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Customer relationships are more important than ever before, and I love how you have identified how companies are moving "from records to relationships."
It's also true that customers have more choices nowadays. That's why businesses NEED to have great customer relationships... so they can keep the customers they have! (And acquire new ones, too, of course.)
...to try to answer your question for the second time, I would recommend just doing the research. Here are things to consider:
1. Who is your target market and how will you reach them? If you are marketing your product to both genders, between 18 to 35 year old, you can probably leverage Facebook and Instagram to reach your audience (paid and free). If you are targeting high-niche business professionals, you might need to adopt a content marketing and SEO strategy to get new leads. You can sign up for SaaS platforms that help you manage and track either strategy.
2. What does your sales funnel look like? Are you selling products on a website or are you sending them down a lead funnel? Similarly to my answer above, you can implement platforms that can help you sell your products or manage your leads.
3. What is the LTV of your customer? If you are selling one-time widgets and your LTV is $9.50, you will need to acquire customers at low costs. If you are selling business software and your LTV is $995.00, you might be able to afford paid marketing tactics like advertising.
To be honest, I think you need to do some due diligence and research to figure out what your marketing budget should be.
Note: I wrote the following realizing that i might not answer your question. Instead of deleting it I'm posting it anyway so my time isn't completely wasted:
If the purpose of this question is for a business plan, you are going to be making educated guesses on what you will need when you bring your product or service to market. You specifically tagged Facebook and Instagram on this post so I am going to assume you're asking about paid social advertising, so I am going to focus on that and can offer more advice if necessary.
I'm going to break it down into two parts:
Budget: If you want to properly test an advertising platform, I would recommend a budget between $4,000 to $5,000 per month of advertising spend. This will be enough budget to run creative testing (e.g. images, copy, formats, etc.), audience testing, and one round of optimizations. You could get away with only $3,000 per month if you are promoting a mobile product since mobile ads are less expensive. Any budgets lower than that will be shots-in-the-dark, meaning you are going to throw a bunch of stuff out there and you'll see how thing perform once the campaign is completed. It doesn't mean that you won't have a successful campaign, but you might not be able to rigorously test different components of your campaign.
Service Cost/Labor: You get what you pay for. You can find freelancers that will run your ads for as low as $500 per month and you'll find agencies that will charge you a minimum of $7,500 per month with a two-month contract.
So, for your business plan, I would probably suggest $10,000 for paid advertising.
Thanks Anuj, yeah I agree, gratitude is such a huge one here! Showing thanks and being genuine about it is good business. :)
""Happiness Isn't the Absence of Negative Feelings," gratitude is a positive emotion that boosts happiness." - aka people are happy when things just work 'cos they're table stakes - after which the hard work of blowing people away starts.
Nice way of looking at this as a "framework" when thinking about what you need to optimize for first.
I would argue it is... At Atlassian you also pay per user. It has to do with their business model, called "land and expand", too.
I wrote about it here: http://www.kevin-indig.com/growing-a-saas-company-to-100m-arr-without-a-sales-team/
I believe there are several reasons for the active users pricing strategy having not caught on:
1) Because those unused but billed accounts are useful for the revenue. You are not supporting them but yet getting paid for it.
2) It is sometimes difficult to manage find what is considered as an active user. For example, would you consider only a login as active? Or would you consider some user activity as active? In that case, what activity is classified to be used for identifying an active user?
3) Some SaaS systems have temporary users or guest users. How would you charge for them?
4) Many SaaS companies use subscription billing software. Active users as a strategy is normally not supported. Or if it is, then it is generally through the API and in that case, you are better off directly integrating into the payment gateway.
5) Bill shock: If the bill for a particular month increases by a larger amount, it causes bill shock to smaller businesses. They want predictability if not anything else. So active users as a strategy may not work.
6) Many companies have already realized that value-based pricing will earn them more money than per-seat pricing. In most cases. So they are moving away from such a model.
Nevertheless, it is a great pricing strategy. If a product is as habit-forming as Slack, you would never require active user strategy. You would always have active users all the time. I first saw this pricing in the Basecamp and was pleasantly surprised by the same. It communicates the boldness of the value that the product brings but I believe it has got its own set of problems that early stage SaaS companies will try to avoid.
True, this works best for tools that have a per seat pricing. But even for tools with a common login, if the customer has not used it at all in a month, don't charge them?
From a business point of view, I agree. But I am also thinking a business could use this to really align themselves with delivering value to the customers—make a product so valuable that users embed it in their day-to-day lives. And of course, it will help you generate buzz and goodwill.
But what I am wondering most about is why isn't this something users are demanding for? I am seeing companies using anything from 30-100 SaaS products depending on size, and more and more products to manage billing of multiple SaaS apps and remove the ones that are not being used coming up, so wondering if it's just a matter of time?
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