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Pipeline Marketing Blog

How Pricing Affects Marketing Strategy for B2B SaaS Companies

By Jordan Con
Feb 11, 2016

While SaaS companies often get grouped into a single vertical, the reality is that they are not one-size-fits-all. It’s especially true when thinking about the optimal marketing strategy.

One of the best ways to break the SaaS vertical into subgroups is by looking at their pricing models. Are they in the $10/month range? $100/month, $1,000/month, or $10,000/month? Do they offer a free tier? What about several tiers? Do they serve everyone from mom and pop small businesses to high growth startups to Fortune 500 companies?

 A company that charges $10/month for their software will need to have a different marketing strategy than a company that has deals worth $10,000/month or more.


How pricing affects your marketing strategy plays out across several dimensions. In this post, we’ll cover four:

  • Demand Gen vs. ABM
  • Calculating the Right Cost Per Lead
  • Brand Marketing Priorities: Awareness vs. Trust
  • The Importance of Marketing & Sales Cycle Velocity


Demand Gen vs. ABM

As ABM continues to be a hot topic in B2B marketing, many marketers are unsure if they’re using the right strategy and tactics for their business. To use the fishing analogy, should you be fishing with nets or fishing with spears? And when do you know it’s the right time to switch from nets to spears or vice versa?

SaaS pricing plays a huge role in this decision.

Here’s the rule of thumb: smaller deal sizes = more demand gen. Volume is more important when you have small deal sizes and need a lot of deals to be successful.

ABM, on the other hand, is a more expensive strategy on a per lead basis. But that’s okay because you expect a much higher lead-to-customer conversion rate and those leads tend to have bigger rewards.

However, if your pricing strategy involves tiers that range from hundreds a month to enterprise deals that go for several thousand a month, you’re probably in a situation where it may be optimal to employ both demand gen and ABM strategies simultaneously.

Demand gen versus ABM is not an either/or situation -- chances are you’ll need a mixture of both. But whether you’re doing 80% demand gen and 20% ABM or 20% demand gen and 80% ABM, is largely a factor of your pricing strategy.


Calculating The Right CPL

Depending on your marketing strategy, your CPL will vary. For example, when running an inbound strategy or demand gen campaign, you expect your CPL to be much lower compared to when you’re targeting a whale.

Businesses selling enterprise-sized deals are willing to spend huge sums of money to win deals. That’s because the payoff is big. On the other hand, if your average deal is $10 or $100 per month, your CPL has to be pretty low in order to be profitable.

This has a big effect on your marketing strategy. In paid media alone, it has a profound impact on your strategy. It impacts how much you’re willing to bid on a keyword in Search, how much you’re willing to pay per click on Social, what targeting technologies you’re willing to use, etc. Lowering your cost per lead is also an important goal to keep in mind and marketing attribution can be used to do that.

At Bizible, as we have developed our product and moved slightly up-market in pricing and in identifying our target customer, our marketing strategy has changed. We are now able to spend more per lead on outbound efforts, both online and offline. Our event strategy has changed, too. We now have the option to make bigger, but still highly calculated, moves to gain the attention of the companies that we want to engage with. All of this change to our strategy is because we’re able to accurately calculate the ideal CPL based on our pricing strategy and conversion rates.


Brand Marketing: Awareness vs. Trust

Finally, the price point of your SaaS product will impact how you prioritize your brand marketing strategy. Are you looking for broad awareness or deep trust? Of course, both of these are good things and every brand would love to achieve both. But when it comes down to creating a budget, marketers have to make tough prioritization decisions.

With a lower price point, a brand marketing strategy should prioritize broad awareness. When your product costs $10, you need A LOT of people to buy it. Fortunately, at that price point, the risk barrier is much lower, and therefore, it requires a lot less buyer trust.

With a higher price point, marketers would do well to focus on creating brand trust. When you’re asking potential customers to spend thousands of dollars a month or more on your product, they’re putting a lot on the line. That’s often a significant amount of their budget and they have to trust that you won’t let them down.

Additionally, broad brand awareness often means little in these scenarios. For B2B marketers with large deal sizes to be successful, they only need to create awareness for relevant stakeholders in target accounts, as well as the few trusted contacts that your buyer may reach out to for positive reviews.

With higher prices, a more targeted approach that emphasizes expertise and reliable results is usually the way to go.


The Importance of Marketing & Sales Cycle Velocity

Furthermore, the higher your price point, the more important it is to think about how your marketing improves velocity -- both the velocity from first touch to lead and from lead to opportunity. Bigger deals can take a long time and require a number of people on the buyer side to get involved. The faster your marketing can get everyone on the buyer side aligned and bought in, the better.

Generally, bottom-of-the-funnel (BOFU) tactics are more important for higher priced products with a longer marketing and sales cycle. BOFU marketing includes activities like nurturing and sales enablement marketing. These marketing activities are often tremendously under-valued because many B2B marketers use a first touch attribution model or a lead creation touch model. Because these attribution models give 100% of the revenue credit to the top of the funnel (first touch) or the middle of the funnel (lead creation touch), the bottom of the funnel typically receives little to no revenue credit. To see the true revenue impact on BOFU marketing channels, B2B marketers need advanced multi-touch attribution.

The ability to accurately track the entire funnel (including BOFU) is just one of many things B2B marketers get with smart attribution. Download the ebook below to find out what else smart attribution can do. Components Of A Smart B2B Attribution Solution  Determine whether a particular attribution solution meets all of your  marketing needs  Download Now

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