The best way to turn prospects into customers and then promoters of your business is to add value to them. And that’s what inbound marketing is all about. In this article, we’re going to briefly take a look at what inbound marketing is and then delve into why SaaS companies today absolutely need it for sustainable growth in the market.

What is inbound marketing?

Inbound marketing is a marketing tactic used to bring potential customers to your business, instead of your business reaching out to them. The marketing tactic includes creating and sharing content specific to your industry and niche with your target market.

By creating content designed to appeal to common customer needs, inbound marketing is known to attract and generate quality leads for your business when strategized well.

The now popular marketing tactic includes promotion of business through content pieces like blogs, podcasts, ebook, newsletter, videos, SEO, social media and others. The idea behind this marketing tactic is to be able to add value to the customer at every stage of the purchase cycle with an informative piece of content.

Why do SaaS companies need inbound marketing?

According to a forecast by Forrester, the global SaaS software revenue is expected to reach $106 billion by the end of 2016 and grow further in the next year.

Considering the growth rate, SaaS companies should be all set to face a steep increase in competition and that means it is going to become harder to stand out in any target market. This, in turn, will make an acquisition as well as retention of customers a challenge for even the best of software products.

The one way that has proven to help SaaS companies differentiate themselves from their competition and achieve sustainable growth, is to understand what is inbound marketing and embrace the tactic in their business strategy.

Signs that your company needs inbound marketing

Although marketers across the industry have been adopting inbound marketing tactics for their business, there is still a considerable section of the SaaS market that is skeptical about the effectiveness of inbound marketing.

So here’s taking a look at some of the signs that are already indicating the need for inbound marketing for your product:

1. High customer acquisition cost

Hubspot’s State of Inbound Marketing reported that businesses banking on outbound methods to market their products and services, typically spend $346 per lead. But those who have adopted inbound tactics in their marketing strategies spent only $135 per lead.

Till today, most SaaS companies bank on paid strategies like advertising to promote their product. With the rise in the number of digital platforms the consumer market is present on, this increases the cost per customer acquisition exponentially.

Inbound marketing tactics focus organic methods of driving traffic to your business and making the prospect want to become your customer by adding value to him. Since most of the tactics don’t necessarily require a marketing budget, the overall cost per acquisition drops significantly.

2. Lengthy sales cycle

Most SaaS products come at a cost and when someone is interested in it, they are surrounded by various questions and concerns around purchasing it. This often leads to a lengthy sales cycle wherein you’re required to approach the prospect multiple times with varied value propositions that might or might not lead him to a conversion.

Inbound marketing answers these very concerns of the target market that hamper the sales cycle. It equips the sales team with content that is focused on educating the buyers and helping them make an informed decision through the buyer journey. The most common types of content with sales intent used by SaaS companies include ebooks, industry reports, blog posts and social media content.

3. Low customer lifetime value

A typical SaaS business model is about establishing a long-term relationship with your customer. The model requires you to first convert and then re-convert your customers on a monthly or annual subscription basis. You’re more likely to lose customers the moment they see another product adding more value to them – even if it is just a perceived notion.

Inbound marketing is your channel to stay in touch with your customers over time. It includes monitoring and tracking their activity on the product from their first conversion, and helping them achieve more out of it. Be it sharing blog posts with tips and tricks or use cases and success stories, the aim is to continually reinforce your value proposition and keep him engaged with your business.

The longer you’re able to add value to a customer, the more likely he is to stay with your business.

Loss of niche authority

The market competition for SaaS businesses is increasing by the day. To sustain in the market, you need to earn the trust of your customers and provide them with additional value that lets them know how you are better than the others.

Inbound marketing tactics include sharing your industry knowledge with your target market to attract and retain customers. It includes sharing informative and original content pieces like long posts, reports, whitepapers, hosting webinars and more to continually add value to the customer. Doing so in turn also helps you establish an authority in your niche by becoming the go-to source of information for your target market.

Low conversion rates

With way too many options becoming available to an average customer, the conversion rates for SaaS products are generally low. Although most of their leads complete their free trials, there are very few who actually convert.

A well-executed inbound marketing campaign takes into account all the channels that your target audience is present It helps you understand what your customers are looking for, their changing needs, the purchase triggers and what they expect from your business. Thereby helping you personalize their journey to conversion. The higher the level of personalization, the higher are the conversion rates – be it from your website or from your social media profiles.

Slow business scaling

Higher customer acquisition and lower retention rates lead to slow scaling of business in the desired market. A SaaS product that does not scale over time, leads to losing customers to market competition – which further slows down your growth.

