Customer Acquisition Guide For SaaS: Definition, Metrics and Examples
What is customer acquisition for SaaS, and how can you leverage it to drive sustainable growth?
This article answers that and more. You’ll learn:
- The different stages of the acquisition funnel
- Teams responsible for acquisition
- Why the process doesn’t end when customers sign up to use your tool
- Effective customer acquisition channels and how to reduce customer acquisition cost
- How to measure your customer acquisition efforts
- Customer acquisition refers to the actions and strategies companies use to attract new customers.
- The purpose of customer acquisition is to expand and make more revenue.
- Customer acquisition marketing refers to the subset of strategies and activities within customer acquisition that focus on marketing techniques to attract and convert potential customers.
- Customer acquisition funnel stages in SaaS are Awareness, Consideration, Evaluation, Conversion.
- Teams from Marketing, Demand Generation, Growth, Sales, Media Buying, and Customer Success are in charge of customer acquisition.
Customer acquisition channels used for SaaS:
- Organic search engines
- Paid advertising (PPC/SEM)
- Email marketing
- Organic and paid social media channels
- Product Hunt
- Hacker News
- Affiliate and referral programs
- In product (especially for PLG)
4 steps to build a successful customer acquisition strategy
- Understand your ideal customer
- Build a customer journey map to understand the customer acquisition process
- Identify the best channels to find potential users
- Focus on targeted customer acquisition methods
How to improve customer acquisition and reduce customer acquisition cost
- Focus on one customer acquisition channel at a time
- Optimize your website
- Compare customer acquisition costs across channels
- Continuously learn from existing customers
- A/B test messaging on conversion pages
- Look at increasing the lifetime value of your paying users
- Optimize your freemium offering
- Optimize your signup flow and free trial onboarding
- Don’t forget about customer retention
- How to measure your customer acquisition marketing efforts:
- Calculate customer acquisition cost (CAC)
- Look at your customer’s lifetime value
- Measure average revenue per customer (ARPU)
- Userpilot can help you create in-app experiences for new customers, convert trial users, and increase retention. Book a demo now to learn more.
What is customer acquisition?
Customer acquisition is a broad term used to define the actions and strategies companies use to attract new customers.
Acquisition is a multifaceted process encompassing every stage of the customer journey, from initial awareness of potential customers to them becoming paying users.
What is the purpose of customer acquisition in SaaS?
The purpose of customer acquisition is to help companies expand and make more revenue.
New customers bring in subscription fees, licensing charges, or usage-based payments, which are the lifeblood of SaaS businesses.
As more customers are acquired, the company’s revenue stream expands, enabling it to invest in product development, innovation, and scaling operations.
Additionally, a healthy customer acquisition strategy allows SaaS companies to tap into new markets and diversify their user base.
As the user base grows, the company gains valuable insights into different customer needs and preferences, which can inform product enhancements.
What is customer acquisition marketing?
Customer acquisition marketing refers to the subset of strategies and activities within customer acquisition that focus on marketing techniques to attract and convert potential customers.
This can involve various marketing channels such as digital advertising, content marketing, social media campaigns, SEO, and more.
Customer acquisition funnel in SaaS
SaaS products are typically more complex and require extra research and consideration from potential customers, so the SaaS sales funnel differs from what’s obtainable in other businesses.
For example, in e-commerce, sales can happen at the first visit. In SaaS, it might take several visits just to get a trial, then you still have a few steps until you acquire the customer.
Breaking down the SaaS acquisition funnel will enable you to convert more customers because you’ll know what’s happening at each stage.
Below are the funnel stages in SaaS:
At the awareness stage, potential users recognize they have a problem or need that requires a solution; they begin searching for information to better understand their problem and identify possible solutions.
Your goal at this stage is to get potential users to know about your product and what it can do for them.
Potential customers have identified their problems and are actively researching various solutions. They’re seeking alternatives and comparing different SaaS providers to find the best fit for their needs.
As they move to the evaluation stage, potential customers are interested enough to explore your SaaS product further. They might sign up for a free trial or create a freemium account to experience your solution firsthand.
