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Lead generation for SaaS companies has always been a process, not a destination. One of the biggest challenges for a SaaS company is to make this process efficient, repeatable, and scalable. In this article, we will share a few critical points that can help you make the SaaS lead generation process profitable at the TOFU, BOFU and MOFU sales funnel stages.
Defining SaaS Funnel Efficiency: What is a Good TOFU Conversion Rate?
The median TOFU conversion rate from a prospect (your website visitor) to a lead (someone who filled in a form) in 2021 is 4.6% according to recent Unbounce research. However, these numbers greatly vary by channel, with email marketing driving a whooping 21% conversion rate.
For a business owner, it means that the cost per lead, or, better, cost per sales qualified lead should be calculated based on the individual channel performance assessment. You can use a high-level default channels grouping (Direct, Organic, Social, etc), but the best scenario is when you can slice and dice your marketing data to the ad or keyword level.
Our experience with granular SaaS conversion rates tracking showed a shocking x4-x6 difference in conversion rate between various types of campaigns within the same channel. For example, a feature-related search ads campaign was driving 12-14% conversion rates, whereas competitors-related campaigns were generating leads with only 3-5% conversion rates.
MOFU Conversion Rate: From a Lead to SQL
MOFU metrics are somewhat secret in the industry where actual customer journeys are generally split between self-service and sales-driven SaaS models.
Our experience with both models shows how different the MOFU metrics are when it comes to the lead qualification process.
For the self-service model, the actual BOFU conversion happens when a user moves to a video demo or a free trial stage (see the image below). These metrics can be tweaked depending on specific customer journey steps, but eventually, you will be looking at conversion from a click to a demo or similar action:
For B2B SaaS models, the conversion from leads to MQLs and SQLs is greatly affected by disqualification rates at each stage of the funnel. In our example, the competitors-related ad campaigns provided cheaper SQLs than feature-based. I.e. The MOFU performance of these campaigns was better at targeting potential customers.
BOFU Conversion Rate: The Moment of Truth for Your Revenue
Now let’s talk about money. Let’s imagine that your TOFU and BOFU conversion rates are acceptable or even good. The last but the most important metric to look at will be your actual conversion to sales, and the ratio between your cost per sale and LTV.
The SaaS business model is beautiful by design: very measurable, very transparent at any stage. If you did the TOFU and MOFU metrics right, you will be in a very good position to estimate your closing rate and roll it back to the top of the funnel to build a profitable lead generation cycle:
So What Sets SaaS Lead Generation Strategy Aside?
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Clear customer journey stages and leads qualification process no other industry can boast.
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Channel-specific measurement is usually not enough, as conversion rate differs greatly within channels (on campaigns, ads, keywords levels).
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Work needs to happen on every stage of the funnel and lead quality needs to be carefully assessed at TOFU/MOFU levels.
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A connection between marketing and sales teams needs to be very tight, as the marketing process enhancement is directly dependent on timely and accurate sales feedback.
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Costs need to be assessed for key actions of TOFU/MOFU/BOFU and should always be benchmarked with LTV to keep the real funnel profitability high.
What it Takes to Build a Profitable SaaS Lead Generation Strategy
From more than 15 years of experience with IT and SaaS companies marketing, the following components seem to play crucial roles in building a successful SaaS lead generation funnel:
Analytics
Yes, that’s the first component a marketer or a business owner should care about when building the funnel. You need to be fully aware of your conversion rates at every step of the funnel, and you need to be able to slice and dice your lead data from day one. With or without a beautiful dashboard, you need to know your numbers, and you need to know them right. By the way, ask your marketing person about TOFU/MOFU/BOFU conversion rates today and, if you don’t have a clear answer, your funnel is in trouble.
Right Channels
“If you can get just one distribution channel to work, you have a great business. If you try for several but don’t nail one, you’re finished.” This quote from Peter Thiele’s “Zero to One” book still seems relevant, however, the 2022 SaaS company is likely to have at least two to three channels pumping up the funnel. Taking a granular analytical approach will help you figure out the best ones for investment and lead nurturing.
Look at Conversion Rate Winners (and Losers)
It is extremely important to cut down irrelevant spending after a reasonable threshold. How many LTVs are you comfortable risking for a marketing experiment? If you are spending more than x4 for an enterprise-level product or x10 for a mid-size SaaS software for a single campaign (or ad set, or email blast), and the TOFU metrics are below average, it may be reasonable to pivot the money to something else.
Right Expertise
Your funnel performance is usually as good as the team you have to build it. As an agency, we got most of the success and momentum when we worked with passionate individuals on the clients’ side. Make sure the person you hire to market you (whether in-house or outsourced) truly understands what you do, has the necessary skills, and is set for success.
Budget
Bootstrap is unlikely to work outside narrow niches in 2022. TOFU tests are usually much cheaper than BOFU, however, even small awareness campaigns will require investment. Again, thinking in terms of LTVs spent for a campaign should give you a rough feeling on how to plan and finance your campaign.
Hear From Industry Experts
Read the latest tips, research, best practices, and insights from our community of expert B2B service providers.
Quality SaaS Marketing Boosts B2B Lead Generation
As we said, lead generation for SaaS companies is a process, and there are clear distinctions that separate it from other lead generation efforts. However, overall best practices for B2B marketers and lead generation campaigns still hold.
Ensure your SaaS marketers have identified that ideal customer and buyer persona to find that target audience and increase quality leads. To help these new leads become new customers, streamline the buyer’s journey. And don’t forget about customer retention!
To further nurture these leads, make sure your marketing strategy includes quality and consistent content marketing and social media. Utilize blogging and LinkedIn to promote webinars or other helpful resources alongside your SaaS product to be sure your company is seen as informative and beneficial to potential customers.