Best Customer Acquisition Channels and Strategies For SaaS

With many customer acquisition channels available, how do you choose the right one?

With the right channels, it becomes easier to attract quality leads, justify CAC costs, and boost revenue in the long run.

Of course, it's not a walk in the park. Read on to find the best acquisition channels for your SaaS and how to create winning customer acquisition strategies that drive growth.

TL;DR

• Customer acquisition is the process of attracting and converting new customers into paying customers. It’s the first step in the customer lifecycle and is essential for businesses of all sizes to grow and succeed.
• Customer acquisition helps you increase your customer base, counteract churn, and drive sustainable growth.
• The difference between acquisition marketing and retention marketing is that the former focuses on attracting new customers, while the latter aims to keep existing customers.
• The customer acquisition funnel stages in SaaS are awareness, consideration, evaluation, and decision.
• In the context of customer acquisition sales funnels, the consideration and evaluation stages can be broken down into five stages: visitor, lead, MQL, PQL, and paying customer.

Best customer acquisition channels for SaaS companies:

1. Search engines
2. Paid Search (PPC/SEM): search and display advertising
3. Email marketing
4. Organic and paid social media
5. Online and offline events
6. Webinars to generate demand

Best strategies for acquiring customers as a SaaS business:

• Content marketing strategy
• Product Hunt acquisition campaign
• Hacker News campaign
• PR campaigns
• Affiliate marketing strategy
• Referral programs
• Influencer strategy
• Direct mail and cold calling campaigns

How to identify the right customer acquisition channel for your business:

1. Define your target audience and user persona
2. Build a specific strategy for each important customer acquisition channel
3. Measure the performance of your customer acquisition plan and improve

How to measure customer acquisition costs:

• Calculate the average customer acquisition cost for each channel
• Calculate customer lifetime value to customer acquisition cost ratio (LTV: CAC)

What is customer acquisition?

Customer acquisition is the process of attracting and converting new customers into paying customers. It’s the first step in the customer lifecycle and is essential for businesses of all sizes to grow and succeed.

Acquisition involves a series of well-defined marketing and sales activities designed to create brand awareness and capture the interest of target audiences.

Why is customer acquisition important?

Effective acquisition strategies will increase your customer base and revenue.

Each newly acquired customer represents a potential source of ongoing sales and profits. As your customer base grows, the cumulative effect of these individual transactions translates into substantial revenue gains over time.

Additionally, customer acquisition is a good way to counteract churn (which, by the way, is common to every business).

Customer acquisition marketing vs. customer retention marketing

Acquisition marketing efforts focus on attracting new customers. The goal is to expand the customer base by attracting individuals who have not previously engaged with the business.

On the other hand, retention marketing is aimed at keeping existing customers.

You need both strategies to drive business growth and sustainability. It's as simple as this: Without acquisition, you'll have no customer base in the first place.

Keep in mind that attracting customers doesn't mean you've succeeded; those customers have to find your tool useful enough to keep renewing their subscriptions. That's where retention marketing comes in.

The customer acquisition funnel in SaaS

SaaS users go through the following acquisition stages:

• Awareness: Here, potential customers are unaware of your product or service; they just know they have a problem that needs a solution, so they begin their search.
• Consideration: In this stage, potential customers become aware of your product and are looking at it as a potential solution to their problem. They're weighing various options available in the market, including your SaaS product.
• Evaluation: During the evaluation stage, potential customers are narrowing down their options and comparing different SaaS solutions. They're looking for specifics about how your product addresses their pain points and whether it offers the desired features. Customers in the evaluation stage will sign up for trials just to see how your tool can help them.
• Decision: The free trial brings customers to the decision stage, where they decide to upgrade to your paid plan or switch to an alternative. Your goal in this stage is to make the purchase process as easy and seamless as possible for users who choose to upgrade.

Customer acquisition sales funnel

The consideration and evaluation stages can be broken down into five stages if we're talking about a customer acquisition sales funnel:

• Visitor: They land on your website through organic content or targeted ads.
• Lead: A visitor becomes a lead when they show interest in your offerings. In many cases, this means downloading a lead magnet like an ebook or engaging with high-intent pages on your website.
• MQL: These leads take actions that indicate they're more likely to be receptive to further engagement and may have a higher chance of becoming customers. These actions include requesting a demo, signing up for a trial, etc.
• PQL: Unlike traditional Marketing Qualified Leads (MQLs), Product Qualified Leads (PQLs) go beyond just engaging with marketing materials and require the user to interact directly with the product itself. These leads have reached activation, and their usage behavior suggests they're considering upgrading to a paid plan.
• Paying customer: Your customer acquisition sales funnel ends here. The customer has upgraded to a paid account; what's left is to make the product experience so good they want to keep engaging.

Online vs. offline acquisition channels

There are multiple customer acquisition channels online and offline.

Offline channels include outdoor billboards, networking events, local sponsorships, etc. However, in this article, we'll focus on online channels as those are most relevant for SaaS.