During this phase, provide clear and easy access to your trial or freemium version, ensuring that potential users can quickly understand how your product works and how it addresses their specific pain points.
The conversion stage is where potential customers make the decision to upgrade from a trial or freemium account to a paid subscription. This decision often hinges on how well your SaaS met their needs and demonstrated its value during the trial period.
It’s important to note the customer acquisition process isn’t always linear.
Potential customers may move back and forth between stages or skip some steps altogether. Always track the customer acquisition process to identify areas of improvement and convert more new customers.
Who is in charge of customer acquisition?
Customer acquisition involves various roles and teams working collaboratively to attract, engage, and convert potential customers into paying clients.
The responsibility for customer acquisition can be distributed among different functions, depending on your company’s structure and size. Here are some of the key roles typically involved in customer acquisition:
- Marketing team: The marketing team creates and executes marketing campaigns that generate leads and drive awareness. They typically focus on driving organic traffic and building awareness through an effective content marketing strategy leveraging SEO and organic social posts.
- Demand generation team: The demand generation team focuses on both creating awareness and generating leads. They organize webinars, podcasts, workshops, and other events to attract potential customers.
- Growth teams: Growth teams are dedicated to Conversion Rate Optimization (CRO) through experimentation. They analyze user behavior and run A/B tests, making data-driven decisions to improve the user experience and increase conversion rates. By constantly testing and optimizing various funnel elements, they ensure potential customers have a seamless journey from awareness to conversion.
- Sales team: The sales team takes over from the marketing and demand generation stages. They qualify leads, ensuring they’re a good fit for the SaaS product. Sales representatives conduct product demos, answer questions, and address concerns to help potential customers make informed decisions.
- Media buying teams: Media buying teams handle paid advertising efforts. They create and manage paid campaigns across various platforms, including search engines, social media, and display networks.
- Customer success team: They provide support and in-app guidance to help users make the most of their experience. After conversion, this team continues to focus on customer retention and success, ensuring that customers achieve their goals with the SaaS product and remain satisfied over the long term.
Customer acquisition channels used for SaaS
Like every other business, customer acquisition for SaaS involves utilizing various channels to reach and engage potential customers. Below are some of the commonly used channels:
- Organic search engines: Customers in the awareness and consideration stages use search engines to find solutions. You want your website content to show up when they search.
- Paid advertising (PPC/SEM): This involves running pay-per-click (PPC) or search engine marketing (SEM) campaigns to display targeted ads in search engine results, driving traffic to your website.
- Email marketing: Use this channel to nurture leads and encourage conversions through personalized content and offers.
- Organic and paid social media channels: Use social media to share valuable content, build relationships with your audience, and drive traffic to your website and landing pages.
- Webinars: Host webinars to showcase your product’s capabilities, share industry insights, and engage potential and existing customers through interactive presentations.
- Product Hunt: Launching your product on this platform will help you gain visibility within tech-savvy communities, generating initial interest and user feedback.
- Hacker News: Hacker News is a social news website where people can post and discuss technology news and articles. The platform can help you get a lot of exposure to potential users.
- TechCrunch: Use platforms like this to gain massive PR exposure. For example, if you just secured funding or hit a huge milestone, don’t just post it on social media; have someone from your team reach out and see if you can get the story out.
- Events: This is two-sided—participate in industry events and conferences to showcase your product and establish relationships with potential customers. Also, you can host events yourself to educate your audience and generate more interest in your tool. A good example of this is Userpilot’s annual Product Drive.
- Affiliate and referral programs: Expand your reach through word-of-mouth by implementing programs that incentivize current users or affiliates to refer new customers.
- In product: This is especially useful for product-led growth (PLG) companies. In-product customer acquisition channels allow you to acquire customers without any outbound marketing. It can be done through free trials, demos, and onboarding.
How to build a successful customer acquisition strategy
Follow these steps to build a solid customer acquisition strategy for your brand:
Understand your ideal customer
You can’t create a plan that works if you don’t understand who your ideal customers are. Create user personas for your different audience groups, highlighting their demographics, pain points, goals, behaviors, and preferences.