Inbound marketing supports business to grow at scale. A well strategized inbound campaign ensures a steady flow of new prospects from your target market at no additional budget. This helps you optimize the marketing budgets further and use the resources for other business growth requirements.

Over to you

While the tactic has endless benefits for SaaS products, it is important to understand what is inbound marketing before you set aside resources for the same. It is also important to understand that this a marketing tactic yields the best of results only when you’re consistent with your efforts across all the primary digital channels.

What are they?

Probing questions are there to help you prepare for a demo or a sales meeting with your prospect. These questions help reveal your prospect and check out if they fit your ideal customer profile.

Why would I use them?

To be able to quickly narrow down your huge prospect list to the one’s that are likely to buy. These questions help to save time and become more productive

What’s in it for me?

What do you mean? All in one list of questions to ask your prospects! Learn these and you are halfway to being a sales guru. Well, theoretically.

101 Basics:

Basic questions are designed to reveal the customer and quickly eliminate ones that you’re incapable to help. Therefore, you’re unable to close them. Having said that, you should have done a fair bit of research to not sound unintelligent in your first rendezvous. Just in case you are unprepared, here is a good start to basic probing questions (a.k.a. Prospecting 101).

What do you offer to your customers?
Ask what your prospect’s selling. Find out what kind of business field are they in. Usually, it could be done prior the call, if you did your homework and researched your prospect.

What is your ideal customer?
To reveal customers that are buying from your prospect. Just when theirs field is too broad, you can ask this question and find out more about your prospect and draw a clearer picture.

Why would you be interested in something we offer?
Just to see what is the reason that you’re sitting with them in one room. Why are they interested in your product? It’s important to see if your prospect’s just window-shopping or are fully committed to making a deal.

What is the main priority right now in your business?
The money goes where the main focus is. If you’re solving a problem that is not relevant to your prospect – 9 out of 10 deals will not close. Figure out does your value proposition fit their top goals in view!

Who else will be a part of this project?
Just to see if you’re talking with a right people. The decision makers and not wasting your time with those just researching market for better options.

What budget portion are you willing to allocate?
Money talks. If you don’t have the money, I don’t have time to talk with you. Instead, I could be talking with someone who has and closing them. A clear budget is a good sign to reveal that they’re willing to buy.

102. Getting to know a prospect:

Now that all those basics are checked out and they seem to qualify your own ideal customer profile, start getting to know them better. Beware! They may still not qualify even if they fit your ideal customer profile.

Are you using something similar to… <<fill your solutions value proposition>>?
Maybe they are already using a competitor or a similar product and maybe they are looking for a more valuable option. Your demo could become a comparison, if they do. That’s why important to research your industry and your prospects. (Do your homeworks!)

Follow-up: If they are, why are they here?
What your competitors did wrong that you would be willing to fix and provide value? Find that little mishap and emphasize it, tell them how it could become a devastating growth’s mistake in such a fast-paced business environment.

What goals are you trying to achieve by using our product?
Just a direct hit, what do they want from you? Well, more like what are they expecting from you. It is mandatory question in any deal you want to close in a very beginning. Else, you could be talking about things that are not relevant to them.

103. Painting a new and better future:

These questions will help you to emphasize how important your product is and how amazing investment it is. Just know your product and if your customer qualified well enough previously, they will likely to make a purchase.

What changes do you think our product will bring in your company?
Let them say it, if they’re are saying it will be just an extra hassle and pretty much a money sinkhole. Then tell them otherwise, if they really qualify your ideal customer. If they start bragging your product, you already in the final straight.

When do you plan on implementing our product, if all goes well?
Urgency can be a great motivator. If you offer a product that does what they need and they ARE in desperate need of it. Deal will close.

What would happen if you decide to postpone the deal?
It’s there to draw a dark future that will soon be upon prospect’s company. But only if they decide to refuse the deal or decide to wait. Maybe later you won’t even be able to help them. Maybe it will even have a huge business impact that later will cost them millions.

Fortune.com research points out that nine out of ten startups fail with “lack of a market need for the product” being the top reason. And, “running out of cash” being a close second. While the first one is really dependent on the tech founders marrying their passion with what is needed out there, the second reason demands a lot more tactical cure. However, both of these reasons have ‘sales’ and how founders view it as a lifeline as an underlying factor for failure.

