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Written by Sam Yadegar on Sep 7 , 2021

Check out these expert strategies to lower CPA for your SaaS brand.

Here, you’ll find:

  • Why PPC isn’t the only way to keep CPA low
  • How content, SEO, and landing pages can help lower CPA
  • Why audience targeting is crucial (and not just on Google)
  • Reasons why you should also measure LTV

Sure, a productive tech company’s office needs physical items like pens, printer paper, and sticky notes. (Oh, and snacks, don’t forget the snacks). 

But at the end of the day, digital rules all. It’s what lives at the core of these businesses — and that includes the software as a service (SaaS) industry. 

No matter the market and target audience, SaaS brands create software to solve a problem. Because of this, it’s likely that digital marketing and paid search have been part of your core business from the start. 

No spoiler alert here: as your business changes, so should your digital marketing strategies.

Why CPA matters for SaaS

One metric you’re likely familiar with in your SaaS paid search strategy is the cost per acquisition (CPA). Also called cost per action, CPA is defined as an online advertising payment model based on qualifying actions such as sales or registrations. 

Many SaaS companies only associate PPC or paid search with improving cost per acquisition (CPA). And while you’ll find a wealth of information linking the two, these things are not mutually inclusive. 

If you’re a SaaS company focused on CPA over cost per lead (CPL), you’re already ahead of the game. Many businesses get too hung up on low CPL. But even if an ad doesn’t bring in a ton of leads, if the conversion rate is high, you know you’re doing something right.

Lowering your CPA is a broad-based task. PPC is just one tool available to help you accomplish this. As you’ll see, there are other digital marketing strategies you can also leverage to help bring in new business without breaking the bank.

close up of a screen with digital marketing data

You don’t need to overhaul your content in order to make it a solid tactic for attracting new, high-quality leads. (Image via Unsplash)

1. Leverage good ‘ole SEO

With new online marketing trends cropping up nearly every day, it can be easy to overlook the effectiveness of classic search engine optimization (SEO)

This isn’t meant to downplay the complexity of this style of marketing. Rather, it’s to remind you that you don’t need to overhaul your content to make it a solid tactic for attracting new, high-quality leads.  

Understanding search engine algorithms and how to mold your SaaS content to better accommodate them eliminates the need to rely solely on new advertising campaigns. By learning to master the intricacies of SEO, you can enjoy benefits such as:

  • ‘Evergreen’ sustainability
  • Greater ROI
  • More leads and sign-ups
  • Free or inexpensive traffic increases
  • Increased authority in your industry or field

For SaaS companies in particular, gating content can be a great way to generate leads. However, it doesn’t do a whole lot for your SEO, since the content isn’t publicly available without filling out a form. Content marketing can still be a big boon for your biz, though, whether or not it’s indexed for SEO.

2. Focus on quality content marketing

In the world of internet marketing, if SEO is what brings them in, then good content is what keeps them around. 

Rather than trying to manipulate the search engine ranking system to work in your favor, content marketing is about understanding your customer base and tailoring your content to them. 

But truly knowing your customers entails a lot more than just having their names and email addresses on file. You need to understand what really makes them tick when it comes to doing business, such as their:

  • Buyer personas and backgrounds
  • Intent
  • Problems and pain points
  • Expectations
  • Values

What makes SaaS content marketing such a cost-effective method of improving your CPA is that you already possess most of the info needed to improve your content. A thorough analysis of your sales history and the feedback provided by customers will give you a ton of information about what content and topics really hook them. 

Understanding just how to use SEO and content marketing to bring new visitors to your site is key if you hope to see high conversion rates from your organic traffic.

3. Look into your competitors

It’s also worth taking the time to see how your competition stacks up in the content marketing department. Which topics are they outranking you on, and how are they doing it? Identify content gaps and see how you can leverage them for your own brand’s benefit.

By highlighting new trends and innovating ways to help your audience, you can start building the relationship and brand trust. See what you can learn from your competitors in the SaaS space, then determine how you can beat them at their own game in your own unique way.

Add into that a detailed analysis of keyword trends and their conversion rates, and content marketing allows you a virtual sneak peek inside of customers’ heads without them even knowing it.

4. Optimize your SaaS landing pages

In case it wasn’t already apparent, we’re big fans of landing pages around here. That’s because we know it’s a solid way to take a user from an organic search result, paid search ad, or marketing promotion straight to a specific page on your website with a clear call to action.

An optimized landing page can be a major key to your digital marketing success, particularly when the competition is stiff and the cost-per-click (CPC) is high. A few ways to ensure yours are optimized include:

  • A killer headline
  • A consistent message
  • A mobile-friendly experience
  • A thoughtful design

Experts know that designing your landing pages to have a specific purpose and drive a particular action will help boost your conversion rate.