By knowing your customers on a personal level, you can tailor your messaging, content, and strategies to resonate with them.
Build a customer journey map to understand the customer acquisition process
A journey map visualizes the steps potential users take from their first interaction with your brand to the point of conversion and beyond.
This helps you identify touchpoints, pain points, and opportunities for engagement at each stage of their journey.
Identify the best channels to find potential customers
Not all customer acquisition channels will be equally effective for your SaaS and target audience. Research and analyze which channels align with your ideal customers’ behavior and preferences.
Focus on targeted customer acquisition methods
Instead of casting a wide net, concentrate on methods that allow you to reach a smaller, more relevant audience. This could involve using specific keywords for SEO, crafting personalized email campaigns, or participating in industry-specific events.
How to improve customer acquisition and reduce customer acquisition cost
Acquiring new customers will always cost you, but with the right approach, you can reduce CAC costs while getting quality leads. Here’s how:
Focus on one customer acquisition channel at a time
Unless you have a large, dedicated team, you’ll find it difficult to be effective across multiple channels at a time.
So, it’s best to identify one channel and start implementing tactics there. This could be just organic social posts or SEO, then move to paid advertising, later add demand generation, etc.
Following this approach ensures your efforts are not spread too thin, and you only move to a different channel once you’ve optimized one.
If you’re wondering what to begin with, having a blog that drives traffic is one of the best acquisition channels for SaaS. It’s cost-effective and can serve as a long-term acquisition channel.
Optimize your website
Acquisition is about attracting and converting customers, and conversion mostly happens on your website or landing page.
Without an optimized website, your marketing efforts will be wasted—you’ll find it hard to drive trials, demos, and freemium sign-ups.
Optimize the following aspects of your website/landing page:
- Speed and other technical SEO
- Images, videos, and any other media
You could also add a chat button for visitors who might need help.
Compare customer acquisition costs across channels
Don’t rate acquisition channels solely on the number of customers they bring in; also consider the cost and the value of the customers acquired.
Test different channels, analyze the results, and stick to the most profitable ones.
Continuously learn from existing customers
Segment your power users and trigger surveys asking how they found your platform and what aspects of your tool bring them value the most.
Take note of the recurring answers. Next, pair the survey responses with product usage data to understand how customers use your tool.
The insights obtained from the steps above will help shape your messaging. You’ll target potential users who are a better fit, and the customer lifetime value will go up as a result.
A/B test messaging on conversion pages
A/B testing helps you identify what works for your audience and what doesn’t.
Run tests for the following pages:
- Pricing page: Play around with color variations and add different elements—feature highlights, pricing tier comparisons, annual vs monthly pricing, etc.
- Demo page: Test the length of the form. A shorter form may be more likely to be completed, but a longer form may provide you with more valuable information. Test different messaging for the call to action, such as “Request a demo” or “Sign up for a free trial.”
Also, A/B test in-app messaging to see what’s helping with trial engagement and upgrades.
Look at increasing the lifetime value of your paying customers
SaaS acquisition is also about driving expansion, so your work doesn’t end when you turn prospects into paying customers.
To increase customer lifetime value, get them to engage more with your tool. Ensure their product experience is satisfactory, then find points in the user journey to offer contextual upgrade prompts.
Limited deals work well. Here’s an exam from Slack.
Optimize your freemium offering
Your freemium option should provide sufficient value to encourage repeated engagement with the product while also avoiding excessive value that might prolong the time it takes to outgrow the free plan.
For example, Notion is targeting small to big businesses, but to attract these, they have a free plan for individuals. It helps with awareness and getting potential end users to recommend the product to their companies.
Optimize your signup flow and free trial onboarding
Your sign-up and trial onboarding processes play a major role in converting users to paying customers.
You want to keep the sign-up flow as short as it can get. Also, analyze how users interact with the process and remove all friction.
