Today, we’ll look at some ways to power your business with leads and establish some basic foundations so that you can take advantage of all the new sales opportunities in B2B SaaS lead generation.
If your B2B business is a car, then leads are your fuel. No matter how well-designed, expensive, or beautiful a vehicle may be, it won’t go anywhere without fuel. You’ll need a well-oiled machine for B2B SaaS lead generation to work. The most efficient vehicles will go further on less fuel, and the ones with the best engines will get to their destination quicker.
The most crucial part of any B2B SaaS marketer’s job is generating leads. If you don’t generate leads, you don’t generate business, and the company doesn’t grow. Because generating leads is such a crucial component of growing B2B technology firms, Sales and Marketing teams are often combined.
According to the Holger B2B Lead Gen Report, more than half of marketers (53%) report that half or more of their budget is allocated to lead generation.
What Is a Lead?
When someone attends an event you organize, completes a form on your website, talks to someone at your company, or clicks on an ad you run, they become a lead. A lead is any company or person that has expressed interest in your services or products.
This article is focused on digital marketing, so we won’t talk about event marketing and direct mail, although both are still significant parts of lead generation.
According to Hubspot’s 2022 marketing statistics, lead generation has remained a major challenge for most companies.
How Much Should B2B SaaS Lead Generation Cost?
An excellent place to start with any B2B SaaS lead generation strategy is determining how much a new client is worth to your company.
Customer Lifetime Value (LTV) is the term used to quantify this value. LTV is a metric that tells companies how much revenue they can expect one client to generate over the course of their business relationship.
The formula for LTV is:
Average monthly or annual revenue per customer x Number of months or years they have been a customer.
You need to adjust accordingly if you charge annually, monthly, or a combination of both, as LTV depends on your pricing or business model. Some SaaS companies calculate LTV a little bit differently, you can check that model out here.
You’ll then have to calculate the cost of acquiring a customer (CAC). This is the sum of money spent on sales and marketing to attract customers. CAC is a high-level metric that is not accessible to all marketing professionals unless the leadership team provides input. It includes salary, tools, and expenditures.
CAC = Sales costs + Marketing costs / Number of new customers
You can begin to estimate how much you should spend to acquire one client/customer by calculating this. For example, you would not spend $100 trying to acquire a customer valued at $100,000 for your company. You’d probably be underinvesting and would likely miss out on opportunities vs. competitors who spend more money.
While everyone wants to spend as little as possible for a B2B SaaS lead, if you underinvest in lead generation, you will not grow as fast as you could and may lose out to your close rivals.
Calculate Your LTV: CAC Ratio
Simply divide your total lifetime value (LTV) by your total acquisition cost (CAC). Basically, LTV/CAC.
A 3:1 LTV ratio is frequently used in SaaS businesses to determine growth. If a client has an LTV of $100k, for example, you should expect to spend about $33k on sales and marketing to acquire them.
This ratio of LTV to CAC is used to measure financial health.
There is disagreement about whether a higher ratio of 5:1 is desirable since it might mean that although you are very profitable, you are not expanding as fast as you could.
In my view, each situation is unique, and it depends on the goods or services.
SaaS businesses track their monthly LTV: CAC ratio to see how well they are doing.
Use LTV As a Guide
A top-level view of budgets is provided using this method of calculation. It can be difficult for marketers to justify the spending to their leadership teams. However, LTV can be used as a benchmark to gauge where you stand, then you can decide what kind of investment would be wise.
Determining the Cost Per Lead (CPL)
Keeping an eye on the ROI of your B2B SaaS lead generation strategy is crucial if you want to track cost per lead (CPL). It’s probably one of the most common things used to keep track of the success of any lead-generating campaign, aside from the number of leads generated.
CPL= Total expenditure / Number of leads generated
For instance, an expenditure of $1,000 on lead generation that results in 10 leads, gives a CPL of $100.
Your overall cost per lead across all digital marketing channels should be calculated, as well as the individual cost per lead for each channel. You can then determine which channel gives you the best value for your money.
