How to Choose the Right SaaS Distribution Strategy

SaaS Distribution Strategy

When it comes to SaaS products, having a targeted distribution strategy can make all the difference in reaching your target customers. But with so many options available, how do you pick the right distribution channel for your SaaS business?

Throughout this article, we’ll discuss some of the most popular SaaS distribution channels out there and which ones might be best suited for your SaaS product. Stay tuned to learn more about finding the perfect matching strategy that meets both customers’ needs and achieves your desired outcome!


What Are SaaS Distribution Channels?


A distribution channel is the network that a SaaS company employs to get their product into the hands of the right buyers.

Selecting the right distribution channel for a company’s product can be key in helping them disengage with the competition and target their desired audience. This choice often dictates interactions between potential customers, how they learn about a product and ultimately how much revenue a company generates.

The ideal distribution channel is determined by various factors such as type of customer, cost structure and level of control desired over marketing activities which can lead to added revenue or cost savings for businesses.

Companies should look at channels that can offer effective access and alignment with their customer base while still allowing for some measure of flexibility when it comes time to scale up or down within those channels.


Types of SaaS distribution Channels


Below are the types of SaaS distribution Channels.


A. Direct Distribution Channels for SaaS Companies


Direct distribution involves selling SaaS products directly to customers, rather than through intermediaries such as third-party platforms or resellers.

This type of channel allows SaaS companies to have direct contact with their customers, as well as having full control of the customer experience. It also allows them to build strong relationships and provide dedicated support for their customers, which can help increase customer loyalty and retention.

Moreover, direct distribution offers SaaS companies numerous advantages over using a third-party channel, including the ability to better control pricing and reduce fees by eliminating middlemen, greater visibility into which customer segments are receptive to their product, and the ability to customize marketing and sales approaches for each individual customer.

Furthermore, SaaS companies can benefit from cost savings and market reach that a third-party channel may not be able to provide.

Direct distribution channels can be an effective way for SaaS companies to reach a large customer base, but they also come with some drawbacks.

For one thing, such channels require extra effort and resources in terms of manpower and money, which can affect a company’s profitability and ability to grow. Additionally, direct distribution channels lack the speed and access to more advanced digital platforms, which makes it more difficult for brands to quickly reach customers when necessary.

Moreover, it also removes the opportunity for customers to be exposed to other products in the market by only focusing on promoting one’s own services. By relying heavily on direct distribution channels, companies may find that their customer base does not increase if their marketing remains stagnant or struggles to change with trends.


1. eCommerce Self-Service (on a Company-Owned Website)


eCommerce self-service allows customers to purchase SaaS products directly from the SaaS company website and receive instant access to downloads or subscriptions.

Customers can create a profile with the company, manage their purchases, view usage details and billing history, update payment information for subscriptions, and more. This SaaS distribution channel gives companies greater control over the customer experience and provides a convenient way for customers to access SaaS products quickly and securely.


2. Inbound channels


With inbound channels, SaaS developers are able to get their products directly in front of their target audience and create relationships that may not have been possible otherwise.

By engaging with potential customers on channels like blogs, social media, and even online forums, SaaS companies can effectively build brand recognition and gain valuable insights about customer needs and preferences.


3. Content Marketing


Content marketing allows SaaS companies to leverage both organic and paid channels to get their product in front of their targeted user base. In fact, about 68% of SaaS and online consumers read the content from the brands they are interested in.

So by distributing content via blog posts, visuals, podcasts, webinars, video tutorials, or social media posts, SaaS companies have the opportunity to showcase the benefits of their SaaS and build credibility that makes potential customers more likely to take the leap and subscribe to their SaaS.

Additionally, SaaS businesses that utilize content marketing will see better long-term results because strategically planned out content can be shared time after time. This ensures that SaaS companies can repeatedly reach customers in the future with ease. No wonder, recent data show content marketing is a focus for 82% of marketers.


4. Paid Social Ads


As opposed to organic promotion, paid social ads involve creating ad campaigns on popular social media platforms such as Facebook, Instagram, and Twitter.

These social ad campaigns are often tailored to target specific groups according to their interests, which can be further tailored depending on how much budget you want to allocate towards the campaign.

In 2022, it is estimated that social media advertising spending would amount to US$226.00 billion. By 2027, it is predicted to hit $384.90 billion market value, growing at a projected annual rate of 11.24% (CAGR 2022–2027). This only goes to show the importance of paid social ads for SaaS businesses and why it could be a powerful distribution channel.

