Lead Nurturing vs. Direct Signups: What’s Best for Your SaaS Business?

Lead Nurturing vs. Direct Signups: What’s Best for Your SaaS Business?

Saying that the SaaS market is growing would be an understatement. Global SaaS end-user spending will likely reach $171.9 billion by 2022, up from $120.7 billion in 2020. 

To put things in perspective, Salesforce revenue has seen a 51.22% year-on-year growth over the last two decades—from $5.43 million in 2001 to $21.25 billion in 2021. Prominent SaaS providers like Adobe and Zendesk have also witnessed similar growth. 

While the SaaS industry is lucrative, SaaS marketing can be challenging. Marketers need to ensure a consistent supply of leads and sales to keep the funnel moving. For most marketers, pay-per-click is the preferred route to drive growth and revenue. 

However, as a marketer, it’s crucial to choose SaaS PPC tactics wisely. Will you nurture your leads before selling to them or go for direct conversions?  This post will compare lead nurturing and direct signups and finally find out which one is the best for SaaS marketing. 

Let’s dive in. 

A deep dive into SaaS PPC advertising 

There are several reasons to use PPC tactics for SaaS marketing. Paid ad results get more clicks than organic results for commercial intent queries. About half the audience can’t differentiate between paid and organic results. And, most importantly, algorithm updates don’t affect PPC. 

Ever wondered how Zendesk went from being another SaaS startup to an industry leader with over 150k paying customers, $1 billion+ annual recurring revenue, and 3.5k+ employees in just 13 years? While Zendesk’s marketing strategy is comprehensive, much credit goes to its simple yet effective PPC strategy. 

Zendesk ranks for 3,360 keywords, spread over 2,000 ads, leading to 26 landing pages. That equals 1.68 keywords per ad, 77 ads per landing page, and 129 keywords per landing page. 

They use the direct signup strategy by offering a 14-day trial (a long period) for their products:

Zendesk search ad

Sprout Social is another popular SaaS company that leveraged its feature launch to get in touch with cold leads. The company highlighted one of its feature releases that urged the audience to look into the product in a more detailed way. Here’s what they did.

Step 1: Sprout Social announced its new feature release with an enticing CTA in the banner asking leads to extend their trial to try it.

Step 2: To help leads determine what this feature is about and how it can help address their pain points, Sprout Social listed its specifications and benefits:

How can SaaS companies benefit from PPC?

Now, how can you leverage SaaS PPC tactics to increase sales, revenue, and profitability? Let’s look at the five key benefits of PPC for SaaS companies. 

1. Target competitors’ audience

If you want your competitors’ customers to notice your brand, PPC advertising is an excellent way to do that. You can bid on keywords your competitors are ranking for. Instead of mentioning your competitor’s name, highlight factors that differentiate your brand. 

Zendesk bids on Intercom and Zoho brand terms— and instead of mentioning the brands, Zendesk uses a benefit-driven CTA to get conversions:

2. Cross-channel retargeting

Even if you run PPC ads for direct signups, a user may not take action on the first interaction with your brand. They might visit your website to learn more about your business and product but leave without signing up for a trial. However, you can use this PPC traffic for retargeting purposes. 

Suppose you run PPC ads on LinkedIn to bring traffic to your landing page. You can include Facebook pixel and Google retargeting code on the landing page. If the user exits without taking action, you can retarget them on Google and Facebook. 

Multi-channel marketing is essential because campaigns integrating four or more campaigns outperform single or dual-channel campaigns by 300%.

Grammarly, a writing tool provider, has aced the cross-channel marketing game. It runs ads on Google, YouTube, and Facebook, plus on websites like WordCounter and Duplichecker:

3. Engage prospects in multiple ways

PPC advertising allows you to reach and engage your prospects in numerous ways. One way, as discussed, is to retarget them on multiple channels. You can also look beyond Google ads and test Bing, Yahoo, YouTube, and other advertising platforms. 

This way, you can diversify your advertising strategy and learn about how prospects behave on different platforms. 

Asana does an outstanding job at engaging prospects on multiple channels. See how they run ads on Google and Facebook, while engaging prospects on email:

4. Track progress and drive strategy

PPC ads are highly trackable. You can identify which campaigns and traffic sources are bringing in the most traffic and conversions. 

Additionally, you can measure metrics like conversion rate, customer acquisition cost, return on ad spend, advertising cost of sale, and customer lifetime value. These metrics will help you track your marketing campaign’s performance and optimize your strategy. 

5. Avenue for experimentation and expansion

With so many channels and ad format options to choose from, brands can try different things to figure out what works best for them. Once you find the perfect strategy, you can scale it up to maximize sales and revenue. 

Mailchimp, an email marketing platform, came up with a unique campaign in 2017. The company realized that most users pronounce their brand name wrong. So, they developed nine mini-campaigns without mentioning their company by name. Instead, they used potentially pronounced versions and let users figure it out by themselves:

The result? Mailchimp got over 67 million organic searches and $3.52 million in earned media value. The campaign even won the Grand Prix at Cannes Lions in 2017.

Lead nurturing vs. direct signups—which should you choose?  