Measuring the Return on Investment of B2B SaaS Lead Generation
One of the major challenges that many B2B technology firms face is having the sales cycle last for months or even years. In most technology B2B companies, a lead doesn’t close the same month it opens (SaaS is a little different at times).
This valuable study conducted by Implicit showed led to opportunity conversion rates of 13% and that the average time taken to convert was 84 days or about three months.
In Order to Benchmark B2B Tech Sector Conversion Rates, One Must First Determine the Conversion Rate for the Company.
It is better to benchmark conversion rates against your own performance rather than look at what everyone else is doing. If 3% is good for your company, then you won’t go to extremes to get to 5% or strive for 10%.
When you are a marketer, taking a more top-level view of your conversion rates and pipeline over a longer period of time is the best approach. Instead of tracking conversion over the month, track it over the year or the quarter, depending on time frames.
You can try to focus on Marketing Qualified Leads (MQLs). Everything you do will be tied back to this metric, and your goal is to increase it. Strive to be as efficient as possible by maintaining high conversion rates and scaling using relevant tactics. This means that you should set brand guidelines that will have a favorable impact on conversion rates.
Here are 5 key performance indicators that will help you set benchmarks and decide what to do next. They also help you track conversion rates at a high level.
|The 5 KPIs||Benchmark||x2|
|# of web visits||1,000||2,000|
|% of web visits to leads||4%||8%|
|# of Web Leads||40||80|
|% of leads that are MQLs||25%||50%|
|# of MQLs||10||20|
Is the prospective customer a good match for your product or service? Are they qualified to be considered a lead?
Each phase of a lead’s progression to becoming a customer is known as the lifecycle stage. The table below shows some examples of stages of the lifecycle:
|Submitted Info||Meets ICP||Ability to Purchase||Opportunity for deal||Deal closed|
MQL = Marketing Qualified Lead
SQL = Sales Qualified Lead
ICP = Ideal Client Profile
What is a Marketing Qualified Lead?
According to the Ideal Client Profile (ICP), a Marketing Qualified Lead is a “good lead” as defined by your sales team. It is a lead that matches your perfect client profile. Usually, your sales team determines whether a lead is suitable by collecting enough information about them. You may determine whether a lead is acceptable by using a form on your website.
According to Demand Gen Report (2018), 33% of demand generation professionals said that MQLs are their primary metric for success.
What is ICP?
This is your ideal client profile (ICP). It is a description of the characteristics and behavior of your perfect client. Your ICP describes your ideal client, and your target audience. Your own ICP will have more specific information on your product or service (depending on your field).
You may not know which clients are most suitable for your business until you have had some ill-fitting clients. On the bright side, your understanding of your ICP will develop over time.
What Does Sales Qualified Lead Mean?
Beyond just being Marketing Qualified, a Sales Qualified Lead is one that is ready to buy. A Sales Qualified Lead would be someone who would ask to speak to a salesperson when contacting your company.
What Is an Opportunity?
An opportunity has already identified a specific deal of an estimated value to your business and has shown interest in making a purchase. This is different from a Sales Qualified Lead as they have already had a call with a member of the sales team and have discussed budgets, etc.
Leads vs Opportunities.
A lead is someone who is interested in your business. An opportunity, on the other hand, is a chance for a deal to be closed, subject to a number of factors.
Lead scoring and Automatic Qualification
These are two important features of CRMs like Salesforce.
Once you’ve determined what your lead stages are, you can begin to utilize marketing automation to assign lead statuses to MQL or SQLs.
You can use MQL Forms on your website to request more information from your visitors. These forms require the visitor to submit all the information you need to automatically qualify them.
An automatic lead status change could be set up by the CRM if certain conditions are met. This automation is known as lead scoring.
What is Lead Scoring?
Your sales and marketing teams can prioritize working on leads by ranking them in your CRM system. A lead scoring system is typically tied to your Ideal Client Profile (ICP) and their behavior or engagement with your business.
There are several lead scoring systems available, and some CRM systems automatically score leads based on certain conditions for you. Keep in mind that a points-based system is likely to become obsolete very quickly because of A.I.