Plus, a lot of SaaS lead capture campaigns represent just the starting point. Once they’re in, you can work your lead through an email drip campaign or additional display remarketing that serves up something like a free whitepaper download. These follow-up efforts are natural areas to iterate on and optimize.

We’ve helped plenty of clients strengthen their online presence and achieve a greater ROI from their marketing dollars. Looking to join the ranks? Let’s chat.

crowd with their hands raised

Demographic targeting and ads on social media platforms are great methods for meeting your prospects where they are. (Image via Unsplash)

5. Find your audience

Google’s audience tools are great for targeting users in the consideration stage. You want to get your SaaS product in front of people who are looking to buy what you’re selling, are similar to an existing audience you have, or are researching one of your competitors. 

Using Google Ads audience targeting to pinpoint or even just “observe” these users can be highly valuable and help you lower your CPA. Just don’t forget to perform regular testing so you can be sure you’re aiming in the right places. 

This doesn’t just apply to Google. Demographic targeting and ads on other search engines like Bing and the main social media platforms (Facebook, Twitter, Instagram, and LinkedIn) are great methods for meeting your prospects where they are.

Connect with these users by offering high-value content that shows you’re a thought leader and guides them right to (you guessed it) an eye-catching, targeted landing page.

6. Don’t forget about lifetime value (LTV)

CPA is no doubt a crucial metric for SaaS companies. But to get a full picture of your digital marketing ROI, it’s wise to be looking at lifetime value (LTV) as well. 

Many SaaS companies operate on a subscription or annual contract level, meaning the transaction isn’t a one-and-done deal. Looking beyond the initial CPA can tell you much more about the actual value and ROI of your efforts. 

For example, if your customer refers two other businesses who end up purchasing your product, you’ve just saved money by not having to use marketing to gain that business. The LTV can also be affected if your customer re-ups their contract for 2 years at once. 

The Balance Small Business explains that a simple way to break down this number is through the following formula:

Lifetime Customer Revenue – Lifetime Customer Costs = LTV

The takeaway

For SaaS companies, there’s no shortage of data — the key lies in translating all that noise into a cohesive and useful narrative. 

Combine these marketing strategies with a successful PPC campaign, and you can immediately see your site quickly transform into a powerful (and efficient) sales tool. 

This post has been updated and was originally published in September 2014.

Sam Yadegar

Sam Yadegar

Sam Yadegar is the co-founder and CEO of HawkSEM. Starting out as a software engineer, his penchant for solving problems quickly led him to the digital marketing world, where he has been helping clients for over 12 years. He loves doing everything he can to help brands "crush it" through ROI-driven digital marketing programs. He's also a fan of basketball and spending time with his family.

Questions or comments? Join the conversation here!

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Written by Sam Yadegar on Aug 23 , 2021

If you’re not calculating the lifetime value of your customers, here’s why you might want to start.

Here, you’ll find:

  • What “customer lifetime value” means
  • Why it’s important to calculate
  • How to determine the lifetime value of your customers
  • What next steps to take

Many companies are getting it wrong when it comes to calculating how much they stand to gain from a customer. 

Sure, they may be in the know when it comes to the value of acquiring a new customer. When they only focus on new customer acquisition, they’re often missing the real prize.

That prize: The lifetime value of that customer. 

With any luck, a customer isn’t just worth a single subscription, closed deal, or purchase from your store. The customer journey doesn’t end when they sign on the dotted line. 

Rather, it’s better to look at what that customer is worth by the value they can bring through a lifetime interaction with your brand. This could be through additional purchases, annual renewals, or referring others to you. 

If you’ve been struggling to reach your overall marketing goals, make sure you’re calculating lifetime value as one of your KPIs. These figures help you determine how much an average customer is worth. They can also help inform how much you should budget in order to retain them.  

hawksem blog: customer lifetime value

By understanding how long they’re likely to stick with you, you can get a better idea of a customer’s lifetime value. (Image via Unsplash)

Customer lifetime value: defined

As we mentioned, a customer’s lifetime value is the value that a customer has for your business over the lifetime of their interaction with your brand. To calculate it, there are a few factors to consider.

How much is the average purchase from a customer? That is, how much does the average customer spend with your brand? Keep in mind that many customers will spend more with your brand if their initial experience is positive. Once they can develop trust in you and the solutions you have to offer, they may be willing to make more big purchases. 

How often do customers make purchases? How often does the average customer come back to your business for future needs? In the case of some brands, that may mean monthly purchases, annual contract renewals, or add-on services. 

Others may find that a customer visits more or less frequently. The average customer at their favorite restaurant, for example, might come by or place a takeout order once a week. The average customer at a car dealership may only visit once every several years. 

How long do customers stay with your business, and what’s their average lifetime with your business? Customers may naturally move through your business over time: new ones come on, old ones leave. By understanding how long they’re likely to stick with you, you can get a better idea of a customer’s lifetime value.

Why is a customer’s lifetime value important?