Best customer acquisition channels for SaaS companies

Before we begin, it's important to note that while customer acquisition channels are generally effective to the extent of leads they can directly generate, most channels have secondary benefits you should also be maximizing.

For example, video marketing generates content that can be used to engage your audience on social media and email, but can also improve your SEO. Having an online community will attract potential buyers, but the community can also serve as a valuable tool for gathering customer feedback and building loyalty. Many more examples abound.

If you're wondering what the most effective channels are, here's data showing the ROI of major channels SaaS companies use. It's expressed as the ratio of dollars earned to the amount spent:

Let's discuss the key channels.

1. Search engines

Potential customers use search engines like Google and Bing in the awareness and consideration stages. That’s a good opportunity to attract and convert them.

Do this by optimizing your website and content to rank organically on search engine result pages (SERPS).

Done well, search engine optimization can be a highly effective customer acquisition channel for PLG SaaS.

Consider the example below when a potential customer is in the consideration stage and decides to use Google's search engine to look for potential solutions to a problem. In this example, they are searching for "best tools for product-led growth," and they can reach your website if it's ranking in the top results.

To win with SEO, ensure your content actually satisfies the visitor’s search intent and positions your tool as the solution to their problem.

2. Paid Search (PPC/SEM): search and display advertising

These are the same channels as above, but you’re paying for a spot at the top of SERP or to display your ads on websites. (If you return to the image above, you’ll see a Sponsored section right before the organic results.)

When should you use organic search vs. paid?

Ideally, you should combine both. Use paid search as a short-term strategy to attract leads while you work on gaining domain authority and credibility to rank high without paying search engines.

3. Email marketing

This acquisition channel lets you reach potential customers who have already expressed interest in your offerings. This can be done by collecting email addresses from website visitors, social media followers, or other sources.

Nurture your leads by segmenting them and sending valuable content, free trial reminders, and incentives to upgrade.

For example, Airtable sends personalized trial emails to product qualified leads and increases the chances that they'll convert:

Newsletters can also drive acquisition, but at a smaller rate. Below is Userpilot's weekly newsletter, which is sent to everyone that subscribes to it.

4. Organic and paid social media

Social media is a good channel for driving awareness and building a community around your product.

It's also useful as a distribution channel for content produced for different acquisition campaigns—blogs, Product Hunt launches, events, etc.

Explore paid social media to reach a wider audience. These platforms have enough user data to help you create highly targeted ad campaigns for capturing leads.

Paid social is generally less expensive than paid search, but of course, both channels have their nuances. For example, search engine marketing (SEM) is in response to user intent, while social media ads often interrupt user behavior, so you have to stand out to gain attention.

5. Online and offline events

Organize industry events, such as conferences, meet-ups, and the like, to discuss problems and raise awareness on how your product can address them.

Such events will attract potential customers and spread word of mouth about your company. It goes without saying that you should make the event worth every second of attendees' time—that's how to create waves that people will keep talking about in your industry.

For example, Userpilot's Product Drive free online event has a lineup of exceptional industry experts. This ensures people don't leave the event without learning valuable lessons.

6. Webinars to generate demand

Provide live or on-demand webinars to educate users. Use these webinars to talk about the pain points your target audience experiences and offer solutions—usually your product, but don't make everything revolve around your tool.

Focus on providing as much value as possible. You could also collaborate with complementary brands to create shared webinars, reach a larger audience, and increase awareness for your products.

Offer the recordings on demand so people can access them anytime. Pair this with email campaigns to drive as many people to your webinars as possible.

Best customer acquisition strategies for SaaS

Knowing the customer acquisition channels to use is like purchasing battle weapons; it's a good step, but there's no guarantee of winning yet.

Your strategy and how you wield the tools determine the level of results you get.

Below are the best customer acquisition strategies you should definitely consider:

Content marketing strategy

Content marketing is a type of search engine marketing that optimizes organic search to generate awareness and guide potential customers in the consideration stage.

It's a long-term strategy that involves creating and distributing valuable content to attract and engage potential customers. The channels used for content marketing can include blog posts, infographics, ebooks, webinars, and social media posts.

Use a content-led approach where you contextually showcase your product throughout articles in a no-sales way.

Product Hunt acquisition campaign

A Product Hunt acquisition campaign is a great way to launch new products or features to a niche audience looking for the latest in tech and SaaS.

Pair your Product Hunt campaign with social media and email marketing. You could start the campaign weeks or days before your actual launch to build anticipation. Once your new release is live, create email and social media posts to inform your audience about it.

Hacker News

This platform is a good traffic generator for your blog, YouTube, or any other platform you'd like potential customers to visit and continue interacting with your brand.

When creating content, remember that Hacker News's audience is tech-savvy and values quality content, innovative ideas, and insightful discussions. Thought-provoking pieces related to your industry or niche will attract lots of eyeballs.

PR campaigns

What's a better way to build brand awareness and attract new customers cheaply than press releases on industry-specific websites?