Paid social ads offer an extensive reach, and are able to cater directly to prospective customers. This makes SaaS products easily discoverable for customers and helps SaaS companies drive awareness for their products.


5. Paid Search Ads


About 74% of brands are now relying on paid search advertising to increase the reach of their products to more potential customers.

Through comprehensive keyword and market research, SaaS companies can work with an ad or marketing agency to find the best possible search terms and create compelling ads utilizing those keywords to drive traffic to their website.

Once users land on the website, SaaS companies have done the work of obtaining acquisition leads through paid search advertising and it’s now up to them to carry out effective sales processes and convert newly acquired leads into customers.


6. Referral


A referral is a SaaS distribution channel whereby existing customers of the SaaS product can refer their friends and family in order to receive discounts or rewards.

The SaaS company gets more referrals from satisfied customers, leading to more growth and success. Referrals work well for SaaS because as data show 84% of consumers are more likely to trust recommendations from people they know, making it easier for SaaS companies to grow rapidly and cost-effectively over time.


7. Cold Calls


Outbound phone sales or cold calls allow software companies to reach and interact directly with their potential customers. Compared to other SaaS distribution channels, such as organic search or marketplaces, outbound phone sales offer personalized customer-business interaction and allow SaaS products to be sold on a larger scale.

The ability of SaaS company representatives to target specific customers that they know would be more likely to purchase the product makes outbound phone sales a great SaaS distribution channel. SaaS teams are also able to use past customer data in order to create targeted messages and tailor offers for potential buyers, a strategy that only helps enhance the SaaS selling process.


8. Cold Emails


Cold emails allow SaaS owners to reach prospects directly in their inboxes and share insights about their products. Cold emailing also offers SaaS companies a way to establish credibility by putting out industry-relevant content and tips.

Unfortunately, data shows the SaaS industry has a cold email open rate of just 20% , meaning that companies need to be strategic in crafting their messages. SaaS Companies should focus on providing value in the emails, such as highlighting how their product can specifically help the customer and make sure to avoid generic sales pitches.

Furthermore, when SaaS marketers use personalization in cold emails, it helps to grab the attention of prospective customers and build relationships with them. Successful marketers report that personalization has caused a 760% increase in their email revenues.


9. Letter/Postcards


Despite the rise of electronic communication, there are still occasions when traditional mail can be more effective – such as when marketing SaaS products to consumers who may not be tech-savvy.

Sending a physical, tangible item provides an extra level of personalization and touch-points, making customers feel more valued and potentially more likely to consider and purchase SaaS products that may seem intimidating at first glance.


10. Out of Home


Out-of-Home (OOH) advertising allows marketers to showcase their SaaS products in a variety of environments while reaching more customers. Examples of OOH channels include billboards, street signs, and transit advertising.

OOH can offer SaaS companies the advantage of using creative visuals to drive engagement with their product, increased recognition as people pass by multiple times throughout the day, and targeting locations where SaaS offerings are likely to be most successful.


11. Events / Public speaking


Attending industry events like conferences can provide SaaS businesses with a powerful platform to showcase their services and products. Attending these events is a great way for SaaS companies to network with new potential customers and build relationships with current ones.

By setting up booths and passing out marketing materials at trade shows, SaaS businesses can gain more exposure, demonstrate their products or services in live settings, qualify leads, receive valuable feedback from potential users, and strike deals that result in long-term business relationships.

Public speaking often allows SaaS brands to not just explain the features of their product, but also inspire and educate their listeners, making SaaS products even more enticing.


B. Indirect Distribution Channels for SaaS Companies


Different SaaS businesses utilize different methods for indirect distribution, including leveraging third-party app marketplaces, providing discounts for partners and vendors, engaging resellers who bundle SaaS products with their own services, and gaining access to customers through a specialized network of affiliates.

These channels can provide SaaS companies with access to significantly larger potential customer bases, allowing them to scale quickly.


1. App Store Marketplaces


App Store Marketplaces allow software developers to offer their products with mobile versions on the App Store and reach customers in an easy and efficient manner. Some of the most popular online marketplaces for SaaS include Appsumo, ProductHunt, and SaaSZilla. They offer SaaS apps a unique opportunity to stand out, as they’re sure to be seen by potential customers quickly due to their highly visible positions.

Not only does App Store Marketplace make SaaS products easier for customers to find, but also provides an array of tools that SaaS developers can use for tracking user engagement, downloads, feedback, etc., giving them valuable insights and helping them improve the quality of their app over time.


