrics
Metrics: User referrals, promoted tweets
User referrals are the number of users who have signed up for your product through a referral. You can find this metric in the 'Users' section of your analytics dashboard. Promoted tweets are the number of people who clicked on a link to your site after viewing an ad on Twitter. You can find this metric in the 'Twitter Ads' section of your analytics dashboard.
Revenue
The last stage of a SaaS marketing funnel is revenue which is also known as bottom of the funnel. Revenue can be tracked by looking at how many customers you have, how much they spend, and what their lifetime value (LTV) is. These numbers will vary depending on your product, but they’re all things that are worth tracking on a per-customer basis as well as an aggregate level.
Metrics
MRR is the average monthly recurring revenue per customer. It's calculated by adding up all of your customers' subscription fees, and dividing that sum by the number of people that have a subscription.
LTV is an estimate of how much money you can expect to make from each customer over the course of their lifetime. LTV is calculated by multiplying MRR by the average customer lifetime (which we'll get into next). In other words:
LTV = MRR * Customer Lifetime (in months)
Examples of Marketing Funnels in SaaS
Netflix
When we think of Netflix, we think of entertainment. But what we don't think about is the marketing funnel that Netflix has created.
Netflix is a subscription service (aka SaaS). In other words, it sells subscriptions to customers on a recurring basis with monthly billing.
Acquisition
Netflix has a free trial so you can try out the service before committing to paying for it. This allows them to get potential subscribers interested in their product without having to pay anything upfront.
After someone has tried out the service during their free trial period, they may decide not to continue using it and cancel their account or even worse—they may never come back after canceling! This is why Netflix offers price discounts if you sign up with friends or family members (aka referrals). Whether or not someone will refer your product depends on how good it is and how easy it was for them to use—which brings us full circle back around again!
Activation
Netflix is famous for its personalization - every user gets their own bespoke homepage that recommends shows and movies they like. This type of marketing funnel, where a company uses a marketing funnel to get users to sign up, subscribe and renew is called the “conversion funnel.”
Netflix uses a conversion funnel because it wants all of its customers to follow through with each step in the process until they reach the end goal: becoming a member and paying for Netflix's service.
Netflix uses different types of screens within its website to help guide users through this process. For example: when you first visit Netflix's site on your computer or mobile device, you'll be asked several questions about movies or shows that interest you (e.g., what genres do you like?). Once you've answered those questions by clicking on icons or links next to them (a process known as “funneling”), Netflix will show your personalized homepage based on what content it thinks would appeal most strongly to you based on those choices (i.e., genres).
How does Netflix do this? By asking little questions about your interests in life and hobbies whenever you first sign up.
Netflix's system uses the information they have about you to create a landing page that is tailored to you so that when someone visits that page, it shows them content they might like. This is also why Netflix has a personalized experience for each user—it uses what it knows about them to make sure all of their suggestions are relevant and interesting to them specifically.
Retention
Netflix uses a landing page to make it easy to find what you want to watch. It’s a great example of how a landing page can be used to help users find what they want.
Landing pages are not only for marketing, though—they can also be helpful when you need information from visitors, like before or after they sign up for your service. This makes the user experience nice and personal, removing the frustrations that some get with platforms like Amazon Prime where it's hard to find something you want to watch!
Netflix uses this strategy for three main reasons:
- It's easier for them to keep track of what users are watching and how they're watching it. They can then use this information to recommend shows they think you might like based on your viewing history. This makes the user experience nice and personal, removing some of the frustrations that some get with platforms like Amazon Prime where it's hard to find something you want to watch!
- It allows them to serve ads more effectively across multiple devices (e.g., phones). This means they can advertise products from other companies who want their product seen by Netflix customers through ads shown throughout various parts of its interface - making sure that everyone knows about new shows/movies or old favorites come back around again soon! You know those "we've found new content" screens? That's one example of how well-targeted advertising works well within this model!
Referral
Netflix has built an incredibly powerful referral strategy by engaging their customers in a way that gives them confidence, lets them express themselves, and puts the power of Netflix in their hands.
The first thing they do is make it super easy to refer friends. You just have to enter your friend's email address and then send them a personalized message that makes it clear how much you trust their opinion and love what they'll get out of Netflix. Your friend can even reply back with a short message telling you how excited they are about it!
Then, once you've got your friend on board, Netflix uses social media to let you know when one of your friends has joined the service. It's like getting an extra person in the family—but without all the annoying relatives. They also let you know when someone else has started watching a show or movie that looks like something you might enjoy.
This strategy puts control where it belongs—in the hands of its customers: people who love sharing good things with each other!
Revenue
Netflix is a subscription-based streaming service, meaning that customers pay a set fee each month to be able to access the company's content. This model has been incredibly successful for Netflix, and the revenue strategy used by the company has shifted over time as it has grown.