In the sign-up process, ask relevant questions to collect user data and personalize their journey. The questions you ask should be about their roles and JTBD.
Example from Fullstory.
Don’t forget about customer retention
Acquisition shouldn’t be used to compensate for loss generated by churn.
If you’re investing too much effort into acquisition and your churn is high, look into proactively reducing churn too—it won’t matter how low your CAC is if LTV and ARPU are low.
Case in point, a 25% increase in retention translates to a 31.07% increase in MRR, while increasing acquisition by the same 25% only results in a 25% boost in MRR:
How to measure your customer acquisition efforts?
No single metric can 100% tell you how your acquisition efforts are coming along.
You’ll need to look at multiple metrics to understand the big picture and measure customer acquisition properly.
The key metrics to track include CAC, LTV, and ARPU. Let’s go over them.
Calculate customer acquisition cost (CAC)
CAC represents the cost you incur to acquire new customers. This includes expenses related to marketing and sales efforts.
Calculate the CAC by dividing the total acquisition cost by the number of new customers acquired in that period.
When combined with CLV and ARPU, a low CAC is beneficial. If the cost of acquiring customers (CAC) is significantly lower than the value those customers bring over their lifetime (CLV), it suggests a healthy business model.
Look at your customer’s lifetime value
LTV is the estimated profit a customer will generate over their entire relationship with your business.
A high customer lifetime value only happens when you’re able to retain the new customers acquired.
There are several ways to calculate the customer lifetime value. One of the most effective ones is using a predictive approach. In this model, you take into account historical transactions and behavioral inductors to estimate a figure.
Here’s a simple predictive LTV formula:
LTV = (Average customer lifespan Average gross margin) (Average monthly transactions Average order value)
A high LTV can offset a high CAC, and a low LTV can make it difficult to achieve a positive ROI on your marketing and sales efforts.
Measure average revenue per customer (ARPU)
ARPU is the average amount of revenue you generate from each customer each month. It’s calculated by dividing the total revenue by the number of customers.
This metric can tell you if your pricing strategy and efforts to maximize revenue per user are effective.
When combined with CAC and LTV, ARPU helps in understanding revenue dynamics. A high ARPU indicates that customers are spending more on average, which can contribute to a higher LTV. If ARPU is increasing while CAC remains stable or decreases, it suggests that you’re effectively upselling or cross-selling to your existing customer base.
Examples of best customer acquisition strategies in SaaS
Userpilot’s Product Hunt acquisition strategy
This strategy is about launching new products or new features to a niche audience looking for the latest in tech and SaaS.
For this launch, we used Product Hunt because it’s where that sort of audience congregates.
Of course, for faster results, you’ll want to use social media and email to drive eyeballs to your Product Hunt launches (or any alternative platform you use).
Userpilot’s website optimization acquisition strategy
We recently updated our website design and content so new visitors instantly ‘get’ what our software is about.
Highlights of this optimization:
- A clear CTA (Get a Demo)
- Short and on point messaging
- We showcased our product using short videos that tell visitors about Userpilot’s top functionalities—in-app engagement, product analytics, user feedback.
Zendesk automated demo for customer acquisition
First of all, Zendesk’s homepage is neat and has super clear CTAs telling users to start a free trial right away or view demo:
The demo option opens a new page where you can experience the product without creating an account—which is something visitors in the early stages of their journey will appreciate.
Further, Zendesk collects visitor data to learn about them and personalize the demo experience. Also, this data will later be used for lead nurturing.
It’s time to start practicing what you’ve learned.
Begin by deciding on a primary acquisition channel. Choose based on your audience and business. You could test a few channels at a time and analyze their performance to know where your efforts should go.
Also, remember it’s not just enough to get users through the door. Invest in making the in-app experience so great they wouldn’t want to leave.
Userpilot can help with that. Our platform not only allows you to create experiences; you can analyze user behavior, segment customers, collect contextual feedback, trigger upgrade prompts, etc.
You’ll do all these without writing a line of code. Book a demo now to see how you can start boosting new customer acquisition with Userpilot.