The goal of every company is to make money. Unlike other businesses, SaaS companies generate profits over an extended period of time.

In fact, some SaaS Start-Ups struggle to convince their investors and venture capitalists to go through with the funding during the first few years.

As it is demonstrated in the graph down below, SaaS and IT companies, especially B2B SaaS businesses, invest huge amounts of resources to acquire customers and only start getting a positive ROI, gradually, after a couple of years.

single-customer-cash-flow-chamaileon

Image Source: For Entrepreneurs

In order to make more money, SaaS companies have to:

  • Decrease their Customer Acquisition Cost (CAC)
  • Increase their Customer Lifetime Value (LTV)

We will demonstrate throughout this article how this can be achieved by implementing a Conversion based email marketing strategy for SaaS.

Optimizing SaaS Conversion Funnel with SaaS Email Marketing

Before diving in and showcasing how SaaS companies can use Email Marketing to optimize their funnel conversion rates, allow me to refresh your memory about what a conversion funnel for SaaS is.

What is a SaaS Conversion Funnel?

A SaaS conversion funnel or sales funnel is a set of steps or stages that a prospect (potential/future client) goes through during his lifetime, from getting to know the company to actually becoming a paying customer.

It is the companies onboarding process to convert people into loyal customers who are advocates.

saas-conversion-funnel-onboarding-elements

AARRR Metric Framework- Pirate Metrics for Startups – Image Source: Medium.com

We got inspired by the AARRR metrics to walk you through the SaaS Email Marketing Conversion Funnel:

  1. Acquisition Emails:

Acquisition emails are the first emails you will send to potential customers.

The goal behind acquisition emails is to acquire new clients.

The most famous acquisition email example is “cold emails”. It’s when you send out an email to your prospects without any previous contact.

Acquisition campaigns are the first point of contact with your potential customers, so you need to make sure that you leave a good impression, that will always be associated with your brand in the mind of your customer.

Target the right prospects, don’t send too many emails, use the most adequate email copy; All of these are general guidelines that you can follow to guarantee the success of your acquisition campaigns.

But, before you can even launch your acquisition email campaign, you need to acquire a database of your prospects email addresses, i.e: subscriber list.

You can either simply buy an email list, or put in some effort to grow your email subscriber list organically, by engaging in cross promotion with your social media channels, or sharing valuable content on your blog.

2.    Activation Emails:

Your prospects know about your brand after receiving acquisition emails. It’s time to dive in your onboarding process. Subscribers show some sort of interest in your product, by creating a free account, testing out your application or downloading your software for a free trial period.

This is the perfect time to start your customer activation phase by sending onboarding emails.

Your major goal here is to get your clients to the “Aha Moment”, where they realize that your brand is awesome, your product is great and they can’t live without it.

The first onboarding email you should send out is a Welcome Email.

Studies show that 76% of people who subscribe on a website expect some kind of Welcome Email.

Studies also show that Welcome Emails Open Rates reach on average 50%, which makes them 86% more effective than other types of emails.

If you want to know more about what to say in a Welcome Email, when to send it exactly and get inspired by welcome email examples from real brands, make sure to check out this article.

Remember that “Aha Moment”?

It cannot occur if your customers don’t actually use your product.

The second type of activation emails for your user onboarding is Education Emails.

You want to educate your subscribers on how they can use your application and guide them through different processes.

You might want to collect data from your current clients and learn about how they use your product, what they struggle with and what features they use the most.

Compile that data to create the most adequate education email series that will truly be valuable to your subscribers.

3.    Retention Emails:

It costs 5 to 25 more times more to attract new customers than to simply retain your current ones. I’m sure you’ve heard that many times.

This phase in the conversion funnel is important because it tells if your customers are happy with what you are developing or not.

If they stick around, then you are doing something right.

If, however, during the onboarding  they tend to leave after a while, you should try to figure out why that is and improve on that point.

During this stage of your conversion funnel, you should keep in touch with your customers in hopes to re-engage them (if they have been inactive for a while) and help them optimize how they use your application in order to extract more value.

The trick with retention emails is to know what type of information to send out, at what time and to which client.

Depending on their level of activity and engagement with your brand, you will be able to determine these elements and create an automated drip marketing campaign to send out triggered emails.

Here are some examples of successful retention emails from real brands:

  • Cart Abandonment Emails
  • Weekly/Monthly activity reports
  • Re-engagement emails for inactive users

You can go through the rest of the retention emails here.

4.    Referral Emails:

This is the phase in your onboarding process where you turn your loyal customers into your brand advocates.

There is no better way to spread the word about your business than through the words of a satisfied client.

Make sure to entice your customers to refer your brand to their friends and co-workers, who, chances are, are also part of your target segment.

5.    Revenue Emails- or Conversion Emails:

This is by far the most important step in the SaaS Conversion Funnel.

This is where profits are made.

All the steps we have mentioned prior to this one are a combination of micro-conversions that all serve the purpose of leading your customer through the Conversion Funnel towards the final, major macro-conversion: to sell.

SaaS Conversion Emails

What are SaaS Conversion Emails?

