In a Product-as-a-Service (PaaS) business model, effective marketing is key to both acquiring and retaining customers. Unlike traditional product sales, where the transaction is a one-time event, PaaS businesses must continuously engage and educate their audience to maintain long-term relationships. According to a recent study from Forbes, acquiring a new customer can be five to seven times more expensive than retaining an existing one. Moreover, increasing customer retention rates by just 5% can boost profits by 25% to 95%. With these numbers in mind, implementing strong go-to-market strategies is essential for sustainable success in the PaaS model.
Communicating unique selling points clearly
One of the biggest challenges in marketing PaaS is ensuring that customers understand their options. Many consumers are familiar with traditional leasing or outright purchases, but flexible PaaS models require a different approach.
Tactics:
- Simplify messaging to differentiate between leasing (e.g. simple payment plan) and Product-as-a-Service (e.g. pay-per-use, outcome-based models).
- Highlight key benefits such as flexibility, lower upfront costs, and hassle-free ownership.
- Emphasize lifecycle management and circularity. Clarify that ownership remains with the manufacturer, providing customers peace of mind, as they don't have to worry about what happens to the product at the end of the usage cycle.
Understanding and targeting PaaS personas
In a traditional sales model, marketing typically targets a straightforward consumer audience. However, in PaaS, messaging must address different stakeholders such as finance departments, procurement teams, and circularity managers.
Considerations:
- Tailor your messaging strategy to resonate with finance professionals concerned about cost predictability and procurement teams focused on resource efficiency.
- Engage circularity managers by emphasizing sustainability, reuse, and reduced waste.
- Ensure your sales teams receive training to effectively communicate and address the specific concerns of these diverse stakeholders.
Sales engagement with the right mindset and tools
The approach to sales in a PaaS model differs significantly from traditional product sales, emphasizing ongoing relationships rather than one-off transactions. Sales representatives must clearly understand the distinct value of the service model and communicate it effectively to potential customers.
Tactics:
- Offer practical tools and clear communication supports that empower salespeople to confidently demonstrate the value proposition of PaaS, ensuring consistent messaging and strong customer engagement.
- Create targeted communication materials designed specifically for PaaS scenarios, including interactive quizzes, comprehensive objection-handling guides, and qualification checklists.
- Provide tailored training programs that help sales teams shift their mindset from product-centric selling to service-focused relationship management.
Example: A manufacturer offering industrial machinery subscriptions could create a mobile app for sales representatives containing real-time calculators to instantly demonstrate cost savings, interactive FAQs to address common subscription model questions, and objection-handling scenarios tailored specifically to finance and procurement stakeholders.
Seamless onboarding: Setting the right tone
A smooth onboarding experience is critical in ensuring customers stay engaged from the start. Customers must clearly understand from day one that they are users, not owners, of the equipment and will return it at the end of the contract. Clearly communicating this expectation helps set appropriate customer mindset. If a subscriber encounters friction in setup or early usage, they are far more likely to churn.
Key elements of an effective onboarding process:
- Easy-to-follow tutorials and setup guides.
- Proactive customer support in the first few weeks of subscription.
- Incentives for completing onboarding steps (e.g., a free consultation or bonus features).
Example: A company providing industrial equipment on a subscription basis can offer a dedicated customer success manager to guide new users through the setup and first few months of usage.
Leveraging data insights for targeted marketing
Utilizing connected technologies and data-driven insights provides substantial marketing advantages in the PaaS model, enabling more personalized and effective customer engagement while benefiting both manufacturers and end users.
Benefits for manufacturers:
- Utilize real-time insights to personalize marketing messages, create tailored promotions, and proactively engage customers based on actual usage data.
- Deepen customer relationships by understanding precise product utilization, customer preferences, and behavior patterns, enabling more informed communication and offers.
Benefits for end users:
- Gain clear visibility into how their equipment is being used within their teams, by whom, and how frequently, helping them make informed decisions about contract renewals.
- Benefit from actionable insights regarding equipment usage levels, under-utilization, or required corrective actions, enabling better optimization of resources and enhancing overall satisfaction.
Case study: Ayvens' approach to marketing PaaS
Ayvens, a leader in flexible vehicle subscriptions, provides a strong example of how to market PaaS effectively. In our podcast, Louis Wyers, Director of Partnerships & Retail at Ayvens, explained:
"The market is still developing. In the Netherlands, private leasing is widely recognized, but when it comes to flexible product subscriptions, awareness is lower. This requires a different approach in marketing to ensure customers understand their options."
To address this challenge, Ayvens focuses on clear communication and strategic partnerships:
- Simplified Messaging: Since customers may be confused by multiple leasing and subscription options, Ayvens ensures that its unique selling points (USPs) are clearly outlined.
- Multi-Channel Acquisition: The company uses a mix of online marketing, direct sales, and partnerships to reach potential customers. For example, Ayvens collaborates with the MWB, a well-known roadside assistance association in the Netherlands, to acquire occasional leasing contracts.
- Partnerships with OEMs: Ayvens works closely with car manufacturers and dealerships. When a customer visits a Mazda dealership looking for a used car, they are immediately presented with leasing options, including flexible subscriptions, along with transparent pricing.
By using these strategies, Ayvens has successfully increased market awareness and reduced confusion around its subscription model.
Final thoughts
Marketing PaaS requires a tailored approach that emphasizes education, clear communication, and diverse acquisition strategies. By simplifying messaging, leveraging multiple marketing channels, and forming strategic partnerships, like Ayvens has done, businesses can create demand, build trust, and drive long-term customer engagement. The key is to ensure customers understand their options and experience a seamless journey, whether online or offline.
At Black Winch, we specialize in helping businesses navigate the complexities of PaaS marketing. From defining your unique value proposition to executing multi-channel acquisition strategies, we provide hands-on expertise to accelerate your growth. If you're looking to refine your marketing approach and maximize your PaaS potential, let’s talk. Reach out to us today!
