The Meaning of ACV SaaS in Marketing The health and success of any SaaS company are determined by the annual contract value (ACV). In fact, many SaaS firms build 16% of ACV by upselling to their clients.What is ACV, and how is it Calculated?
ACV refers to the subscription revenue produced from every contracted client annually. ACV is calculated as follows:
ACV= Total contract value/number of clients under contractHow to Increase ACV
Companies ACV depends largely on the type of target audience they have. For example, Salesforce has a high ACV than Netflix. Irrespective of the target audience, other methods help increase ACV.Upsell to Existing Clients
It is the most efficient technique to increase ACV. Many top SaaS organizations are employing the Upsell method to raise their ACV by;
• Nurturing clients
• Offering free trial
• Highlighting the benefits
• Sharing case studiesFocus and Filter on Highly Qualified Leads
All leads are not equal. By segmenting leads based on their likelihood of choosing various plans, a firm can identify the most profitable leads. Here are several ways to sort out highly qualified leads:
• Check the features
• Use information enrichment tools.
• Track their activities
• Research on details needed to qualify a leadOffer Unique Consumer Service
It is an efficient way to attract more clients because 86% of clients are willing to pay more for better consumer services. Here are several tactics to offer unique consumer service:
• Create a knowledge base
• Provide live chat support
• Use CRM to keep all client requests in one place.
• Make sure the FAQ page works effectively.Reduce the Churn Rate
The lower the churn rate, the higher the ACV. The average churn rate for SaaS firms is approximately 7.5% monthly. Here are several ways to lower the churn rate:
• Improve the onboarding process
• Understand the reason behind client churn
• Educate users to use products effectively
• Use predictive analytics to identify customers.Get the Right Pricing
Pricing is a crucial factor in ACV determination. It is important to balance pricing and select the right strategy to increase ACV. Here are some tactics to master pricing strategies:
• Identify kinds of clients needed.
• Perform competitor research
• Consider future strategies of marketing.
• Decide whether to offer per-user pricing.Improve Process of Marketing Targeting
The more customers, the higher the ACV. Firms should improve the process of marketing targeting to increase theirACV. Here are several ways to target actual clients:
• Build a market profiler
• Develop a content marketing strategy
• Create separate landing pages
• Conduct competitor research
It is essential to track SaaS ACV as it determines how rapidly an organization can grow.