Software As A Service (ie SaaS) and eCommerce can have distinctly different buyer personas, and thus different marketing strategies. SaaS marketers commonly use strategies that are not often seen in the world of eCommerce marketers. These can be powerful marketing strategies, if applied to eCommerce brands: partnerships, affiliates, customer success and onboarding. Today, Jeremy and Gen will dive into the differences between SaaS and eCommerce marketers, and what you as an eCommerce marketer can take, borrow, and steal! Three things that you will learn: • How To “Onboard” an eCommerce customer • Communities for eCommerce brands • How to find collaborative Partnership opportunities If you are in need of differentiating your brand and finding new growth levers, then this episode will give you the strategies, and examples, to inspire your future growth!
Show Highlights:
3:21 How to increase eCommerce LTV
9:49 Product marketing and how it differs
19:56: How to manage paid ads around your customers lifecycle — save money, increase ROI
22:47: How eCommerce can leverage Product-Led Growth
27:04: Content marketing to create differentiation
Episode 4 Sequence
Jeremy Biron: [00:00:00] Hello and welcome to Episode four of the Cart Overflow podcast. Today, we're going to be talking about the differences between software as a service marketing and eCommerce marketing. We're going to discuss the lessons we can learn from software marketing and how we can apply those to eCommerce marketing.
Gen, it's good to chat with you again.
Gen Furukawa: [00:00:17] Jeremy thrilled to be here and really excited to dig in. So one thing I did want to discuss is because we both had significant experience in doing both, you know, you with Honest Office and I've been helping lot of sellers for awhile on Amazon and at jungle scout. So that's kind of like a hybrid of e-commerce and SaaS.
So one thing that I want to clarify though, is the assumptions of what we're talking about. So when I talk about Software as a Service (ie SaaS) , it's essentially just a subscription software. So anything that you might pay for on a monthly basis that you're charged for automatically. So think, if you sign up for a paid Dropbox or an email marketing or CRM or accounting software, any of these are software as a service. And so that's what we're going to be discussing. One nuance here, though, that I do want to mention is that we're talking about like a self serve , a high transaction, low touch, or self-service checkout. So that's something like Buffer, which is a social media management platform. You sign up, you pay five bucks a month or nine bucks a month and it's ongoing.
Jeremy Biron: [00:01:23] So we're not talking about enterprise software sales, like salesforce.com or enterprise Zendesk.
Gen Furukawa: [00:01:30] Exactly. Yeah. So I do want to assume that we're not going to have any sales team and it's not going to be an enterprise sale. So this is like for SaaS marketing, you just drive the awareness, get the customer there, and they can check out on their own without having to go through a demo or learning about the pricing. So the user experience is essentially going to be the same and the price point might be the same, but there are some stark differences in terms of how the marketers approach it.
Jeremy Biron: [00:02:00] Definitely you want to get into some of those differences now.
Gen Furukawa: [00:02:03] Yeah. Yeah, for sure. So I think the first big difference is how you maximize your lifetime value. So how much is a customer worth? And I think the interesting thing for SaaS companies is the Lifetime Value (ie LTV) of a customer is, compounding over a matter of months. So you're going to be assuming that, you know, buffer might discharge $9 a month. the lifetime value is going to be that $9 times X number of months or years that a customer is there. I think the difference with eCommerce is there's a lot focused on the very first transaction, which is the first purchase. And then the lifetime value is incrementally increase based on increasing the average order value of that first order. And then getting into repeat purchases.
Jeremy Biron: [00:02:53] Yeah, I definitely think it's important to point out the metrics that we focus on on each one of these with SaaS, we focus on ARPU , average revenue per, per user for anyone that's on familiar and then lowering churn. So churn is the number of people that leave or cancel their subscription every month. And then as you pointed out in e-commerce, we want to increase our average order value and we want to increase the number of repeat purchases that we're getting per customer after we acquire them.
Gen Furukawa: [00:03:21] For sure. And I think there's, eCommerce businesses that are modeling the SaaS recurring revenue, because ultimately I think recurring revenue is the Holy grail. That's where you have one install base and you can continue to grow, if you're just able to upsell. So we're seeing a lot of successful subscription eCommerce businesses, whether it's beauty or utcher box or, coffee and any number of things that can be sent on a recurring basis, is great and eCommerce companies, I think that have the highest lifetime value or those that get to a recurring model.
