Lead Generation for SaaS Companies: Ultimate Guide

Lead generation is often the biggest challenge for many businesses, but it’s even more challenging for SaaS companies (both B2C and especially B2B). 

In a SaaS company, convincing potential clients about our solution is difficult due to the fact that we can’t show physical proofs, and the lower barriers to entry have also invited more competitors in the SaaS industry. Meaning, in your lead generation efforts you have to fight harder to win your prospect’s attention amidst all the noises. 

Unless you are a giant SaaS enterprise like Google, it’s unlikely that prospects are automatically going to flock to purchase your software solution. Without a clear and effective lead generation strategy, your customers simply won’t find you, period. This is also part of the reason why the majority of SaaS startups fail in their first three years, and obviously, you wouldn’t want to be one of them. 

Thinking about solving lead generation issues for your SaaS companies but don’t know where to start? Or wanted to plan a SaaS lead generation strategy but don’t have a clear idea how? 

You’ve come to the right place. 

In this ultimate guide to SaaS lead generation, we’ll discuss all you need to know about lead generation for SaaS, and by the end of this guide you would have learned: 

  • The concept of lead generation and its importance
  • Unique lead generation challenges in SaaS companies
  • Key principles and best practices for developing a SaaS lead generation strategy
  • A step-by-step guide to SaaS lead generation strategy

And more.

Without further ado, let us begin

What Is Lead Generation?

Before anything else, what actually is lead generation?

At first glance, the concept of lead generation is fairly simple: the efforts of generating and capturing leads for a business, and in this case, for your SaaS business. What is a lead? So that we start on the same page, we’ll define a lead as someone who has shown an interest in your product and has submitted their contact information (email address) to your business. 

So, we can say that someone is a lead once they’ve submitted their email address, for example by signing up to your email newsletter, downloading a gated content in exchange for their email address, signed up for a free trial of your SaaS product, or similar activities. 

In practice, however, lead generation can be very complex involving several phases from building awareness to the actual conversion, and we also need to consider what we’ll do after we’ve captured the lead until they are ready to make a purchase. 

To understand these different phases, we will use the concept of a marketing funnel to explain the lead generation process. 

Marketing Funnel and Lead Generation

Not all strangers who visited your website will submit their email addresses to you. And, out of all the captured leads, not every one of them will end up purchasing your SaaS product. This is a process known as the buyer’s journey

In practice, if we visualize this process, we’ll get a funnel-shaped diagram that we call the marketing funnel or purchase/sales funnel.

While the purchase funnel will differ for each business, the typical process in a SaaS business can be visualized as follows.

As we can see, the purchase or marketing funnel consists of four main phases: 

  1. Awareness

Also known as the top of the funnel for obvious reason, in this phase, a consumer is aware of a problem they are facing. In today’s digital age, a common action is for this potential prospect to go to Google and the other search engines looking for a solution. 

In this phase, the potential prospect is aware of their problem and is aware of their need for a solution. 

  1. Interest

Now that the consumer has become aware of their need for a solution, they might stumble upon your website or a piece of content on your website, and now they are aware of your existence and are now interested in your solution.

In this phase, the potential prospect is aware of their problem, aware of their need for a solution, and aware of your existence as a potential solution. 

  1. Desire

The consumer also researches other options (your competitors), considering which solution is best suited as a solution for their problem. After weighing the different pros and cons of each solution, they decide that your solution is the best option for them. 

This is typically the phase where a consumer will provide their contact information, such as a phone number or email address, and this is when they’ve converted into a lead. We can say the lead generation campaign is successful in this phase, but typically we should also consider the next phase. 

  1. Action

Once the consumer has become a lead, we nurture them until they are ready for purchase. In this phase, the business must continuously convince the lead that their solution is indeed the best option while also identify and eliminate potential obstacles. The consumer finally makes a decision and becomes a customer. 

Why Lead Generation Is Important for Your SaaS Company?

Now that we’ve understood the concept of lead generation and its relation to the marketing/purchase funnel, why is lead generation important?

Simply put, if you can’t generate enough leads, you won’t be able to move your potential customers through the marketing funnel, and you won’t generate any new sales. Without a sustainable way to generate leads, your customer base won’t grow. 