2. Resellers


A SaaS reseller is a third-party provider that acts as an intermediary between cloud-based SaaS developers and their customers. Resellers have the ability to take SaaS applications and deliver them to the customer on behalf of the SaaS provider, creating an automated distribution channel between developers and end-users. It allows SaaS providers to expand their reach, providing businesses around the world with access to business solutions in a fraction of the time.

In addition, this SaaS reseller can acquire new customers for SaaS providers by marketing and selling SaaS applications locally in different countries or regions.


3. White Label Resellers


White-label resellers take a SaaS software platform or application, customize it with their own branding, and then resell it without any indication that they are not the original creator.

This allows SaaS companies to expand their potential customer base significantly while avoiding investing heavily in sales, marketing, and customer support – tasks typically handled by the retailer.


4. Affiliate Marketing


Affiliate marketing works on a performance model, where affiliates are rewarded for successful SaaS sales that are tracked to their promotions.

Usually, SaaS businesses involved in affiliate marketing establish partnerships with specialized SaaS-focused Affiliates who then market and help your SaaS products reach a wider audience online.

A successful SaaS affiliate marketing program stands out by creating the opportunity for beneficial long-term relationships between SaaS businesses and affiliates, creating mutually beneficial opportunities to make money while driving more SaaS user acquisition and retention.

SaaS companies can also create more closeness with their customers by setting up Customer Affiliate Programs that empower existing users to become ambassadors of the SaaS product as they receive incentives such as a commission or discounted service for referring their friends and family.

Read What Is Affiliate Marketing Strategy For SaaS Businesses? for more information.


How Do You Choose a SaaS Distribution Strategy?


Below are some factors to consider when selecting a distribution strategy for your SaaS solution:


1. Company Goals


What does the company hope to achieve by distributing its products? The answer to this question will help to determine the most appropriate distribution channels for the company’s products.

For example, SaaS solutions may be handled through direct sales or via an app store, but if an organization is looking to open up new international markets then using an app store might be the better option since it could quickly reach customers on a global level.


2. Customer Needs


What type of SaaS solution do they need and how often do they need it? For example, a customer who needs access to productivity applications on a regular basis may be better served by a subscription-based model or an app store.


3. Pros and Cons of Distribution Channels


Each type of channel has its own advantages and disadvantages that must be considered before making a decision.

These considerations include how well each channel can handle the SaaS product’s complexities, costs, user experience, visibility, scalability, and more.

For example, direct sales might be better for SaaS products with a high level of complexity that need onboarding and customizability for each customer. However, SaaS solutions with a straightforward setup may be better suited to leveraging Marketplace or e-commerce channels.


4. Cost


SaaS solutions are often more cost-effective, because they don’t require big capital investments that traditional software and hardware products need. As such, it’s important to consider how each potential channel will impact the overall cost of delivering your SaaS solution.

Some may be more expensive than others in terms of operational costs and setup fees, while others may offer more flexibility and shorter implementation times.

Choosing an expensive distribution channel means increased costs for your SaaS solution, and these costs can eventually be passed onto the customer. Ensure you research the most cost-effective but still suitable for SaaS options before making a decision. This way, you guarantee that your SaaS solution brings in the needed sales without costing too much.


5. SaaS features


Understanding the features of your SaaS is paramount when selecting an appropriate distribution channel. Different tools have different needs and therefore require unique sales strategies in order to reach the intended audience.

Features like pricing, scalability options, compatibility with other tools, and usability must be taken into account when choosing which channel will give you maximum visibility.

Distribution channels offer added benefits, but it is essential to consider if your product has features that make it ideal for a particular channel – for example, digital marketplaces like App Store or Google Play might not be ideal for complex software packages.

A SaaS solution designed for accounting needs may be better suited for a B2B channel such as a contract sale. Or it could work with an app store or marketplace in order to give users direct access and quick implementation.

Additionally, certain features can increase the visibility of your product through various channels, such as marketing campaigns or on-site showcases.


Final Thoughts


Choosing an effective SaaS distribution strategy requires careful consideration and planning beforehand in order for it to be successful for any business venture. From researching different models available on the market today to understanding user preferences, there are many factors to consider when making this decision. Ultimately though, by taking all these components into account beforehand – including budget constraints – firms can rest assured knowing they have chosen the right strategy for their needs!

Check out our blog for more tips on growing your SaaS business.

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Ken Moo