Jeremy Biron: [00:03:56] I completely agree with that. I think the next thing that comes to mind when we talk about differences between the two industries would be customer acquisition. They're obviously a lot of different avenues to acquire customers. There's paid there's content. There's social to, just to name three of them on average.
And I it's important to point out that we're just talking. On average for either SaaS or e-commerce. There are a lot of different examples or these outliers in any of the things that we discussed today of companies that will prove us wrong. However, we're just talking the industry on average, SaaS , seems to be content first.
They're taking a content first approach where they're putting many different types of content out there and it takes several months or in some cases a year or more to acquire a customer and get them to sign up for your software, service or software as a service.
Gen Furukawa: [00:04:52] Yeah. And so I think the reason that that's the case in it, it obviously makes a lot of sense. Is because this SaaS customer by and large might need a more specialized knowledge and it's less impulse driven, less emotions driven than what e-commerce is. whereas e-commerce might be, You know, you're, you're hooked by an ad on Facebook or Instagram.
it's a lot more aspirational driven and, things that are more personal and emotions driven. So that's where content makes a lot of sense because you're kind of breaking down objections because the customer is driven by logic and facts. And ultimately, how are they going to calculate this purchase on an ROI basis?
Jeremy Biron: [00:05:37] Yeah, on average, e-commerce tends to be, as you pointed out, more paid and social driven.
I brought up the metrics in when talking about lifetime value of a customer in with the previous difference, but I think it's important to point out here as well, in terms of customer acquisition. Both industries with the marketing focuses on cost of acquiring a customer.
, it's never easy to understand the cost of acquiring a customer. It's hard to measure the cost of content.
When that customer could take a year to acquire, you're using both paid social and mainly content. It's very difficult to figure out the cost of content customer acquired.it's much easier to measure paid ads in e-commerce. If your shop tends to get a lot of customers via paid ads, especially with impulse driven purchases, then it's easier to figure out alright. Here's exactly what it costs. Cost me to acquire this customer.
Gen Furukawa: [00:06:47] Yeah, I think that's where things get a little murky in marketing in general is attribution. And that's a topic for a whole different discussion, but how do you break down what, the CAC is for content marketing and. Really, I think that the simplest way is just to, calculate all your marketing expenses.
And then that includes head count and, operations, software, paid ads, all of that. And on an increment of, let's say a month, how many customers were acquired and then, how much did it cost? And then that's, that's your easiest way to, to attribute what your CAC is. It's not necessarily as nuance as You know, the first touch of being a year ago to the conversion 12 months later. But I think that's an easy way to understand the CAC, both for e-commerce and SaaS.
. so if we're talking about that, one other thing that I think is interesting is. Software in some ways is always a moving target in terms of what the marketing is because you have a dev team that's constantly changing or developing new features.
And so the story of what the features are that your marketing are different. E-commerce is much more of, I think, a long lead up you're building the prelaunch or list building anticipation and excitement, and then you're selling it. And how do you, how do you announce it? It might be, via email to your.
To your email list. You know, one example is, my buddy had at Howler brothers, for example, a local clothing company in Austin, they do a lot of different Different shirts, styles, patterns, and they're constantly releasing. And so that's, that's how they're building their equivalent of product development that assess might consider.
Jeremy Biron: [00:08:40] that's a great example that ties back to SaaS. Cause I was thinking, as you were speaking about that, it takes a lot longer to develop a physical product. If you're in print on demand or you're in your example, putting out different types of tee shirts with designs on them, it's easier to constantly iterate and put out new iterations over time.
With office supplies , in my case, those don't change as often. You want to, you want to take the next iteration? Well, that could take it several months or a year to develop the next generation of a product with software we're changing almost every week. So I can, I can mold my product to exactly what the consumer wants.
Relatively quickly, whereas with marketing for e-commerce, it takes longer or development for e-commerce. It takes longer to change that product over time, which makes marketing for e-commerce harder at the same time, your customer can't catch up to us quickly and develop their product to match yours as quickly, which is, which is very nice.
It gives you a slight competitive advantage.