Netflix initially had a free trial period for new customers, who could use the service for one month before being charged. This allowed Netflix to get new users onto their platform and establish a customer base before charging them. It also helped them avoid having to pay credit card companies fees for processing payments in advance of receiving payment from customers.
As they grew, they were able to charge more money per month for access to their service. They also began offering different tiers of membership: basic membership was $7.99 per month; premium membership was $9.99 per month; and ultra-premium membership was $11.99 per month (these numbers have changed slightly since then). These tiers allowed them to raise prices while still maintaining their value proposition of "unlimited" access—which meant that users would not be charged more than $11.99 per month unless they wanted additional features such as offline playback or 4K streaming quality.)
Netflix has created an amazing experience for its customers. It has amazing content, it personalizes your homepage, and it gives you exactly what you want to watch.
This is a perfect example of how creating an effective marketing funnel can transform your business into something truly fantastic.
Mailchimp
Mailchimp is a great email marketing tool. In fact, it’s so good that it has become one of the most popular tools in its niche. Part of this success is due to its ability to create high-quality content and implement excellent targeting strategies. But another key factor is Mailchimp’s understanding of the marketing funnel.
Acquisition
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At the top of the funnel is your brand, which functions as a magnet for new customers. You want to make sure that you’re creating a strong, compelling brand that people will remember and want to engage with. For Mailchimp, this meant developing a brand identity that was friendly and approachable while still having a distinct voice — which they’ve done by including playful icons in their emails (such as hearts or thumbs up) and using consistent color schemes throughout their marketing materials.
Another way you can attract new customers is by creating content they want to consume — whether it's blog posts on your website or social media updates that showcase how others are using Mailchimp. By creating interesting content around topics related to your target market, you're helping potential customers get familiar with who you are and what kind of product or service you provide before ever reaching out directly themselves!
If someone has signed up for one of your marketing lists (acquisition) then it's time for them to enter into the next phase: conversion!
Activation
The activation phase is the point at which you get your users to subscribe, engage with the product, return to it and stay with it.
Subscribers: Getting a user to subscribe is the first step of activating them. You want them to feel excited about signing up for your email list because you’re giving them an opportunity—and if they don’t take advantage of that opportunity right away or ever again, then their needs aren’t being met. To ensure this doesn't happen, you need a strong "call-to-action" (CTA) which tells people exactly what they're signing up for and why they should do so immediately (see example below).
Engagement: At this stage, you want your subscribers to engage with your emails after they've signed up but before they become inactive or unsubscribe from receiving future messages from you (if such behavior even exists). In order for this engagement process to work properly in Mailchimp, we recommend sending out new pieces of content every few days — ideally once per week — along with cross promotions that encourage further engagement within the platform itself via social media platforms like Facebook and Twitter pages dedicated solely toward those ends like [this one](https://twitter.com/Mailchimp).
This way everyone gets involved regardless whether they want something simple like tips on how best use Mailchimp features or more complex issues such as getting started in eCommerce industry specifically related topics such as SEO/SEM campaigns using tools like Google Analytics data analytics service monitoring software tool."
Retention
This is where Mailchimp really shines. It’s data-driven and highly personal, which makes it perfect for understanding your customers and sending them the right content at the right time.
Mailchimp also offers a range of tools that help you connect with your subscribers in more ways than just email marketing, including SMS campaigns and automated workflows.
Referral
When you send an email to a subscriber, they can forward it to their friends. They'll have the option of adding in their own message and picking where they want the recipient's name to appear (e.g., "as recommended by" or "via"). Your friend will then receive an email that looks like this:
The most important thing is that Mailchimp knows who referred them, so you can give them credit by using our referral program. Mailchimp has done a great job in all the stages of the funnel.
First, they have a great customer service. Mailchimp provides 24/7 email support and phone support for their customers to solve any problems they may have during their use of Mailchimp. For example, when you sign up for an account, you're asked to enter your credit card information.
After this, there's an option where you can choose to cancel your subscription by simply clicking on "Cancel Account", which is located on top right corner next to "Sign In". Next day after I signed up for an account and entered my credit card information but forgot about canceling my subscription (I didn't read carefully), suddenly I received a notification from them saying something like "Your credit card has been charged $10."
This made me very angry because I didn't want this at all! Luckily there was a link below that said “Cancel Subscription” which took me directly into canceling my subscription immediately without having any problems with it! Even though this was not our fault since we didn't mean anything bad but still got charged due to human error; however thanks for saving us from wasting money by making such perfect cancellation process system along with its customer support team who works 24/7 so anyone can contact them anytime during business hours or weekends even holidays too!!
It's a wrap
If you are building a SaaS, you need to have a marketing funnel in place that can help you acquire new customers. This is one of the most important tools in your arsenal, and it will help you grow your business faster than anything else. If you're looking for help with your own marketing funnel, we would suggest you to give Digital First AI a try. There's a 7 days trial available and if it doesn't work out, there's no obligation on your part. :)
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