Marketing Budget for SaaS Companies
Software as a service (SaaS) model differs from a standard business model, but a majority of ISVs disregard these differences. SaaS businesses are pressured to grow on a monthly basis to generate revenues to refund customer acquisition costs. Marketing has become an integral part of the SaaS business plans since these companies are worried about developing fast to pay off initial continuing costs. How does this affect marketing budget of your company? Here are few tips to consider.
When SaaS budgeting is concerned, experts recommend that marketing efforts and sales should match the first-year ACT (Annual Contract Value). This means that SaaS companies can use a considerable amount of capital to invest in marketing and sales in the first year of a contract but only if this implies that the following years will bring about genuine profit. But, this can be hard to achieve because spending first-year ACV on marketing and sales will waste a lot of money upfront. The biggest concern is making sure that you will have enough cash to survive the first year of business.
Balancing the Budget
When creating your budget plan for your SaaS company, there are few general rules to consider. The fluctuation of marketing can be used during your company’s growth. Once you determine the amount of ACV you need to invest in sales, you can calculate how much money you can use for marketing efforts and make adjustments over time when necessary. Balancing a marketing budget can be a challenge. If you do not invest enough in marketing, you may not grow enough to keep your company running. But, if you invest too much, you risk spending all of your capital and not surviving long enough to reap what you sow.
Inbound Marketing will Save You Money
Marketing needs of SaaS businesses can be carried out with lead qualifications and cheap inbound efforts. The statistics show that companies that use outbound methods, like trade shows or advertising, usually spend $346 per lead. Inbound methods cost is $135 per lead. Some of the examples are using social media marketing to target broad audience at no cost. Additionally, blogging is a smart way to attract customers. Companies that use blogs generate 126% more leads in comparison to those who don’t. They also have 55% more visitors. Inbound marketing is an efficient tool for generating leads and maintaining existing users.
Photo source: flickr.com
An ordinary person with great love for internet business