Gen Furukawa: [00:09:49] the fundamentals of marketing would say that you want to share the benefits you want to lead with the benefits and consider. Where your customer is, what their goals are and how your product can bridge the gap. But I think with SaaS, there's a little bit more focus on maybe what those features are that can help your customer achieve their goals and also how your product might differentiate from other alternatives in the market.
I think what we're seeing with e-commerce because it is more impulse driven or emotions driven. There's a lot more of this aspirational imaging And in that case, maybe benefits driven of, what you will become or what you can do with this product. And I think that's, that's just like an interesting nuance where software again, might have a customer that's more focused on The specifics of what their needs are. And, I'm also considering that it's a B2B consumer, which isn't always the case. but, there might be more focused on the specific details and nuances of that feature set.
Jeremy Biron: [00:10:55] Do you want to get into the heart of today's episode and actually get into the nitty gritty of the strategies from SaaS that can be applied to e-commerce.
Gen Furukawa: [00:11:03] Yeah. Yeah, for sure. so one of the things I think is most interesting in, and what I was talking about earlier, how do you extend the lifetime value? How do you. Get a customer month over month to happily pay and continue to engage with a product. And this is a notion of a customer success team. yeah, of course.
Specific to SaaS, but this is basically somebody who's there to ensure that the customer gets onboarded once they start, and that they're continuing to use a product and get the most value out of the product. So the goal of a customer success team is not only to, ensure that month over month they're using the product and that they're staying a paid customer.
But also that they're basically maxing out their usage and then that leads into the opportunity for an upsell or cross sell, which will also increase their lifetime value. There's no real equivalent in eCommerce. And I think it totally makes sense because, there's no recurring revenue per se for e-commerce, it's more focused on, like a support and in that way it's more reactive.
Jeremy Biron: [00:12:11] I think that one thing that was, that needs to be pointed out here with customer success is that it's nurture it's about nurturing a relationship with that customer, right. Building a relationship with them. So I may be interacting through computer. However you want that customer to recognize that there is somebody on the other end of that now.
Sometimes in software, we do video chats. We do phone calls. You might have live chat that that team may use to nurture that relationship with the customer. So it may be slightly different than e-commerce. If you're talking about video chat, however, the same concept of, of nurturing the relationship can be applied to eCommerce.
And I think that's the important takeaway here is that the personal touch matters,
Gen Furukawa: [00:12:56] For sure.
Jeremy Biron: [00:12:57] Offering phone support. May seem very obvious, but I can't tell you the number of Shopify, excuse me. The number of Shopify stores that I'm on, that don't make their phone number blatantly obvious. You want someone to reach out to you to know that there is somebody else on the other side of that computer, it's not just a website and that this is what this brand is all about.
There are people behind it.
Gen Furukawa: [00:13:24] Yep. So tangentially to that, I think. One thing that SaaS products do that's. Interesting and eCommerce brands might borrow from, is this notion of communities. I've seen a lot of SaaS companies that have done a good job of creating whether it's a Facebook group or a Slack group, or even just a discussion board.
The first thing that pops into my mind is Moz moz.com. It's an SEO tool. They've created this really vibrant community where, people are always sharing knowledge there. Able to build a personal brand and exchange expertise all around this moving dynamic topic of SEO. And by the way, Moz offers an SEO tool.
So it's a very tightly coupled software and community. I haven't seen this as much with e-commerce, one that. Does come to mind is BarkBox has a community. I think they call it Park, which makes a lot of sense. A lot of people get a lot of joy out of going to the dog park and meet a lot of people there.
So take take what's online and offline experience in person and bring it online, even more appropriate. Now with coronavirus and people have to socially, socially distance. but I think if you are able to build a community first, that's a great play to kind of. B a, a Trojan horse of sorts too. Get in the mind space of customers around a specific topic.
A another brand that comes to mind is veer brand, you know, like men's care products, dollar shave club, very similar. and I think both of those brands have done a good job of creating content and then creating a community, not only around the product, but around the interests of their perfect audience, their ideal audience.
Jeremy Biron: [00:15:13] Building a community is it's an absolutely amazing thing when it works, because it's a magical moment when your customers start interacting with each other and you don't have to get involved, they start talking about their problems and solutions to those problems without you ever getting involved. And you can sit there and moderate it, help it move, help the conversation move along.