Conversion is when you succeed in turning your user into a paying customer.

Conversions are usually about selling, however, some experts argue that conversion, in general, is when your user goes through with an action you intended for them, even if it doesn’t necessarily concern paying for your service.

We call this type of conversions micro-conversions.

What is Micro Conversion?

Micro conversions are the small conversions that the user goes through from the moment he is introduced in the SaaS funnel, from acquisition to referral.

Each time you send an onboarding email to your subscribers to engage them, you are actually micro-converting them, in the hopes that at the very end of the Marketing Funnel, you would be able to macro convert them.

Your micro conversions metrics, for example, email open rates and CTR (Click Through Rates), are important to keep track of.

They will help you get more insight on what your subscribers like, what you are doing right and what you can improve.

The more your open rates increase, the more your CTR can increase, the more conversion rates can also increase.

Why are SaaS Conversion Emails Important?

It’s quite simple: The more you convert, the more money you make.

The more your subscribers go through with your calls to action, the closer they get to the major call to action we all care about: buying the product.

What are the most important Conversion Funnel Metrics you need to look out for?

In order to evaluate the success of your conversion-onboarding process, you need to know which KPIs to follow. You should collect data to be able to make decisions based on precise and reliable metrics.

Here are the Key Performance Indicators (KPI) for SaaS Conversion Funnels:

  • Customer Acquisition Cost (CAC)

Customer Acquisition Cost is how much money you spend to acquire one customer for your SaaS business.

CAC is the cost of onboarding a customer, which includes marketing, advertising and sales costs.

You can calculate your Customer Acquisition Cost by dividing the total amount of money spent acquiring customers by the total number of customers acquired during the same time frame.

You goal is to keep your CAC as low as possible. If you generate less profits than you spend acquiring customers, you are losing money.

cac-vs-ltv

Startup Killer: the Cost of Customer Acquisition

  • Customer Lifetime Value (LTV)

LTV or CLV is an approximation of how much money your company can expect from one customer over the span of his engagement period with the company: the longer a customer buys from you, the greater his LTV becomes.

Basically, LTV is a business’s ability to monetize their customers.

customer-lifetime-value-vs-churn-rate

Customer Lifetime Value – Image source: Chartmogul

  • Revenue Churn

Revenue Churn is the revenue lost in a certain period of time.

Revenue Churn can be caused by a number of factors, like downgrades, tough competition, client bankruptcies, cancellations.

  • Customer Churn

Customer Chrun is the rate at which your customers stop being your customers.

It is calculated based on the number of customers lost in a certain period.

customer-vs-revenue-churn-1

Customer Churn VS. Revenue Churn

  • Conversion Rate

Conversion Rate is the percentage of people who went through with the action you intended for them.

Conversion rates depend on a number of factors, some of which you do not control and cannot recreate (a major competitor stepping down for example).

However, you can still improve your conversion rates by enhancing your user onboarding process.

Customer-Free-To-Converted-Rate-customer-onboarding-process

Onboarding Process to Conversion

  • Monthly Recurring Revenue (MRR)

For SaaS companies, revenue from customers is usually recurring.

Customers renew their subscriptions each month or pay an annual fee in one shot.

This allows SaaS Businesses to easily calculate their monthly revenue simply by adding up the total sum of subscription money received from each customer each month.

If your MRR doesn”t increase each month, you should increase the number of your paying customers either by optimizing your SaaS Sales Funnel or improving your onboarding process.

You can also increase your LTV, in order to earn more revenue from existing customers.

How To Increase SaaS Conversions with Email Marketing?

There is a misconception in the IT and SaaS industry that companies only send one type of emails: activation emails.

Especially when it comes to B2B SaaS Companies who tend to send only a few emails, out of fear of disturbing their very busy customers.

However, that is not entirely true.

You see, SaaS companies generate profits not only by acquiring customers but also by retaining them (Retention Emails) and most importantly monetizing them (Conversion emails).

Your goal as a marketer in a Saas company is to extend your Customer Lifetime Value.

Translation: you need to sell more or upsell.

To upsell is to generate more revenue by:

  • Making your customers buy more (create more features in your application that your users would like to try, improve your software, etc.)
  • Making your customers buy more often (come up with different usability opportunities)

No one can deny that SaaS emails are crucial in the process that drives revenue increase.

Email Marketing Campaigns make sure that your subscribers go through with the different steps you set up in your email marketing funnel until they convert into paying customers.

Not only emails are personal and customizable according to each specific customer, but they are also easily measurable.

Here is a list of different types of  SaaS Conversion Emails with examples from real Saas Companies (In logical order):

  • Application Improvements
  • New Feature in The Application Launch
  • Different Uses of The Software/Application
  • More Occasions to use the Application
  • End of Trial Period
  • Account Renewal
  • Upgrade Account
  • Change in Pricing
  • Contests To Increase the Use of the Software/ Application

SaaS Conversion Email Examples from Real Brands

Application Improvements

mailchimp-application-improvement-email-sample

When Mailchimp updated their automation features back in 2015, they made sure to tell their subscribers about it.

