A Comprehensive Guide to B2B SaaS Lead Generation
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. Source: Hubspot 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. Source: Visible.VC 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%.