But it's, it's a pretty cool thing.
Gen Furukawa: [00:15:40] are there any e-commerce brands you found that do it really well? Or software brands.
one thing I think that eCommerce brands do that is interesting and it goes to the social element is the notion of micro-influencers. So while they don't have content, per se, I think that. Leveraging influential individuals, to share on their, share their product or share their experience.
Experience is, slightly related. It's like using the community of the influencer to spread the word. So maybe that's the e-commerce tech too community is leveraging the community of a micro influencer or an influencer.
Jeremy Biron: [00:16:34] I've seen this work really, really well with Instagram marketing too. you use that micro influencers audience to help build a community around your brand. So that micro influencer, as you mentioned, has their own community, they have their own audience introduce your product or your community to that other community.
And it helps you grow.
Gen Furukawa: [00:16:59] speaking of help you grow with software brands, there's a lot of. Kind of lifting each other up because there's similar target customers and noncompeting products where there's a lot of opportunity for partnerships and cold promotions that I don't see as much with eCommerce. so you know, like Jeremy, how did we meet, jungle scout and forecasts that you kind of.
Had some co marketing efforts. And so that included, webinars together or referrals or, even product integrations, but there's, and there was also an interesting tactic of basically just sharing audiences, sharing Facebook pixels,
yeah. So basically I think that there's, you know, Talking about menswear maybe that's what I know. Well is an underwear company, MeUndies, and socks like stance or Obama's have they done things together. I haven't seen it, but those are tangential. They're targeting the same person. maybe there's some competitive overlap in the future when they move into each other's spaces.
But I think that. There's maybe more opportunity for you as an eCommerce marketer to think "sqwho is my customer, what are they looking for? And then what other products are they purchasing? How can I get in front of that same customer by partnering with a similar brand?" and what that partnership might look like.
It might be a guest post. It might be a podcast. It might be a promotional video or sharing a Facebook pixel. But there are ways to partner, that SaaS companies leveraged, that eCommerce brands might not as often.
Jeremy Biron: [00:18:37] Yeah, Gen, as you mentioned, we've seen a ton of success with this on the eCommerce side webinars being the first one to do a webinar together and to introduce it, to basically share audiences or co-mingle audiences is excellent. We've seen a ton of success there. Referrals. Referrals are the obvious one.
I see that used a lot. I don't think it's as I haven't seen as much success there. However, there are a lot of brands out there that run great referral programs, sharing audiences or pixels is a great one. They visited Gen's a similar e-commerce brand, but he doesn't compete with me. Maybe you're a ski shop.
I'm a mountain bike shop. We'll go back to our mountain bike example. I know that the majority of my customers like outdoor activities that are physical it's exercise, it's fun. They also ski. So we work together and we share audience pixels. What that means is Gen, can advertise to folks that are visiting my site and I can advertise to folks that are visiting his site, which is pretty cool.
Gen Furukawa: [00:19:48] All right, Jeremy, what else do we have? That's a lesson from SaaS that e-commerce marketers can leverage?
Jeremy Biron: [00:19:56] I think we should talk about paid ads quickly. this always seems like an easy one to me or an obvious point, but I think so many companies mess this up and they waste so much money on paid ads, marketing to people that they should be excluding. in SaaS. It's easy to exclude an audience.
Once they've purchased Gen has signed up for my paid service, whatever it may be. He's hooked in. I have him on a subscription. I can stop showing him ads. Most likely at that point, there's always these extraneous examples where we might want us to continue to market to him. The same thing can not be immediately applied to e-commerce.
So, but the lesson here is at least exclude the customer. At least exclude that customer from ads right after that purchase. I just made a purchase from that bike shop yesterday. Why are they showing me another ad? If I had to buy something today, I would have already purchased it yesterday. So if I've made a purchase, exclude them, figure out on average, how often purchases are time depart.
So Jeremy makes whatever it may be. My vitamin was my vitamin purchase was a good example. Maybe you sell vitamins every 60 days, people purchase vitamins. So on 45 days out automatically add that person back into your audience to show them ads again, we have a good idea. Jeremy has a vitamin purchase coming back up.
We need to start showing him ads again. Don't waste money on day one through 45 after I've just made a purchase from your store. Like I said, this seems really obvious. However, it happens time and time, again, both on the software side and the eCommerce side.