A customer’s lifetime value is important to your business for a number of reasons. 

First, data shows it costs you less to keep a current customer than it does to acquire a new one. You may also find that appealing to existing customers through your advertising is less expensive than attracting brand-new ones.

Increasing retention by only 5% can lead to as much as 95% more profits. Moreover, even retaining 2% more customers can save you 10% on costs.

Your customers’ lifetime value can help compensate for your customer acquisition cost (CAC). If you’ve noticed your CAC creeping up, looking at a customer’s lifetime value can give you a better idea about what your customers are worth to your business. This, in turn, can potentially increase your willingness to raise your ad spend. 

Reasons your CLV might be low

If you aren’t keeping your customers around, you need to consider why. 

Some businesses are accustomed to fleeting traffic. It’s normal for most businesses to have one-time customers who come in to fill an immediate need but may not need to use their business again in the future. 

Most businesses, however, should consider the importance of maintaining a relationship with existing customers. This makes it easier to bring them back for future purchases. 

If you aren’t bringing in repeat business, ask yourself: why not? It could be a matter of prices that are too high or a lack of quality customer service. Maybe you’re not nurturing clients once the deal is closed, encouraging them to refer others or purchase additional items or services. 

It could simply be that your business isn’t leveraging marketing to stay top of mind for your customers. This decreases the likelihood that customers will return. 

hawksem: customer lifetime value blog

As you develop a better understanding of the importance of customer lifetime value, the next step is determining how you can increase it. (Image via Unsplash)

How to calculate CLV

There’s no single equation that is universally agreed upon when it comes to calculating a customer’s lifetime value — if only it were so simple!

As The Startup explains, two common ways you can calculate CLV are historically and predictively. 

The historical method is based on purchases your customers have made in the past. You find this figure by determining a time period. Then you divide your total revenue by the number of customers during that time. This gives you the average revenue per user. 

From there, you can multiply or divide it to determine this figure on a monthly or annual basis. 

The predictive approach is a bit more precise. This method involves looking at a customer’s transactional behavior to predict what actions they may take in the future. 

This formula multiplies average order value, average gross margin, average number of monthly transactions, and average customer’s lifespan in months together. From there, divide that result by the number of clients for that time period. 

Here’s a more basic formula: 

(Average purchase value) x (number of times the customer makes a purchase each year) x (average amount of years the customer relationship lasts) = CLV

There are other more advanced formulas as well, if you want more options.  

Tips to increase CLV

As you develop a better understanding of customer lifetime value and its importance, the next step is determining how you can increase it. Increasing customer lifetime value can boost your business’s revenue without substantially increasing your marketing efforts or ad spend. 

Upselling

When customers visit your website, they should not only receive information about the product or service they’re looking for, but about the accessories and additions that go along with it, if applicable. 

For example, a customer buying a grill may need a cover, utensils, or propane. Someone who purchased the basic-level tier of your service may be interested in the deluxe or enterprise version as their needs grow. Consider offering recommended pairings to go with a purchase. These potential upsells could pop up on the product page, as recommendations in the shopping cart, or via email. 

Retargeting

Consider targeting ads to customers who have already visited your website, or even those who have made a purchase in the past. You can create retargeting (also called remarketing) ads designed to target the types of products customers have already considered buying or offerings that go along with a past purchase. 

Retargeting can keep your business top of mind for those customers, bringing them back to you when they have another need for products or services in your industry.

Improving your customer service

Your overall customer service is one of the biggest indicators of whether someone will return to your brand. People want to feel valued and heard. Whether they’re coming to you with a problem or offering quotes of praise, responding in a personalized, respectful way can take you far.

It’s not the presence of a problem that will lose a customer. Rather, it’s how you choose to deal with the situation. That comes through via the quality of the service that you offer to your customers.

Plus, you can repurpose client testimonials for marketing on your website and social media. This makes your clients feel heard and appreciated while helping to boost your credibility.

By empowering your customer service team, you can increase the likelihood a customer will stay with your business, which can ultimately increase lifetime value. 

Pro tip: Google Analytics has a CLV report (dubbed LTV for lifetime value) that will break down data about your users’ behaviors, from the first interactions to page views, goals, and more.

The takeaway

As you can see, a customer’s lifetime value is of critical importance to your business. 

By tracking the average lifetime value of your customers, you can move towards increasing your understanding of how to reach your customers. 

In turn, this can help you better target your ads and understand what your customers need to stick with you over your competitors.

This post has been updated and was originally published in July 2020.

Sam Yadegar

Sam Yadegar

Sam Yadegar is the co-founder and CEO of HawkSEM. Starting out as a software engineer, his penchant for solving problems quickly led him to the digital marketing world, where he has been helping clients for over 12 years. He loves doing everything he can to help brands "crush it" through ROI-driven digital marketing programs. He's also a fan of basketball and spending time with his family.

Questions or comments? Join the conversation here!

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