They sent an email announcing that they have enhanced the application’s interface and enumerated all the benefits it has on their users work.

They included screenshots from the new interface to tempt their users into trying out this new updated version of their application.

litmus-product-update-email-sample

Here’s an example of an application update email from Litmus.

They added screenshots from the new application, and even included before and after snippets to highlight furthermore the changes they made.

Litmus added a big, specific call to action button at the end of their email. In order to encourage their clients to try out the new and improved application, Litmus scheduled 2 live demos where the customer support team shows off all the new features and answers user questions.

New Feature in The Application Launch

  • SlideShare

linkedin-slideshare-application-update-email-example

SlideShare by Linkedin added a new feature in their online application, and promoted it to their clients via email.

The email that our friend Jordie received starts with a big statement letting all readers know that this email is about a new feature release.

It goes on to explain what this new feature is about and why it’s great for the user.

Different Uses of The Software/Application

  • Airbnb

airbnb-new-feature-update-application-email-example

Airbnb sends an email to its subscribers encouraging them to check out close destinations where they can spend the weekend.

If you’ve ever heard of Airbnb, you know that they are not a travel agency.

However, in order to increase the usage of their platform, and upsell, Airbnb promotes different destinations to its users in order to increase bookings.

More Occasions to Use the Application

  • Uber

uber-Fireworks-AnimatedGif-new-year-email-example

Uber finds the perfect opportunity to promote their application during New Year by encouraging their subscribers to use their application instead of driving in order to prevent drunk driving accidents.

This is a great way to upsell your application in a completely unrelated holiday or occasion.

End of Trial Period

  • Dovetail

your-free-trial-of-dovetail-finishes-soon-dovetail-end-of-trial-period-email-example

Most software and IT companies allow first time users a free trial period where they can test the application and get to know more about its features.

When the trial period comes to an end, an email like this one should be sent to the user.

This will remind the user to make a decision about whether or not to go through with the payment and, if they like your application, your conversion rates will definitely increase.

Account Renewal

account-renewal-email-example-1

When your customer’s paying account is about to expire, it’s wise to send them a reminder to renew their subscription.

This way, you are certain that your current income will remain intact.

Another way to secure your revenue is to make sure that your current customers automatically renew their accounts.

As you can see in this account renewal email example, you can also allow your customers to upgrade their accounts at the same time.

If you like this template, you can make it your own using our Responsive Email Builder Application.

Upgrade Account

unlock-your-review-pages-save-vimeo-update-account-email-example

After a while of using your application, you should send your users an email encouraging them to upgrade their accounts.

This is an easy and inexpensive way to retain customers, extend their lifetime value and increase your revenue.

All it takes is to send to your old time users an email informing them of their options.

Let’s take this Vimeo email for example. The different payment examples are showcased in two separate columns where the differences between each pricing plan are highlighted (weekly limitations, access to features, number of users, etc).

This upgrade account email gives all the necessary information that a long time user needs to click through to the pricing landing page.

Notice the call to action buttons under each plan.

To encourage their customers to upgrade faster, Vimeo included a reduction coupon code at checkout.

  • Grammarly

mystery-sale-email-example-grammarly

Grammarly had a different approach when sending their upgrade account emails.

Instead of showcasing their different pricing models, Grammarly teased their subscribers with a mystery sale email where they get the chance to save costs while upgrading their account to premium.

Grammarly made sure to increase the urgency of upgrading by including a clear set deadline of the offer.

They also added a little twist to their email by featuring a twitter card at the end, from a user who upgraded his account.

Change in Pricing

  • Netflix

confirmation-of-changes-to-your-membership-netflix-email-example

It is important that you inform your users of any changes in your pricing models or payment plans, like this Netflix email example showcases.

When increasing or lowering your monthly/annual fees, you should notify your customers by sending them an email.

This will keep them engaged and well educated about your application.

The downside of this time of email is the risk of losing some paying customers who might downgrade, which is counterproductive to what we are trying to achieve.

However, other users- who were indecisive before or hesitant about upgrading to premium accounts, will explore their new options.

Contests To Increase the Use of the Software/ Application

  • Framer X Dribble Debut Shots

contest-announcement-email-example-1

An efficient way to increase conversions is to entice your subscribers with a contest and the chance to win something that resonates with them.

Framer (a UI design software) showed that they really understand their target segment’s motivations and interests  when they organized a contest with Dribble (a platform where designers can share their designs and gain inspiration, feedback and jobs).

Users had to create a beautiful UI design using Framer’s application for the chance to be featured on Dribble’s blog, which increased conversions.

A couple of things to keep in mind

All conversions happen on your website, but they will only be successful if your landing page is interesting and in accordance with what you promised in the email.

However, without a well-executed email marketing funnel, you will find it harder to convert.

You need to make sure that you are:

  • Targeting the right audience
  • Creating a great, intriguing subject line
  • Writing awesome email copy and promoting an enticing offer

When your subscribers go from your email to the landing page you intended for them, you need to make sure that you provide them with exactly what you promised them, and voilà… Conversion rates through the roof!