Gen Furukawa: [00:21:52] Right, but just to clarify on day 45, are you getting the same ads that a cold traffic audiences getting. Where are you getting something like a resell for, Hey, you purchase a bike or you purchase vitamins. You might like this.
Jeremy Biron: [00:22:06] If you're a really small store and you can't build out a whole portfolio of ads, it's okay to show an ad over again. And just to hook that customer back in, however, on day 45, in my vitamin example, I probably, I wouldn't suggest showing the same ad. Like it's good to show fresh material. You don't want your consumers to get ad fatigue. All I've seen this ad three times, or I've seen this ad every 45 days and my brain just. Zones it out. You'll get better results if you use a new ad, but you, but you do bring up a good point again about upsells.
Gen Furukawa: [00:22:47] So there's one other example from SaaS that might be applicable to eCommerce and it's this notion of. In SaaS, there's often a free trial or freemium where you can use it up until a certain usage, and then you'd have to start paying. A lot of us are probably familiar with Dropbox or something. And it's now this whole movement called Product Led Growth.
Basically you can use a product and then that's going to be the best Avenue to converting a sale, as opposed to somebody demoing the product and walking you through it. The best way is I use it myself and whether I like it or not solves my problems or not, I'm going to purchase. And I think e-commerce might do this a little bit.
You might know, you know, Casper, you can buy a mattress, trial it for a hundred days and then return it or. Even Ikea, you can use something for 365 days and then return it as essentially product led growth for eCommerce. I don't think it's necessarily viable because you're also probably going to get an increase in returns, which right now might average his store 2% or so, which has calculated into their P and L profit and loss statement.
But. Maybe that increases if you're, if you open the door for more returns. However, I think you also might see an increase in conversion rate. So I think some of the sophisticated SaaS, marketers. Are always testing their checkout process. What are the different ways that we can address this shoppers objections or concerns and facilitate them to get to the checkout and start paying, using the product is one good way to do that.
And I think eCommerce brands might see something. If they're see an uptick in conversions in sales, if they're able to figure out ways to. You know, be a product led growth. And of course it's easier with a software where you can just grant somebody access to, to check it out as opposed to shipping and then incurring those costs and maybe returns.
But, I kinda like where Casper is going because you have a lot of objections when you're about to spend a thousand dollars on a mattress.
Jeremy Biron: [00:24:57] definitely. If it is a large purchase, I, you bring up a great point. You see it and you see it a lot in software, money back guarantee, or a free trial one or the other, or a combination of the two. It makes a ton of sense. I, I agree with you that I really like where Casper and those other DTC brands are headed.
I did think of one thing that I used to see a lot that I don't see as often.
You don't see loss leaders as often as you used to see. Which is basically, I'm going to put a lower price, a lower cost purchase out there that is going to cost me more money to acquire a customer than it is for that purchase. However, I know I can get the hook in them and I can get that customer coming back over and over again, the situation that you just described before, right Gen where.
I get that consumer used to my brand and I know that I can continue to market to them, get them. They've gone through my checkout. They have an account with us. It's easy to make a purchase again. So I know that they will.
Gen Furukawa: [00:26:01] Yeah, classic examples there. You buy a printer and it's not the printer that's super expensive. You can get them for a hundred bucks these days, but it's the ink. And I'm sure, you know, very well from honest office, right?
Jeremy Biron: [00:26:12] That's a fantastic example.
Gen Furukawa: [00:26:14] Yeah. Or, or, you know, razor Gillette, for example, or Kindle and the eBooks. It's all about actually just providing the entry point. Well, should we, should we kind of wrap up and summarize what some of the main lessons are that e-commerce marketers can take from SaaS?
Jeremy Biron: [00:26:32] I think that's a great plan. You want to want to go through those?
Gen Furukawa: [00:26:36] Yeah, sure. So I think the most important thing is, Leveraging content. I think the SaaS approach to using content as a way to build awareness and education, and then ultimately in the longterm it's having the, the patience, I suppose, for the conversion that SaaS has, whereas e-commerce is far more transactional and focused on the first touch.
I think that might make sense.
