Inflection 5: How to get SaaS customers in crowded markets

Inflection 5: How to get SaaS customers in crowded markets

Dylan Touhey

This is the fifth post in my "Inflections" blog series where I lay down the hard truths and remedies for SaaS marketing.

I want to share some insights we've learned from running paid search campaigns for SaaS companies in crowded markets. 

We work with several technology clients in crowded marketplaces including network security, accounting, finance, image processing, machine learning, telecom, hardware and even ad tech.

One of the biggest marketing challenges you will face in a crowded marketplace is the amount of advertisers competing for the same keyword phrases.  

Here are some things that have worked for us.

1. Move to Product Listing Ads  

PLAs are not limited to ecommerce sites. As a SaaS company you can create different products from your subscription tiers and use these to leverage the added benefits of PLAs.

When running paid search ads in a competitive environment, we found that by moving from regular text ads to product listing ads (PLAs) we were able to improve our campaign KPIs dramatically. This is likely due to fewer advertisers using PLAs, resulting in lower CPCs and higher CTRs. Here are some highlights that we saw when switching one of our online retailer clients over from regular text ads to PLAs: 

  • 20.40% increase in clicks
  • ~3x increase in CTR, from 0.31% to 0.89%
  • 59.90% decrease in CPCs
  • 45.70% decrease in costs per conversion
  • 51.70% decrease in overall account costs (while maintaining comparable conversions and an increase in clicks)

Hint – Google has openly stated that ads with PLAs get higher quality scores than those without. 

2. Bid on your branded terms

Many online retailers don't bid on their own branded terms in AdWords or adCenter for a couple reasons. 

First, they believe it's a waste of money. 

Second, they know that their organic listing will rank first regardless of whether they are running paid search ads for that branded phrase. 

But you've worked hard to build your brand. So you want to be the one who profits from those searches, not affiliates, or competitors. 

The solution is to create a separate campaign in AdWords and/or Bing Ads and bid on your own branded keywords. 

You'll find that your CPCs are extremely low, CTRs are extremely high, and your costs per conversion will be substantially lower than your other paid search campaigns. 

Here are some highlights we have experienced with one online retailer’s branded terms campaign metrics, compared to their aggregate AdWords account metrics:

  • 54.17% decrease in CPCs
  • 300% + increase in CTR
  • 5x decrease in costs per conversion

Just because someone searches for your brand doesn't mean they are a customer yet. They could be simply researching you after hearing about you from a display ad, social media, or blog post. 

3. Know where big wins come from  

Does “sign up now” convert better than “start free trial”?  Does “no credit card required” get more clicks than “free support”? It really doesn’t really matter. Unless you are running massive campaigns and have already exhausted every other angle, tiny optimizations will produce minor lifts in conversions. Instead of micro optimizations, focus on testing different key messages and refining your positioning. 

4. Muscle-out your competition by outbidding them 

Another paid search tactic for bidding in a competitive ad marketplace is to simply outbid your competitors. The goal here is to bump the smaller competitors down in ad rank who may not have the budget to compete. Do this as a loss leader if you have to. Measuring lifetime value will soften the blow of the immediate loss on the initial transaction. 

5. Bid with Lifetime Value in mind  

When you build up enough metrics to discern how many transactions a customer makes throughout their lifetime in your product, what their average transaction size is, and assign a dollar figure to that, you'll realize that determining your paid search success around a single (first) transaction can be short-sighted. 

As an example, a SaaS company in the ad tech category may have CPCs of $3.00 with a conversion rate of 5%, with a subscription price of $20.00 per month and an average customer life span of 16 months.

If they only look at revenue for the first transaction their ad campaign is not profitable as it will take $60 to drive an initial transaction of $20.

If they factor in lifetime value, the campaigns become highly profitable as  it will take $60 to generating $320 in lifetime revenue.

For SaaS companies, LTV is very important. Master it.