Before we begin analyzing, let’s put some assumptions in place. Of course, in the case of B2B tech startup, the product-market fit has been validated by a first few wins or “projects” as tech founders would call it. In fact, the success of the startup has been measured, not by cash earned, but list of features validated by the pilot customer for development roadmap over next 12 months.

And that’s the when the predicament hits the startup founder – should I invest more time in product development to appeal to the larger market before I go out and ask for money. Or should I spend time and learn how to sell what I have?

In fact, at this stage lot of tech founders re-adjust the definition of the minimal viable product (MVP).

It is at this juncture, the foundation of success to seed round or drying out of cash is laid. Of course, there is no right choice between the two. Authors of Traction- Gabriel Weinberg and Justin Mares talk about doing sales and product iteration concurrently to succeed. But I would tend to clarify things on ‘figuring’ out sales side because that’s what I know.

At this juncture, the tech founders begin to ask – Are we ready to sell full-steam? Or should we develop till the product is closer to “perfection”.

This is where a 4:40:400 principle of sales comes in effect. The term that I borrowed from my friend who is a chief strategy officer and a highly successful sales leader at a APAC based startup. As per this principle, sales DNA required to acquire your first 4 customers is very different from acquiring your first 40 customers which in turn is very different from acquiring your first 400 customers.

At each stage of change, the organization requires a revised sales plan; sales methodology and tools & tactics. It’s not just the planning & processes but level of maturity in sales behavior and thinking varies drastically, especially between the first handful of customers versus first 40.

The way you sell a longboard is different than how you sell a bike.

First four customers can be acquired easily and through relationships, however for the next forty customers the strategy may be to handpick a few star performers with a track record, identifying your successful verticals; identifying the geography or the product strength etc. For 400 customers, companies may need to have a partner strategy; geographical segmentation and teams alignment; sales processes and tools like CRM etc

To highlight this difference more explicitly: For the first forty customers, it is critical as a tech founder to keep your feet on the ground, and ears close to your customers in order to get valuable feedback to iterate product development (and of course reference selling). However, as you hone the art of customer feedback, you should be getting ready for hiring sales leader who can turn around feedback driven product development into the value proposition that sells to the next 40 customers. As you hit this 40 new logos stage, the focus should shift on how to hire someone who can hire and scale, rather than be a “killer salesman” for next 400 customers.

Here are some suggestions to tech startup founders, in order to avoid running out of cash:

• Kickstart sales early. It will generate much solid customer feedback and buying process insight on features that sell. Without organized sales plan even at initial customer stage, you could try selling improved chassis when some of them only need a board with wheels.
• While you are motivated by anyone interested in using your product and providing feedback, sales leader is thinking about finding a sweet spot and creating a messaging that sticks with customers at large. Their goal is to use the least resistance method to get sales. This ability to generate initial cash flow is paramount for startup success.
• Sales are about cadence & diligence. And it takes time. It is creating a hypothesis about product – market fit, testing it consistently at scale with a standard messaging and getting feedback on what sticks (and what does not). It is about diligently following up with stakeholders or aggressively going after an industry. It takes someone full time to get engaged. It is certainly not a side-occupation to pick up the phone and dial cold for a couple of hours on a Friday afternoon.

  “The gap between the founder-driven, heavy-lifting style of sales, on the one hand, and formalized, repeatable, scalable sales, on the other hand, is pretty big.” – an interesting read by Kwindla Hultman Kramer

  Click To Tweet

• Hire to scale against hire to sell. The sales leader or partner that you bring in at the stage of 4-40 customers should have expertise in scaling rather than selling. He/she should be able to develop sales processes, establish sales playbook, hire effectively and fast when the time arises and create a plan to scale team. In fact, a tech startup, that is just getting picking steam, should hire a failed sales entrepreneur rather than a successful sales rep working for enterprises.Of course, this changes unless you operate in an industry of few multi-million dollars sales a year. Then better get someone with a good Rolodex.

We wrote another piece on 10 tell-tale signs of a great CSO for a startup, if you want to know what he should focus on.

• Sales Execution tops planning. Though short term sales strategies do require a definite plan, there is a point of failure at every step. A sales leader, who is not grounded up, does not understand customer behavior and has a limited view of sales processes is bound to fail. It requires sales leader to be as agile as you’d like your products team to be.

The sales methods at each stage of growth from 4 to 40 to 400 customers are different. The sales playbook differs drastically. However, the cadence to test the sales playbook at learning stage is paramount. What will get you deals for first few customers will not scale for next 40. Make generating cash as a top priority and justify it by offloading it to someone who is a pro. It takes time and diligence to create the sales process, hire and execute. Let that not be a part-time engagement if you want to be that 1 startup out of 10 that does not fail.

This article has be co-written by Pradeep Agarwal & Deepanker Dua.

A business can’t survive if it can’t meet its revenue goals. It’s as simple as this. But the marketing and sales truth goes much beyond just recognising a target market.

What most businesses don’t understand, is the fact that generating revenue isn’t just the sales team’s responsibility. It also depends on how effectively the marketing team is performing, and how in-sync the goals of the two teams are.

But here’s the truth – the sales team expects a particular type of leads from the marketing team, which clearly has no idea of the same and ends up creating independent personas. The end result of this lack of communication – assuming everyone to be the ideal target customer.

Target market vs Ideal customer

Target market is a marketing term that refers to a particular group of consumers that a business wants to reach out to with a specific service or product.  It is a carefully put together analysis of the competitor customer demographics, segmentation, positioning and marketing message.

While it defines the high level criteria of who you’re addressing in the market – age, gender, background, etc, it doesn’t really tell you who amongst this group would be your ideal customer.

An ideal customer is the one who doesn’t just know a bit about your brand, but is also more likely to convert – without too much of persuasion.

Here are a few things that the marketing and sales teams need to do together:

1. Define the ideal lead or prospect

Since both marketing and sales teams might have different personas, it is important to commonly establish the criteria of who an ideal lead would be. Accordingly, create a customer journey for the ideal lead and demarcate the duties of each team clearly – which stage the lead is at, who is responsible for pursuing the lead to convert him into a customer, etc.

Defining an ideal lead constitutes of two sections – the demographics of your target which are tangible and measurable, and the psychographics which cover their beliefs, cultures and values. It is important to understand your prospect behavior before reaching out to them. This helps create personalized campaigns and customer journeys that convert more.

2. Create real-time alerts

According to a report by Central Selling Organization (CSO), 44.6 percent of sales reps need help in identifying potential buying signals and prioritizing accounts of different clients. Marketers, who are interacting on the forefront to generate leads should set up alerts so that the sales team is able to pursue potential buyers at the right time.

Alternatively, marketers, while generating leads, can fill out this information in the CRM so that it is easily accessible to the sales reps. They can document their interaction with the prospects, so that the reps know exactly where to pick up the conversation from. This will also reduce the buying cycle.

3. Define lead scoring metrics

Lead scoring is the process of ranking prospects against a scale that represents the perceived value of each lead to the business. This score is used to determine which leads need to be engaged with, in order of priority. Having an effective lead scoring system in place decreases the risk of losing prospects who are more likely to convert on a shorter buying cycle.

Here is a 5 step formula for creating a leading scoring process for your business:

A few other points to consider include the recency of engagement, volume and timing of events that indicate a prospect’s imminent plan to buy the product or service.

4. Analyze and exchange data that matters

Today, the amount of data available online is endless. With new social channels, applications and communities coming up every other day, volumes of prospect data is easy to find. The challenge though, is to extract insightful data from the same.

Most marketers and sales reps end up analyzing the wrong prospect data, increasing the buying cycle period. And at other times, they’re either making use of invalid or outdated data for prospecting.

The solution to this challenge is using a dynamic process that will not just catalog the existing customer data, but also pull out insightful and actionable prospect data from the volumes available online.

Instead of trying to maintain master sheets, the business must make use of a CRM that can be accessed by both the marketing and sales team. This lets each know what the other is doing, the data that is available, what data generated is of no use and what they need for better prospecting.

While it might seem a little difficult to bring the two teams in-sync with each other, most successful businesses priorities aligning marketing and sales in 3 main areas:

1. How customers make buying decisions
2. What language or message to use for reaching out to them
3. Common sales method

This alignment helps the marketing and sales teams identify their ideal prospects or customers, and not focus on pursuing the market that is less likely to convert.

Takeaway: Not everyone in the target market is your ideal customer. The marketing and sales teams need to work together to identify who makes for an ideal prospect or customer from the leads generated over a period of time.

Here are a few steps you need to take to bring marketing and sales together:

• Identify your target market and segment it based on their interests, online behavior, etc
• Create ideal buyer personas under each segment
• Define clear marketing and sales processes
• Establish a lead scoring system
• Use a CRM for managing marketing data and the above defined processes
• Create real time alerts along side your lead generation campaigns

Remember, the idea is to reach out to the right set of people at the right time and convert them while they are still interested in what you have to offer. About 71% of internet leads are lost because companies don’t respond fast enough, don’t be one of them!