Monday.com, a management software provider, uses lead nurturing to drive conversions. Their ad takes you to their homepage, where they have a frictionless CTA, “Get Started.” Clicking on it leads you to a page where you can sign up using your email:

Twilio, a communication management platform, uses a direct signup approach and takes you to a free trial page:

Which approach is better? Let’s start by differentiating between the two strategies. 

1. PPC for lead nurturing

The lead nurturing model focuses on collecting a user’s email, usually a cold lead, and nurturing them until they’re ready to buy. 

For instance, you can build customized landing pages to nurture your leads. Omnisend, an SMS and email marketing automation platform, offers landing page builders that enable users to send their visitors to a specific CTA page. 

One way to do that would be to deliver on the promises made in the ad—whether that’s for a resource, a giveaway, a free trial, or even 50% off on a product:

However, you can nurture these cold leads using this three-step process. 

  • Offer valuable content: Provide helpful information to build credibility and thought leadership. The content you offer can include blog posts, videos, industry reports, white papers, etc. HubSpot is an excellent example. They have a vast resources section, including blog posts, ebooks, templates, guides, and free courses:
  • Create engagement: Capture your prospects by sending emails and conducting webinars. See how Canva, a graphic design tool, engaged its users through email:
  • Get a sale: Once the prospect is confident and ready to buy, go for a sale. Email is an ideal sales channel. See how Squarespace, a website builder tool, uses email to get sales:

2. PPC for direct signups

PPC advertising for direct signups is simple. You link your ads to a landing page and ask users to take action. You can use one of three direct signup models.

  • Freemium: Offer a free version of your product with limited features. Once a user signs up, use upselling strategies to encourage them to upgrade to a higher plan. See how Todoist encourages its users to upgrade to the premium version:
  • Free trial: Offer a free trial, allowing users to use your product for a few days without paying anything. If they don’t subscribe to a paid plan immediately, you can send them emails to convert them later. Here’s an example of how Basecamp does it:
  • Symbolic pricing: Allow users to try your product for a fraction of the full price. For example, you can let prospects try your product for seven days for $7. Ahrefs, an SEO tool, does this well:

How does lead nurturing compare with direct signups?

Lead nurturing vs. direct signups is a significant choice you need to make as a SaaS marketer. Let’s simplify this confusion by comparing the two strategies’ industry benchmarks. 

1. Measure and compare key metrics

A common mistake marketers make is tracking too many metrics. However, this only creates unnecessary noise and clouds their judgment. You can track a PPC campaign’s effectiveness using various key performance indicators, like CVR, RoAS, ACoS, etc. 

CVR is the simplest metric marketers should track to measure the strategies’ effectiveness. You can call it the measure of your campaign’s success. It lets you track the number of people who viewed your campaign, clicked it, followed the CTA, and converted. According to Invesp, businesses that invest in lead nurturing are likely to get 50% more sales-ready leads than companies not leveraging it. That too, at 33% lower costs.

Moreover, marketers should also test the results of direct signups and lead nurturing campaigns to determine which works best for them. When testing the two strategies, compare the following metrics:

  • Click-through rate (CTR): The number of clicks an ad receives per the number of times an ad is shown.
  • Return on ad spend (ROAS): Total revenue generated for a campaign divided by the total spend on that campaign.
  • Cost per conversion (CPC): Average advertising spend for one successful goal completion (signup, free trial signup, sale, etc.).

However, there are two takeaways you should keep in mind.

  • Direct signups work better for simple, low-ticket products with easy setup and low energy commitment.
  • Lead nurturing is better for complex, high-ticket products.

Lead nurturing is suitable for established businesses. These include mid-stage and late-stage companies with proven staying power and a desirable product. These companies have the resources to run full-fledged lead nurturing campaigns. Lead nurturing can also help retain existing customers and upsell to them. 

Direct signups can also work for mid-stage companies, provided that you have a large user base willing to try your product right now. For example, if you launch a new product and your target audience consists of current customers, you can run direct signup PPC ads.

2. Direct signups are suitable for early-stage startups 

On the other hand, direct signups can be ideal for early-stage startups creating brand awareness and building a defined customer base. These businesses try to target the broader market, and hence, their target audience is vast. 

Lead nurturing can be feasible for startups, however, most new businesses don’t have the time, budget, and patience. A nurturing sequence should be at least two to three emails long, though it can be much longer. 

Create PPC campaigns for effective SaaS marketing

PPC is the cornerstone of a SaaS marketing strategy. While SEO, social media, and other marketing techniques are valuable, marketers should invest in PPC campaigns.  There is no “right” or “wrong” way to choose a PPC advertising model. Lead nurturing and direct signups can produce excellent outcomes based on your product and marketing objectives. 

If you have the resources, you should aim to run direct signup and lead nurturing campaigns simultaneously. 

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Bernard Meyer
by Bernard Meyer

Bernard is the Director of Content at Omnisend, the email & SMS marketing automation platform. He has a passion for good research and storytelling, helping ecommerce businesses with their marketing automation needs, and beating absolutely everyone in Mario Kart 64.

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