Even if your SaaS business is doing pretty well at the moment, if you don’t grow, sooner or later your competitors will outpace you, and in the world of SaaS that relies on recurring revenue (more on this later), your customers might also move to your competitors and you’ll lose your revenue. 

Worse still, we cannot rely on gut feeling and intuition when attempting to attract customers, build awareness, and convince them to submit their contact information. We need a comprehensive lead generation strategy tailored specifically for the target customers we’re trying to attract. 

Without the right strategy, it’s possible for the SaaS business to put their marketing efforts to the wrong kind of audience, which may result in the failure of generating enough leads or capturing leads that are not the right fit for the business. 

If you want to truly succeed as a SaaS business, it’s important to have a sustainable influx of leads so you can maintain a healthy growth rate.

Lead Scoring: Not All Leads Are Created Equal

Not all captured leads would value the same for your business: a lead, for example, might not have the budget yet to purchase your product, and another lead might still be considering between your solution and your competitors’.

This is where lead scoring comes in: how we “score” each lead to determine how qualified they are and how should we direct our approaches. 

We can use various different scoring systems depending on your needs, and there are many available scoring frameworks you can use. However, we can generally categorize leads into three main types based on the actions a lead take after their initial conversion: 

  1. IQL: Information-Qualified Lead
  2. MQL: Marketing-Qualified Lead
  3. SQL: Sales-Qualified Lead

Let’s discuss them one by one. 

  1. IQL

An Information-Qualified Lead (IQL) is a prospect that is currently only interested in getting some type of useful information. In the purchase funnel, this consumer is typically just starting to be aware of their problem and starting to research the solution to their problem. Most likely they are not yet aware of your company and the solution you provide.

Thus, for IQLs, the focus should be to invite the IQL to learn more about your company and how your SaaS product can potentially help solve their problem. We should attempt to help them move to the next phases of the funnel by offering things like case studies, free-trial, educational content about our product, free webinars, and so on. 

Many IQLs will just submit their email address to access the initial information (i.e. a white paper or ebook) but not move on to the next phases of the funnel. When their actions didn’t show any further interest after their initial conversions, the IQL can be considered as a low-priority lead and you shouldn’t focus your efforts on them. 

  1. MQL

A Marketing-Qualified Lead (MQL) is essentially an IQL that becomes interested in how your SaaS product might be a viable solution for their problem. 

The main action to look for in identifying an MQL is whether a lead has viewed, accessed, or downloaded information about your SaaS product. For example, visiting your product page or signing up for your free trial. 

Our focus for MQLs should be to guide them to the next phases of the purchase funnel: the desire and action phases. We can offer things like free trials, product demos, free consultations, free quotes, or discounts. 

When an MQL receives our offer and essentially moves on to the desire phase, we now have a Sales-Qualified Lead or SQL.

  1. SQL

A Sales-Qualified Lead is considered a hot lead that you should focus your efforts on. In fact, once you’ve identified an SQL, you should follow them up as soon as possible. Studies have suggested that the faster sales reps follow up with an SQL, the higher the closing rate. 

As you can see, even a basic lead scoring method by dividing your leads into IQLs, MQLs, and SQLs is already very useful. You can custom tailor your marketing efforts for each group, and you should also make sure your sales reps spend more time with MQLs and especially SQLs and less time with IQLs. 

SaaS Lead Generation Strategy: Step-By-Step

Now that we’ve learned the concept and principles of lead generation for SaaS businesses, now we can actually discuss how to develop a SaaS lead generation strategy. 

Let us begin with the first step. 

Step 1: Define your goals

At first glance, the goal for your lead generation campaign might seem pretty obvious: generating more leads, but it’s important to define the specifics so it’s easier to track the performance of your lead generation efforts and maintain your team’s morale. 

We’d recommend using the S.M.A.R.T methodology when defining your goals so that your goals are: 

  • Specific: clear and easy to understand. 
  • Measurable: you can clearly set a benchmark and assign KPIs to measure whether you’ve reached this goal
  • Attainable: realistic and achievable. If necessary, break down bigger goals into smaller, more realistic milestones. 
  • Relevant: the goal must be relevant and aligned to your SaaS business’s overall objective
  • Time-bound: you can assign a timeline to the goal.

For example, a S.M.A.R.T lead generation goal can be: generate 1,000 new leads in 6 months or increase free-trial sign-ups by 20% by the end of Q2 in 2021

You can set several goals, but it’s best to focus on just one or two main goals to narrow down your focus.

Based on the goals you’ve defined, you should also decide on KPIs of your lead generation efforts to track your progress against these goals. These are the common lead generation KPIs to track:

  • Organic traffic: more organic traffic to your website will translate into more potential prospects to convert into leads. 
  • Traffic-to-lead ratio: the percentage of website traffic that converts into leads. Ideally, you should get more lead conversions as your website traffic increases, but if the traffic-to-lead ratio is lower than expected, you might need to assess whether your website is adequately optimized for conversions. 
  • CTR: click-through rate, the percentage of people who click on a link on your website, landing page, or email newsletter.
  • Cost per lead: how much you’ve invested to generate one new lead for your SaaS company. Will help you measure the efficiency of your lead generation campaigns. 
  • Bounce rate: the percentage of people who leave your site right away after just visiting one page. A high bounce rate means your site is perceived as not relevant by your target audience and you aren’t effectively conveying the value of your information and/or solution. 

Step 2: Identify target audience

You won’t be able to successfully generate leads if you don’t know who your target audience is. 

It’s important to first build a clear buyer persona and try to understand as much information as you can about your buyer persona: behaviors, needs, pain points, interests, and so on. 

If you are a B2B SaaS business, it’s also important to consider that you might need to build multiple buyer personas for different roles in your target organization that might be involved in the purchase decision. 

For each buyer persona, also develop a model of the buyer’s journey (purchase funnel) from each of their perspective. 

Step 3:  Keyword research

Based on the target audience you’ve identified above, the next step is to perform keyword research to identify what this specific target audience is searching on Google (or the other search engines). 

In performing keyword research, there are three basic principles to embrace:

  1. The keyword must be popular for your target audience/buyer persona. This is typically determined by measuring the monthly search volume of the keyword. 
  2. The keyword must be relevant for your SaaS business. Not all keywords that are popular for your target audience are going to be relevant. 
  3. Based on your budget and timeline, the competition for the target keyword must be manageable. Pursuing an overly popular keyword with too much competition might not be worth it. 

There are various tools you can use to perform keyword research like SEMRush, Ahrefs, or even the free Google Keyword Planner, but we can stick to the three principles above. 

Once we’ve figured out our target keywords, the main focus is to develop content optimized for these target keywords, which we’ll discuss in the next step. 

Step 3: Content development and promotion

Based on the keyword research performed above, we can start planning and developing content to target these keywords. 

While content strategy is a pretty deep subject on its own, the basic approach is to perform a Google search for your target keyword(s) and analyze the sites featured on the first page of Google SERP. At the very least, do an in-depth analysis of the content published by the top 3 pages. 

Basically, we have two main options: 

  1. Develop something better, more in-depth, more informative than these pages, or 
  2. Develop something unique, cover the topic from a different angle

In some cases, the latter approach is “easier” to execute, especially for very competitive keywords, but based on your available resources, you should identify the best option for you. 

Also, how you are going to promote the content is just as, if not even more important than content development itself. Figure out where you are going to publish the content, when, and how you are going to promote it. Utilize various channels effectively from social media, working with influencers, email marketing, and so on. 

Remember that the purpose of your content is to bring organic traffic to your website/platform. No matter how good your content is, it won’t bring you any value—lead generation-wise— if nobody is consuming it. 

Step 4: SEO optimizations

One of the primary ways we are going to promote our content is through SEO: by ensuring the content is ranking high enough on Google’s SERP, we’ll generate organic traffic to our website. 

First, optimize each content for SEO according to their target keywords: 

  • Use the target keywords naturally throughout the article. Don’t focus on stuffing the article with keywords, make sure it’s natural and focus on being informative and providing value for your target audience.
  • Optimize your title tag (heading). This will tell your search engine how to display the title of your page in the SERP. Your title should stay below 160 characters. Use your target keyword upfront if possible, but again, keep it natural.
  • Optimize your META description. Similar to title tags, include your target keyword upfront when possible, but keep things natural. META description will be displayed as the snippet of the article on the SERP, and will significantly affect the click-through rate. Make sure it’s as attractive as possible. 

Also, optimize the technical factors of your website. You might want to check the guide for SEO technical checklist, but you should especially focus on: 

  • