With the pure-play SaaS ecosystem predicted to reach $50 - $70 bn by 2030, the demand for SaaS is rising, and so is the competition.
How do you ensure your brand shows up before your prospects when they search for a solution?
One of the most important ways to grow your SaaS business is to attract and retain the right leads. It doesn’t end there. You must also develop them as high-impact SaaS buyers and convert them into sales. This blog will cover some timeless lead generation strategies for SaaS companies and how you can make them work for your business.
Let’s get started.
What is lead generation in SaaS?
A SaaS (Software as a Service) lead is a potential customer who has shown interest in a SaaS company's product or service and has provided contact information for follow-up. SaaS leads are usually generated through various marketing channels such as content marketing, webinars, search engine optimization, social media, email campaigns, and others.
SaaS lead generation can be defined in the following ways based on your business model
- A person who has subscribed to a SaaS company's email newsletter and provided their name and email address.
- A person who has downloaded a whitepaper or attended a webinar hosted by the SaaS company.
- A person who has filled out a contact form on a SaaS company's website requesting more information about their products or services.
- A person who has interacted with the SaaS company's chatbot or chat support and provided their contact information.
- A person who has signed up for a free trial of a SaaS company's product and provided their contact information during the sign-up process.
Why is lead generation important for SaaS businesses?
SaaS lead generation plays a critical role in driving the growth of software companies, as it helps to establish a steady inflow of interested individuals who could become customers. According to a Marketo study, companies with effective SaaS lead generation strategies have at least 133% more revenue than those without a well-defined strategy.
Moreover, the SaaS industry is highly competitive, and companies need to stand out from the crowd to capture the attention of potential customers. Lead generation for SaaS can help them to differentiate themselves from their competitors and create a strong brand image that resonates with their target audience.
However, lead generation can also be a challenging task, with 61% of marketers finding it to be their biggest challenge. To overcome this, it is important to have a strategy in place that is tailored to your business's needs and goals. SaaS lead generation strategies that focus on building organic relationships and customer engagement are more effective in attracting and converting potential customers. This approach is preferred over outbound marketing techniques like cold-calling, which can be intrusive and lead to a negative perception of your brand.
Top 4 Lead Generation Strategies for SaaS Companies
So, you've tried it all, from SEO to PPC, from inbound marketing to everything in between. You might have secured leads here and there, while some didn’t meet the mark, some are not even close to your targeting. Here’s what you are missing in the SaaS lead generation strategy.
1. Generating SaaS leads through content
Content is the future of marketing. In fact, content is the only marketing left, as quoted by Seth Godin. SaaS and tech companies are unique in their product positioning and services. Their audience is always seeking a one-stop source to educate them and help them grow professionally.
Creating content that helps customers upgrade their knowledge is key to building a loyal community and establishing yourself as a thought leader. A report from Semrush states that 92% of SaaS companies find content marketing as an effective lead gen strategy and succeed in it.
There are numerous content approaches to generate leads for SaaS. Here are three of them to kickstart with:
- SaaS Blogging
- Gated Content
When you search how to generate B2B SaaS leads with content, there’ll be ‘n’ number of articles educating you to focus on the buyer persona, using keywords to make your blogs visible on SERPs. These strategies are great in a generic sense, but when it comes to driving consistent traffic and leads, these don't get to the nitty-gritty of an accurate lead-gen strategy for SaaS companies.
As one of the few b2b lead generation agencies working with SaaS startups in India, here’s what Tripledart’s No-BS SaaS blogging strategy looks like -
- Great SaaS blogs don’t include technical jargon. They have a personality that makes you love reading technical content.
- Evergreen content doesn’t often work out with SaaS. Timely updates in the SaaS industry require you to churn out more fresh content.
- To make your blog relevant to your customer, addressing their pain points is the first priority.
- Lengthy guides, case studies, and opinion pieces are a great way to showcase your brand’s expertise.
- SaaS blogs should focus on every buyer journey stage and create content specifically for each.
Hubspot’s content marketing is a great example. With honest, authoritative, and high-quality content, Hubspot earned a solid reputation among its audience. Not just evergreen content, but with podcasts, and interactive social media posts, Hubspot shows us how to break legacies and experiment with new content formats to stay relevant in the eyes of an evolving audience.
HubSpot proves that no matter how small you start with, being found by the right audience and evoking trust is possible. All it takes is effort, consistency, and the will to deliver excellence to your audience.
Before charting out a SaaS blogging strategy for lead gen, ask yourself these questions:
- Are you clear on the audience's goals?
- Do the keywords used in the article have enough search volume?
- Does this article offer clear, actionable value?
- If you were reading the same article, would you give your email to read more about the topic?
If the answer to the above questions is NO, the topic idea isn’t a right fit for your blog page.
Did you know that 80% of B2B content assets are gated? If you’re wondering what we’re talking about, the tradable information compels you to leave your email id. It’s that free ebook, downloadable template, checklist, or know-how guide.
With innumerable in-depth content for free, why would anyone want to exchange their email address for extra information?
The trick here is to offer value your customers wouldn’t get anywhere else. As you understand your audience better, you’ll know there are niche-specific content pieces they repeatedly search for. These are the ones that would lead them to trade information on your website.
One of the best examples of gated content strategies is this one from Backlinko. In one of their posts, “Google’s 200 Ranking Factors: The Complete List”, Brian Dean subtly channels users’ attention from reading the blog post to downloading the Free Checklist by leaving their emails sent to the customer database.
This is a great example of an effective content upgrade. It’s extremely relevant to the blog post that visitors find it on and provides genuine value that builds upon the blog’s content.
By offering incredible value such as this in exchange for only an email address, you can very easily build a huge email database of leads to sell to.
What better way to showcase your expertise and authority over a topic than to host a webinar? Especially for SaaS businesses, where potential customers may not be able to experience the product in person before purchasing it, webinars are a great chance to offer a first-hand experience of your products/services.
Not only do webinars engage with your customers, but also help your leads understand your business well. To ensure you get the maximum leads out from webinars, make your content T-shaped, where it can perform two functions - educate your audience and drive leads to your business.
Here’s how you can drive SaaS leads with webinars:
- Instead of pre-recorded product demos, onboard 2-3 customers on a webinar to reduce customer churn rate.
- Drive targeted leads by releasing the summary of the webinar via an ebook or a guide.
- Co-host a webinar with a customer to reach a larger audience
2. Generating SaaS leads via Account-based Marketing
Unlike traditional marketing, account-based marketing flips the sales and marketing funnel upside down. ABM squares down the ideal customer for a particular product or service even before they express a purchase intent. Upon identifying them, ABM further nurtures these high-value accounts by guiding them through the sales cycle with targeted, personalized content and customer support.
This approach offers lesser cold calling and more personalized lead nurturing. Imagine doing targeted ABM vs. setting up campaigns, collecting leads, calling them, and then qualifying them as MQL - Sounds a lot easier to execute, right? Now, here’s the thing - identifying high-value SaaS leads is the toughest.
So, here’s a cheat sheet that marketers at Tripledart follow to identify high-value accounts
Who are the clients that bring in the most Monthly Recurring Revenue (MMR)?
- Compile key information from your existing customers
- Identify the key characteristics, build a buyer persona
- Create custom content aligned with their pain points
- Promote the content in channels where your target audience is active
- Monitor your campaign. Use targeted KPIs and metrics to measure success and gray areas
Account-based marketing is a great B2B SaaS company's lead generation strategy that aligns sales and marketing goals with personalized content and committed leads.
3. PPC for SaaS lead gen
Do you know your Google Ad quality score? If you’re unaware of it, it might cost you a lot. If SaaS content marketing strategies and SEO aren’t working, you should switch to a paid model. Paid search can help garner targeted traffic more than organic and secure leads. If you’re looking to
- Increase your brand visibility
- Focus more on the product and less on marketing
- Witness a high marketing ROI
Paid search is the right channel for generating SaaS leads.
Not all paid media channels are worth the effort for B2B SaaS platforms. While working with B2B SaaS companies, we’ve witnessed higher customer trust on Google, be it with retargeting or text-based ads. Because of cognitive bias, a prospect’s degree of trust is regulated while viewing ads vs. organically ranked content.
When targeting, ensure enough long-tail keywords for the right people to see the results and click them at the lowest cost-per-click.
In 2023, SaaS companies have no more one-for-all lead generation strategy. If you’re running paid ads, ensure your website’s SEO is aligned to achieving top ranks on SERPs for the same keywords. This combined approach will lead to better results.
Also, do not forget your ad quality score. Most SaaS companies build a series of landing pages targeting them with keywords with the highest search volume. Later, the lack of better results makes them question their paid marketing efforts with the least buyer intent.
Paid search can be a great lead generation strategy for SaaS companies. With key elements like choosing the right keywords, creating a targeted ad copy, and a few A/B tests on landing pages, you can create ads that convert prospects to high-paying customers.
Started running paid ads? Great! What about testing them?
For an optimized paid campaign, test new ads, and cycle them. Old ads fade out with time, so releasing new paid ads biweekly and monthly can help your PPC campaign reach new heights. Add new ad copies to your existing ad campaigns to help the algorithm re-learn. If you see the performance of old ads declining, it’s time to roll out new ad copies. However, if that’s not the case, you can run separate campaigns for working days and weekends.
4. Paid Social for SaaS lead gen
SaaS companies' biggest mistake with lead generation campaigns is using low-funnel, direct-response ads on freezing-cold audiences. This approach might work for impulse-buying products, but for SaaS it doesn’t. Here, the customer needs to learn about the problem and how a SaaS product like yours can solve it.
Before we go deeper into the copies and creatives, let’s start with the three stages of SaaS prospect.
Awareness - The user isn’t aware of the problem or is beginning to understand their problem
Consideration - The user is aware of the problem and weighing up options before looking for a solution
Conversion - The user is ready to invest in the best solution that fits their problem statement
So, before ‘book a demo’ or ‘start a free trial’, don’t you think your customer should “talk to an expert”? Instead of direct CTA ads that target cold, top-of-the-funnel leads, there should be a complex series of ads that help users to navigate from the awareness to the conversion stage depending on their needs.
Paid social media ads can be an awesome lead generation strategy for SaaS brands to capture the right data, get vital insights, and use them to rebuild your social media presence. If done correctly, paid social media ads can generate leads without wasting time and money.
Here are our two cents on running a successful paid social media lead gen ads -
- Understand your needs and define core KPIs – Is it for making your brand familiar to the audience, starting a conversation, or generating high-value leads? This can be directly attributed to your campaigns.
- Connect data across all channels - Collate all your owned ad accounts, measure every channel’s success rate, and analyze the results
Gong.io’s ad aptly brings out the controversial approach to the topic, which serves as a hook for anyone scrolling the newsfeed. Not just for the clickbait, but the article involves original research so the intriguing teaser complements the consumable movie in the end.
This article scored a massive hit because the content was fit for Linkedin. The tone of communication resonated with all sales people, because it had actionable tips– Gong.io became a useful resource that tells it like it is. The article generated over 100 comments, encouraged following and sparked fresh discussions on a topic that’s relevant for the brand.
How to generate leads for SaaS - Top 12 Actionable tips
To stay ahead in the SaaS marketing game, you need to be able to ramp up your lead generation with lightning speed. Think of it like playing a game of Tetris, the faster you can stack those blocks, the higher your score. Here are twelve actionable ways to scale up your lead generation and drive more sales:
Set the foundation strong with content
Leverage the power of blog content to attract new leads for your SaaS business. The key to success lies in producing unique and valuable content that will appeal to both existing and potential customers. By consistently posting new blog content, you will not only keep your audience engaged but also establish thought leadership in your domain.
Utilizing gated premium content, such as eBooks or eGuides, is an effective lead generation strategy. By offering this valuable content in exchange for your audience's email address or contact information, you will be able to add them to your sales pipeline and continue nurturing the relationship through other channels.
Repurpose old blogs
Don't let your old successful blog posts go to waste - consider updating and repurposing them to reach new audiences and generate even more leads. For example, turning a popular blog post into a podcast, video, or eBook can help you reach a wider audience and attract even more leads.
Leverage Guest Posting
Finally, don't underestimate the power of guest posting. By writing a guest post for a high-quality blog or website, you will be able to introduce your brand to a new audience and direct them to your website with the use of backlinks in your article. This will help you build trust with potential leads and incentivize them to learn more about your product.
Pay attention to Software Review Sites
Lead classification is a critical aspect of lead generation, and leads are typically categorized as cold, warm, or hot. Each category requires a unique strategy to convert leads into customers. Understanding where your leads stand on the spectrum can help you prioritize your lead nurturing efforts and improve your chances of success.
Software discovery platforms or tech marketplace space is rapidly growing and has become a crucial resource for businesses and individuals looking to find and compare software solutions. Platforms like G2 are trusted by millions of decision-makers and have become an excellent source of warm leads for B2B sales.
By optimizing your business profile on these platforms and appearing at the top of search results, you can engage with motivated buyers who have already identified their problems and are actively seeking solutions. Provide them with the right information and resources to help them make an informed purchasing decision and convert into paying customers.
Social proof your product walls
The B2B SaaS landscape is highly competitive, and businesses need to go the extra mile to win over potential leads. Trust is the currency in this space, and building trust is vital to securing more B2B leads. One effective way to build trust with your prospects is through the power of social proof. Leveraging customer testimonials, case studies, and awards can help reinforce your claims and position you as a trusted solution in the minds of your prospects.
Moreover, incorporating social selling into your SaaS lead generation strategy can provide valuable insights into your target audience's interests, habits, and behaviors. This information can then be leveraged to personalize your communication, emails, and other interactions, thereby increasing the chances of securing more conversions.
Partnering with credible review sites such as UpCity and Clutch can also help boost your credibility and reputation, making you an attractive option for potential leads. Additionally, creating engaging and interactive content on social media can help build a strong brand image, increase visibility, and position you as an industry thought leader.
Optimize your Website
Your website serves as the foundation for your digital presence. Regardless of where you choose to market, prospects will eventually find their way to your website. Therefore, it is crucial to optimize it for optimal user experience, search engine optimization, and conversion optimization.
Here are some key elements to consider for enhancing B2B lead generation through website optimization:
- Speed - Page load speed has a significant impact on lead generation. 70% of consumers state that slow websites make them less likely to make a purchase. A slow-loading website can lead to a 5% decrease in lead generation for every second it takes a page to load. With the average lead conversion rate being just 1.7% of website visitors, even a small decrease in load speed can have a major impact.
- Mobile-optimized - With the rise of mobile usage, it's crucial to ensure that your website offers an optimal user experience on mobile devices. The COVID-19 pandemic has accelerated this trend, with B2B mobile research and buying activity rising 250% according to McKinsey.
- Automation Tools - Automation can lead to a 451% increase in qualified leads, according to Oracle. For websites, chatbots can help visitors quickly find answers and direct them to live chat if needed. To ensure success, choose automation tools that are easy to integrate into your existing CRM and user-friendly.
Consider incorporating these elements to enhance your website's performance and conversion potential.
Create a Lead Magnet
Engaging users with e-books or gated content that requires filling out a form is great. But let's face it, who has time for that? The most effective lead magnets are the ones that make our lives easier, more efficient, and dare I say, even fun.
For example, imagine a checklist that makes organizing a closet as easy as 1, 2, 3, or Excel tools that turn data analysis into a game of Tetris. These tools not only help you attract more email subscribers, but they also generate organic traffic, build backlinks like Legos, and solidify your brand like a hand-shake with Iron Man.
Take Ahrefs' free Webmasters Tools site, for example. It's like a superhero sidekick for SEO, earning over 8,000 backlinks and bringing in around 3,000 organic visits per month. That's like hitting a homerun every day, without even breaking a sweat.
Interactive tools are a secret weapon in the lead magnet arsenal because they allow you to form a closer bond with users based on results before they even consider becoming paying customers. It's like getting a sneak peak at the future and seeing that it's bright, shiny, and full of conversions.
Expand your network with audio
According to LinkedIn, 44% of senior decision-makers, the people who call the shots, like department heads, VPs, bosses, and the bigwigs in the C-suite, are all ears when it comes to podcasts. So, if you want to get their attention, you better get on the mic.
While starting your own podcast is like opening a theme park for your brand, you don't have to wait for the grand opening. Instead, find out what topics your potential customers are dying to learn about and crash the party as a guest speaker. Share your insights, tell some entertaining case studies, drop some mind-blowing stats, or share some practical information that'll make their day. It'll put your brand on the map and create new connections faster than you can say, "Can you hear me now?"
People trust people, not corporate robots. Podcasting humanizes your brand and creates trust with executives like a BFF neck-brace. It also opens up new markets like a can of worms, waiting to be explored.
But why settle for just being a guest when you can be a sponsor? Find a podcast that's attracting new leads like bees to honey and sponsor it. It may take some trial and error, but if it's bringing in leads like the tide, it may be a smart investment in the long run.
Target with Account-based Marketing
ABM is a B2B marketing strategy that zeros in on specific accounts, rather than trying to reel in any old fish. This approach is a game-changer for B2B and SaaS businesses allowing you to tailor your marketing and sales efforts to the unique needs of each account. Think of it like custom tailoring a suit for a VIP client, versus mass-producing a one-size-fits-all product.
With ABM, you can effectively generate leads and close deals with higher precision and less waste. But here's the catch, to get the most out of ABM, you need to have a solid understanding of your target market and ideal customer. Otherwise, you might as well be shooting arrows in the dark.
Focus on Lead Nurturing
Lead nurturing is the secret sauce of B2B marketing. Lead nurturing is the art of building relationships with potential customers, even if they're not yet ready to make a purchase. Picture yourself at a networking event, striking up a conversation with a stranger - that's the essence of lead nurturing.
By nurturing your leads, you'll create brand awareness, build trust, and of course, generate leads. There are many ways to do this, such as through email marketing, content marketing, and social media. Just think of it as the difference between a one-night stand and a long-term relationship - both can be enjoyable, but only one will pay off in the long run.
Having a solid lead nurturing strategy in place is crucial to the success of your B2B marketing efforts. Don't be the person who only reaches out when you need something, be the one who nurtures your relationships and reaps the rewards.
Be available 24/7 - The Smarter Way
As a startup, we know how overwhelming it can be to juggle multiple complex requests. It's like trying to juggle fire while riding a unicycle - it's just not sustainable. And let's face it, providing subpar customer experience is like serving a cold cup of coffee - it'll leave a bad taste in their mouth.
But don't fret, that's where chatbots come in to save the day. With the help of AI algorithms, chatbots give startups the ability to connect with their prospects in a more effective way. It's like having a virtual customer service representative at your fingertips, 24/7. And for those of you who are looking for a real-life example, take LiveChat Software for example - it replicates the in-store customer experience online and includes features such as Customization and Personalization, Chat Reports, Analytics, and Encryption.
Chatbots streamline the entire customer support and sales process, reducing response time and generating high-value leads. In fact, using a chatbot can result in 60% more revenue. That's like finding a hundred-dollar bill in your pocket - it's a no-brainer!
And it's not just small startups that are reaping the benefits of chatbots - big players like Drift, Salesforce, and Segment are using them to automate their customer service, scale up operations, and drive SaaS lead generation. So why not join the chatbot revolution and take your startup to new heights?
Automate your lead generation processes
Having a solid CRM system in your toolkit offers immense benefits. That's why we’re a big fan of HubSpot. It's the ultimate one-stop-shop for lead management and automation.
Think of HubSpot as your personal secret weapon. With its lead-gen forms and welcome email automation, it makes the process of attracting and nurturing leads a total breeze. And with the option to add a chatbot or go straight to a live chat with a real person, you're able to provide a top-notch customer experience every time.