To begin, create a list of top industry websites your target audience trusts and visits regularly. Pitch your stories yourself or hire a PR agency to handle everything.

Affiliate marketing strategy

This strategy leverages the network and influence of affiliates to reach a broader audience and drive conversions.

Offer incentives so anyone interested can talk about your product—usually a set amount per conversion or a lifetime percentage of your subscription fee as users keep renewing.

Either way, each affiliate will have a unique link to promote your business and get paid if you get new users through those links.

ActiveCampaign pays an average of $1350 per referral.

Referral programs

This is similar to affiliate marketing as they both motivate other people to bring customers to your business.

The main difference: referral programs leverage existing customers, while affiliate marketers don't necessarily have to be users of your software.

Additionally, the benefits derived from referral programs are often not money in the bank—mostly discounts or extra features.

Influencer strategy

Similar to affiliate marketing, these are mostly short-term contracts with influential people in the industry. Influencers mostly use social media, blogs, and emails to promote their clients.

Pair your influencer marketing with acquisition strategies that need lots of buzz, e.g., a Product Hunt launch, an event, etc.

Direct mail and cold calling campaigns

This strategy is best for engaging with a specific, targeted audience, personalizing your outreach, and creating direct communication with potential customers.

Use tools like LinkedIn Sales Navigator to get access to relevant people. You might be entertaining the idea of buying lists, but that's against privacy law—plus, you might get an unsorted list of random people or dated info.

How to identify the right customer acquisition channel for your business

Not all customer acquisition channels are created equal. While you'll get a measure of success with any of the channels we've discussed so far, there are those that will pull better results for your business.

Here's how to know the channels to prioritize:

Define your target audience and user persona

Creating a successful strategy starts with understanding who you're building it for.

Conduct market and user research to understand your target audience's pain points, struggles, and motivations. You can do this by reading industry reports, conducting surveys, or interviewing potential customers.

After gathering the data, develop detailed user personas encompassing demographics, job roles, goals, challenges, and preferences. It might also help to divide your target audience into segments based on common characteristics and preferences.

In the end, you should come up with something like the sample below. Use the insights to decide the best customer acquisition channels and tailor your messaging to potential customer needs.

Build a specific customer acquisition strategy for important channels

Now that user needs, behaviors, and motivations have given you an idea of the channels to use, it's time to start building a strategy.

Realize that each channel requires different customer acquisition techniques, so build a strategy for each. From the onset, decide on the budget and how you will measure success.

Also, don't be afraid to set goals. Your goals for each channel should be specific, measurable, achievable, relevant, and time-bound. For example, your target for a social media channel might be to increase brand awareness by 20% in the next quarter.

Regularly measure progress and make adjustments as you go.

Measure your customer acquisition efforts

The final step in identifying the right channel is to measure your customer acquisition efforts. This means tracking the number of leads and customers you're acquiring from each channel, as well as the cost per lead and customer.

By tracking your results, you can see which customer acquisition channels are most effective and which ones need improvement. You can also use this information to optimize your customer acquisition strategy over time.

How to measure customer acquisition costs?

Calculating your CAC will enable you to optimize your customer acquisition strategy.

You'll also see how much profit you're making from each customer and have CAC figures to benchmark your performance against industry standards.

Below are two ways to measure CAC:

Calculate the average customer acquisition costs for each channel

For each channel, divide the total acquisition cost by the number of new customers acquired in a specific period.

For example, imagine you used social media as an acquisition channel, and at the end of the campaign, you had the following data:

Total cost of acquisition:

• $5,000 for marketing costs
• $2,000 for sales costs, and
• $1,000 for onboarding costs

Number of new customers acquired: 50

CAC = ($5,000 + $2,000 + $1,000) / 50 = $160

This means you spent an average of $160 to acquire each new customer.

Few things to keep in mind when calculating CAC:

• Make sure to include all the costs associated with acquiring a new customer. This includes marketing costs, sales costs, and onboarding costs.
• Use the same time period for all the costs and the number of new customers. This will help you get an accurate measure of your CAC.
• Track your CAC over time. This ensures you see how it changes as you adjust your customer acquisition strategy.

Calculate customer lifetime value to customer acquisition cost ratio (LTV: CAC)

The customer lifetime value (LTV) to customer acquisition cost (CAC) ratio is a measure of how much profit you make from each customer over their lifetime. It's calculated by dividing the customer lifetime value by the customer acquisition cost.

For example, if the customer lifetime value is $1,000 and the customer acquisition cost is $100, the LTV:CAC ratio would be 10.

This means you're making $900 in profit from each customer.

A high LTV:CAC ratio means you're making a lot of profit from each customer, while a low LTV:CAC ratio shows you're losing money.

Conclusion

It's time to take what you've learned and start applying.

Create your user persona and decide on the customer acquisition channels to use. Experiment with different channels and compare the results, then stick with what works.

Userpilot can help you understand user behavior, choose the right customer acquisition channels, and deploy in-app experiences to retain customers. Book a demo with our team now to get started.