SaaS Growth and How it Can Be Negatively Impacted by Selling to the Wrong Customer

SaaS business owners, marketers, and sales people, we are all united by one goal: get more customers. We know that the company’s revenue and, in turn, its survival, depend on an increasing number of customers. But what if this blind chase can actually impact SaaS growth in a negative way?

The SaaS market is predicted to have an immense growth — $133 billion by 2020. To be part of it, every SaaS company needs to grow their revenue AND their customer base. According to a study, SaaS companies spend $1.18 for every $1 revenue they get from a new customer.

Of course, this seeming discrepancy is regulated by the fact that said customer will continue to purchase from the company in the upcoming months or years. This is why SaaS free trials are a standard offering today and we cut no corners when it comes to SaaS lead generation.

But what if we sell to the wrong customer? It’s still a sale and it still brings in revenue, right? Not really. Let’s see why:

3 Reasons Why Selling to Wrong Customers Can Harm SaaS Growth

No matter how hard you try, some people still won’t buy your SaaS solution. We tend to take this personally, as a failure. But it’s really not.

Irrespective of how attractive your SaaS free trial may be, some people are still going to say “thanks, but no, thanks”. Here’s why you shouldn’t go above and beyond to change their mind:

1. You Can’t Make the Wrong Customer Happy

The Internet is full of places where people can rate the SaaS solutions they work with and complain about them. And yes, this can be valuable feedback. We all know that no SaaS solution is perfect and that they are all works in progress.

But we need to make a clear distinction between valuable, honest feedback and complaints. The first one comes from the clients that are a fit for your SaaS and that will help your SaaS growth. These customers offer their feedback because they plan to stick around and grow along with you.

On the other hand, complaints (even if based on legitimate facts) come from clients that you cannot make happy. You are not solving a real need for them, no matter how much you try to. And, as soon as the wrong customers take note of that, they will leave and, consequently increase your churn rate.

What is worse is that they will leave a trail of bad reviews and complaints online. And, as we all know, the Internet never forgets. Plus, the potential right customers won’t know that the bad reviews come from “misfits”. They will believe the reviews were written by people just like them. And if their peers couldn’t manage to derive any value from your SaaS, why could they?

2. The Wrong Customer Can Harm Sustainable SaaS Growth

Sure the extra $50 or $500 per month IS new revenue and no one can deny that. But how long can you really count on that money?

As stated above, the wrong customers bring about a high churn rate, so before you think about making new investments in your SaaS, decide whether you sold to the right customers or not. Otherwise, your SaaS growth will be unsustainable.

In other words, you may grow with the wrong customers for a year or two, but then you will be in for a rapid decline. No matter how many SEO copywriters you hire or how great your SaaS social media marketing is, you won’t be able to bring back customers who were never supposed to be there.

3. The Wrong Customer Brings Extra Costs

Yes, along with the revenue they bring! Customers who are a misfit for your SaaS will not just complain about your SaaS. Before doing that, they will also generate a need for more customer support specialists and they will lower the morale of your employees.

As a good businessman who cares about customer satisfaction (and, of course, SaaS growth), you will hire more customer representatives. If the complaints keep piling up, you will probably also think about changing or upgrading some of the features of your SaaS.

But none of these will work. Because the problem is not with your SaaS, it’s with your initial marketing strategy.

How to Sell to the Right Customer and Boost Your SaaS Growth

Most salespeople have a common mindset: sell as much as you can to as many people as you can.

This is where the first change needs to happen. In the sales mindset. You see, the era of pushy salesmen is gone. It is now time for inbound sales.

In a nutshell, the inbound sales main tactic is selling to the right customer, the customer who REALLY needs your service.

So how can you apply this to your SaaS?

Follow these steps:

• Create a detailed buyer persona: go beyond the usual age and gender metrics. Find out where your buyer persona hangs out (online and in real life), what do they like to eat, drink and read. Most importantly, find out what are their main challenges or pain points. This will be the starting point for your lead generation campaign.
• Don’t be too generous with your PPC ads: whether your main focus are Facebook ads, Google AdWords or any other kind of online ads, the principle remains the same – don’t go beyond your ideal buyer persona when you set up the campaigns. Assign job roles, interests and demographics that fit within that profile. Narrow down your audience as much as possible, even if the reach numbers seem daunting at first.
• Create copy that speaks to your buyer persona: your perfect blog post is one that solves a specific problem, not a generic one. For instance, you need to go further than “how to succeed with social media”. Choose topics like “how to create taglines for local Facebook campaigns”. This is how you know you will reach the right audience. The same goes for webinars, white papers and any other collateral you create. Last, but not least, know your limits. If you can’t create content for your audience, it’s better to hire professional copywriting teams.
• Don’t try to convert everyone: even if you follow the above steps, some wrong customers will still fall between the cracks of your sales pipeline. Before you invest too much effort in converting everyone who tried your free trial, take a look at the profile of your leads. See how they interacted with your SaaS solution and determine whether they got any real value from it or not.

Sustainable SaaS Growth Can only Happen if You Sell to the Right Customer

Letting customers go is not a failure, nor a disaster, provided you choose wisely. Every SaaS company has limited resources. Instead of focusing yours on the wrong customers invest in precise targeting that bring you long-term gain and ROI.

Need help finding the right customers for your SaaS? We can help you with buyer persona defining, marketing strategy design and marketing strategy implementation! We helped numerous SaaS companies achieve sustainable growth and we can do the same for you: