We’re in the process of digging into the video vault from last year’s Tech Adoption Summit, held November 7 at a tiny, quirky venue in San Francisco’s Mission District. It was a packed day spent geeking out on the things that drive the small-business SaaS industry — creating compelling brands and customer experiences, building great products, and scaling customer acquisition.
One of the highest-rated and most cited sessions featured Adam Blake, CMO of ThriveHive, a Boston-based provider of SaaS-based digital marketing products for SMBs.
Adam’s thesis is that product-based marketers perform better than their non-product based peers, and product-driven customer acquisition is the key to managing ever-rising customer acquisition costs.
“The elephant in the room is that customer acquisition costs have gone up dramatically,” Blake said. He added that costs are up more than 50%, for both B2B and B2C companies.
He also pointed out that companies that offer free products, a requirement for product-driven customer acquisition, have seen their CAC rise at a much slower rate than those that do not offer free products.
The real eye-opener was the order of magnitude different in close rates across different sale models. Moving from cold calling to selling against product qualified leads yields a 100X improvements in close rates. PQLs in simple terms are prospects that use your free products and signal upsell. Adam offers a more precise definition in his talk.
Have a product-driven customer acquisition strategy isn’t as simple as offering free products. Adam went through a checklist of dos and don’ts for offering free products that deliver on the lower CAC promise. Key among these is to offer a “free forever” product and not just a free trial.
“If you can offer a free forever product vs. a free trial I would encourage you to do so,” Adam said. “The reason is a free trial is way further down the funnel. A free forever product has a much lower barrier to entry.”
Another key was that the free products be completely self-provisioned by the prospect. If you can’t bring each new user on at a very low marginal cost, it undermines what you are trying to do, which is acquire paying customer at a dramatically lower CAC than your competitors.
Adam’s presentation at the Tech Summit was so well received that Adam was invited to give a version of this talk to a much larger and more diverse audience at the upcoming LSA ’19 conference in Dana Point, CA.
You can check his TAS presentation from last November here:
In case you missed it, we covered some of this ground with Adam when he was a guest on our Above the Cloud podcast in September, prior to his appearance at the Tech Adoption Summit. You can listen to it below.