Qualifying Leads Based on Scores
Once you’ve decided to use Lead Scoring, you must link a lead to MQL, SQL, and Opportunity together in such a way that a certain number of points convert a lead to an MQL and an MQL to an SQL, and finally to opportunity.
Lead Stage > 10 Lead
10 – 20 MEL
20 – 30 SQL
30 – 40 Opportunity
Is Lead Scoring Worth It?
Lead scoring is only advised if you have a well-structured CRM system with accurate data. This is the foundation of lead scoring. Without these two things, you will not be able to score your leads accurately, as points are usually awarded based on the data you collect.
It’s unlikely that B2B technology businesses will need to use lead scoring. Unless you are getting hundreds or thousands of leads per month, it is probably not worth the time to set it up.
You can create simple Lead Scoring schemes by using demographic and behavioral information.
Why Sales and Marketing Departments Must Work Together
Sales and marketing overlap the most in expanding B2B enterprises. When a commission-driven sales team doesn’t have enough leads to work with, tensions may arise, particularly if a marketing manager is hired to produce more leads but little happens.
A lead handover is used to pass control of the leads from one department to another. Sales and marketing must be on the same page concerning lead qualification standards. The lead handover process is where you decide how marketing will work with leads and what sales will do.
Consider how often and how many leads you get when creating a lead handover process. Establishing an official handover process is not advisable if you only get four leads each week. At this point, you should treat each lead as if he were royalty.
However, if you get more than a handful of leads in a week, here is a simple example of the roles sales and marketing can play.
|Criteria||Submitted Info||Meets ICP||Ability to Purchase||Opportunity for deal||Deal Closed Won|
|Sales||No Action||Make Contact||Sales Activity||Sales Activity||Handover to Customer Success & Marketing|
|Marketing||Lead Nurturing||Lead Nurturing|
What Is Lead Nurturing?
A lead is “nurtured” by the marketing team (or sales) when they are not yet ready to buy. The leads are then put back into the virtual pot and “nurtured” until they are ready to make a purchase .
In B2B tech businesses, customer success has become a new accomplice to sales and marketing. Lead gen doesn’t stop when a lead converts. Lead nurturing comes in to turn the customers into referrals and customer advocates. Hence the reason customer success is the new face of many tech businesses.
Building Your CRM for Lead Generation
It’s important to ensure you are ready for a potential data influx before starting your lead generation strategy. This is typically an afterthought, as people learn as they go. In most cases, the learning process looks like this:
- More leads are being generated through the website and digital marketing than expected.
- Your CRM system/database receives leads.
- You then realize you want to be more focused on your marketing efforts.
- Then you notice your data is not detailed enough to personalize messages.
- Go into a fix-it mode to try to fix the data.
- Then go at it with more targeted marketing messages.
To avoid all this when setting up your CRM system for B2B SaaS lead generation, you must consider these things:
- The type of data you want to collect.
- What needs to be done to standardize the input, e.g., have fewer text fields?
- How can you segment data?
Lead Source and Attribution Tracking in Your CRM
Having the ability to track what worked and what didn’t when it comes to lead generation strategies is one of the most crucial parts of B2B digital marketing. You should be able to track the point of conversion for a new lead, whether it’s attending an event, downloading a white paper, or requesting a demo on your website.
Most CRM platforms already have lead source tracking built in, and if you integrate your website with them, you’ll be able to track which form was filled in.
Prior to running any external lead generation activities such as PPC, you might want to track which ad the person followed to then fill in a form.
You can connect your LinkedIn, Google, and Facebook Ad platforms to a tracking system.
The purpose of marketing attribution or multi-touch attribution is to show you the influence your marketing efforts have on a buyer’s decision-making process.
As we’ve seen, leads are the fuel of any business, including B2B businesses in the tech niche. It’s a core competency for the success of any business.
This article will help you make well-informed decisions in SaaS lead generation. You don’t have to know everything on the get-go as you’ll learn as you progress. But it’s important to understand how your business attracts and converts customers, as this is an integral part of every buyer’s journey.
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