But wait, there's more! HubSpot integrates seamlessly with other popular tools to bring your SaaS lead generation game to the next level. Need to connect your Facebook data to your CRM? No problem! LeadsBridge has got you covered. Want to capture leads from your landing pages? Unbounce and Leadfeeder have got your back.
So if you want to streamline your lead management, improve customer experience, and boost your revenue, HubSpot is the way to go. And with its integrations, you can supercharge your SaaS lead gen process and hit those goals out of the park!
Show up at industry events
The days of casting a wide net with a virtual event and hoping for the best are over. Gone are the days when high registration numbers and attendance equated to a successful event and qualified leads.
Instead, it's time to get strategic and segment your audience into distinct categories. This could be based on industry, function, or any other relevant parameter that will give you insight into where your customers are coming from.
Remember, it's always easier to sell a painkiller than a vitamin. That's why it's crucial to have a core theme that focuses on solving the problems of your potential market. By clearly outlining the benefits and what's on the menu through your event's agenda or program, you'll see a significant increase in registrations.
During the event, lead with the problems you solve and engage your audience. Use metrics to showcase your expertise and keep track of live Q&A sessions to uncover potential leads. And don't forget the power of credibility - bring in industry leaders or SMEs to add even more value to your event.
In short, when it comes to virtual events and lead generation, it's all about being smart, strategic, and solution-focused.
Hire a SaaS lead generation agency
Outsourcing B2B SaaS lead generation is like having your own superhero team, taking care of the heavy lifting while you sit back and watch the leads roll in. Think of it like hiring Iron Man to handle your lead generation while you focus on other important tasks.
When it comes to outsourcing lead generation, you've got options. Companies that specialize in lead generation services offer a range of tactics, such as SEO, landing page optimization, and guest posting, to help you generate quality leads. And let's face it, who wants to waste time and money on SaaS ads that just don't work?
A lead generation company can help you generate leads that matter by conducting market research, identifying your target audience, and creating personalized messages that are relevant and specific to your audience. Their team of experienced professionals have the know-how and the latest tools to get the job done quickly and efficiently.
But before you outsource, make sure to identify your goals, the type of leads you're looking to attract, and the client profile. Then, hire a reputable lead generation company with proven results and get involved in the research process to create a database of qualified B2B SaaS leads. And don't forget to stay in touch, set appointments with your prospects, and watch your lead generation soar. With a solid SaaS sales funnel in place, outsourcing your lead generation will be a breeze, and you'll generate qualified leads faster and more cost-effectively.
Acquiring new customers with every lead generation campaign? Great! But at what cost?
SaaS businesses need a smart, growth-focused marketing strategy to propel their success, and building an effective marketing budget is one of its key contributors. Preparing one is definitely time-consuming and tricky, but when you’re sure about the growth channels, fuelling your growth in the same direction is a piece of cake.
What is a SaaS Marketing Budget?
In our initial discussions, we’ve encountered many business owners who are unsure of things to focus on in a marketing budget. Marketing budgets are often planned annually, but agile SaaS businesses prefer revising their marketing budgets quarterly or monthly in this hyper-growth phase.
Here are the expenses that fit into the marketing budget:
- Social media marketing
- Paid Search and Social advertising (e.g., Google Ads, Facebook Ads, etc.)
- Customer Relationship Management (CRM)
- SEO & Content Marketing
- Outreach and influencer marketing
- Marketing automation solutions
- Lead capture and generation
- Data collection and analytics
The expenses include software costs, staff, service, and advertising fees.
Why should SaaS businesses set up a lead-gen budget?
Developing and committing to a SaaS lead-gen budget is necessary for the following reasons:
- It helps track your spending and analyze the ROI for lead-gen campaigns
- It compels you to build strategic campaigns and focus on impactful initiatives
- It allows you to evenly spend your marketing budget and ensure you’re using the right channels to target your audience
A balanced marketing budget is the thin line between overspending and underspending. Understanding unit economics is important for SaaS founders. Invest in channels that can channel your success. Early-stage SaaS startups might not have this advantage, but scaling SaaS startups can get into the details of revenue growth and double down their lead-gen spending on channels and tactics that work.
How much to spend on SaaS lead generation?