Jeremy Biron: [00:27:04] Yeah. And with that content again, I think it's important to point out, which I don't think we hit on hard enough before is thinking not only about your exact product, but thinking more about the, the audience. So what topics is my audience interested in? Outside of just my product. So in talking about all of those topics, to get them coming back more and more versus having them just come back to read about your product or your specific product niche.
Gen Furukawa: [00:27:35] Yeah. So, you know, there there's a lot that can be gained from content it's educating the customer attracting and then ultimately converting. So. What are some examples, you know, most SaaS companies will have in their marketing arsenal, eBooks or white papers or a, the regimented content schedule for social and blog posts.
And that's ultimately to drive awareness both for around the problem that the software is addressing, and then also maybe specific for the product, but it's not just on focus on the product and its features. And. I think that the best benefit from that is the halo effect of being an industry expert. And I think if you can do that for your brand, then there's, there's going to be a lot more, Awareness and sales in an efficient manner.
Jeremy Biron: [00:28:27] the other piece of content. And Tom top of that, again is video. I'm big on video. I was going to say now, but I've been video big on video for the past couple of years. It's not easy to produce and it takes time. However you don't need highly it, depending on your brand, you don't need highly produced video clips. It could be relatively rough. However, it's something that most likely. Your competition is not doing, or I would say the majority of your competition is not doing because it is not easy to produce video.
Once you get into it. It isn't that hard. With video. Once you, once you get into it, it's easier to produce video than you think it's going to be at first. And it's easy to consume as well. I have YouTube right on my phone. I don't watch lots of YouTube videos every once in a while. I'll get into there, the apps on my phone and it's quickly suggests. , there are other ways to distribute as well to get you get those videos out there. You find people that may not be familiar with your brand and you get them back onto the site.
Gen Furukawa: [00:29:37] Yeah, there was a quote or a tweet that I saw from Dave Gerhardt. He's the COO of privy, kind of like helps e-commerce shops with popups and drive leads. His tweet was something along the lines of don't create a marketing team, create a media company first. And I think that that really gets at the heart of where, where this shift in marketing is going and kind of encapsulates what we're talking about is driving awareness with content, helping educate and inform customers helps at every single stage of the funnel.
And I see that eCommerce brands, Right now. And I think it's kind of by necessity or folks at the very bottom of funnel first, and there's maybe less of a focus on the educational component of what a content marketing strategy can do. So I think that's really one of the main areas of differentiation that an eCommerce brand can take.
And like you say, creating content high quality content is a pain in the ass and it's, it's hard. It's time consuming. It requires a lot of planning and multiple hands and skills. but I think those brands, you know, those brands that I've mentioned of say, Warby Parker or, or Ipsy or glossy they're, they're kind of like content first in some ways.
And then the brand is there as well.
Jeremy Biron: [00:30:58] I think the important takeaway there, or one of the, I think one of the important takeaways there is that you want that consumer to build a relationship with your brand. So initially they're building it through content. Eventually, as we touched upon previously, they're going to reach out, they're going to need support in some way, shape or form most likely.
And you want to build that relationship with them directly. So make sure your team is interacting with them on brand and phone support, live chat, email. It should all be on brand and have the same tone for support. Support should be using the same tone that your marketing team is using to just to continue to enhance the relationship with that customer over time.
Gen Furukawa: [00:31:43] Yup. And then it gets back to our very first point of the day. The outcome really is an increased lifetime value, more repeat orders because ultimately that's where SaaS lifetime value is founded upon is repeat orders and eCommerce as well, no longer is it focused on increasing the average order value of the first order, but you can expect recurring orders on an ongoing basis.
So anyway, I think that that might wrap it up for today. Anything else, Jeremy?
Jeremy Biron: [00:32:11] No, I think we got a bunch of good takeaways today. Hopefully everyone got at least something out of today's episode, but I think that wraps it up for today.
Gen Furukawa: [00:32:18] Alright see you next week, everyone.
Outro: [00:32:20] And that's the episode for today. Thanks so much for listening to the end. We love you for it. If you've found anything valuable at all, or want to share your feedback, please leave us a review on iTunes or wherever you get your podcasts. You can also drop us a line at hello@cartoverflow.com. If you have any suggestions for how we can help you grow your e-commerce brand.
So until then keep that cart overflow. I had to sorry keep that cart overflowing thank you bye