Archive for the ‘Customer Acquisition Cost’ Category

Is the SaaS sales cycle just another webshop checkout process?

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When delivering a SaaS offering two factors are crucial to profitability

  • Customer Volume
  • Customer Acquisition Cost (CAC)

You obviously want a large customer volume and a low CAC. To this end you will typically employ the power of viral marketing and cheap and scalable online marketing. Hence, you will not have sales people in the field actively herding customers through the sales funnel. Instead, your online initiatives and community need to be able to turn leads into customers autonomously. Actually, the sales cycle is not a sales funnel as much as it is a sales vacuum hose. Customers have to be sucked into your business. Since no-one is around to actively respond to prospects’ whims and wishes and since prospects have a free will (gasp!), the slightest barrier to entry in your sign-up process can have a large impact on your customer volume.

If you read up on some of the lore on designing a webshop and its checkout process, you will see that a lot of energy is put into streamlining the buying process. At every step of the process, a webshop risks loosing customers if they can’t figure out where to go next or if they are just distracted.

When selling SaaS, streamlining the process from initial interest until you can charge the customer is even more important and even harder to get right. SaaS vendors usually offer the option of trying the product for a period of time before buying. This means that there is ample room for something to trip the customer up.

The process of getting someone to sign up for your service looks something like this:

  1. Get them to visit your website
  2. Get them to read about your product and realize that it might address their pain
  3. Get them to try out your product
  4. Get them to sign up
  5. Get them to renew their subscription

Each step in the process is a possible barrier to entry, so you have to think very carefully about each step. Heed the advice of webshop designers, e-commerce consultants and usability gurus, but keep in mind that turning a prospect into a paying SaaS customer is a much more complicated process than making a customer go from A to B in a webshop.

When designing your sales cycle, you should keep the 5 steps above in mind and actively seek to make the transistion between each step as effortless as possible.