How do you decide on the amount to spend on lead generation? Let’s evaluate two common methods for doing it:
Budget by Revenue Percentage
A common rule of thumb is that businesses should spend 7-10% of their revenue on marketing budgets. Does this stay true for SaaS businesses? Let’s explore.
SaaS Capital shares that SaaS firms with above-median growth spend 14% of their revenue on marketing. This may differ for early-stage SaaS startups as they tend to outspend on marketing for better brand visibility.
But is a high marketing budget necessary, especially for lead gen? Here’s why
B2B SaaS firms experience a higher customer acquisition cost (CAC) and lower cost of goods sold(COGS).
Because SaaS businesses are niche-oriented, they rely on fewer customers to generate higher revenue. This is why they should spend enough on acquiring them and scale sustainably.
Secondly, once a SaaS product is out, its unit costs plummet. Traditional B2C businesses have an 80% COGS – having to pay for brick-and-mortar stores, wholesale goods, transport, and logistics, etc; SaaS businesses don’t.
Maintenance, admin, and support costs exist, but with an unlimited inventory – so now you need to sell your product! With low entry barriers for SaaS, lead-gen spending is a key tool for establishing market share.
Therefore, SaaS companies are lean w.r.t costs to benefit from the budget by revenue percentage method.
Budget by Monthly Recurring Revenue - LTV-CAC
Tripledart, the best b2b lead generation agency follow this method for SaaS businesses. The golden LTV-CAC ratio. The LTV:CAC ratio combines two separate metrics: lifetime value and customer acquisition cost. This describes how much value your organization brings to acquiring a single customer.
Based on a monthly recurring revenue model, LTV:CAC highlights each customer's value to your company as a whole. The ideal LTV-CAC ratio should be 3:1 i.e., for every customer acquired, there should be a 3X ROI.
LTV-CAC is used to calculate the ideal marketing budget given a target MRR.
Before that, let’s calculate a few key metrics:
Monthly Recurring Revenue is defined as your subscription revenue divided into monthly amounts. You can easily calculate your MRR with the help of payment and subscription analytics tools like Stripe and ChartMogul.
New Customers Needed
How many new customers do you need to achieve your MRR?
For SaaS firms, this is particularly easy to determine:
Churn rate is the rate of canceled subscriptions or services by the customer. A high churn rate can mean the SaaS company has trouble retaining customers. The churn rate is calculated by dividing the number of customers who canceled their subscriptions in a given month by the total number of customers at the beginning of that month.
Knowing your churn rate is important to derive the Customer Lifetime Value (LTV) formula.
Examining LTV and CAC
Customer lifetime value (LTV or CLV) can be calculated using various methods. The one we’re using here is:
We’re calculating CAC as:
If we’re targeting an LTV/CAC ratio of 3:1, we can write this as:
To use a churn rate, we’ll also need to express MRR in per-customer (or per account) form. We’ll need to replace MRR with APRA: Average Revenue Per Account:
That gives us:
For example, consider a company that currently has a $5,000 MRR and desires a $10,000 MRR. Their churn rate is 30%, and their monthly subscription price is $50.
Firstly, how many customers are needed to generate $5,000? 5000/50 = 100. APRA is 10,000/150=200/3
With this information, the ideal marketing budget can be found:
Outsource B2B Lead Generation to Tripledart
Choosing the right SaaS lead generation strategy can make a huge impact on the success of your business. However, with so many strategies to work out on, it can be overwhelming to know where to start. Instead, you can partner with a b2b lead generation agency like Tripledart.
Tripledart offers a comprehensive solution tailored to your unique needs, leveraging our expertise and resources to help you unleash the full potential of B2B lead generation. From lead capture forms and email marketing to account-based marketing and sales intelligence, our B2B lead generation agency can help you implement the right tools and processes to attract and engage potential customers, drive conversions, and grow your business.
Our innovative approach to lead generation for SaaS, combined with their deep understanding of the latest technologies and best practices, makes us the ideal partner for businesses looking to take their lead generation to the next level.
So why wait? Book a discovery call with our experts today and watch your business thrive!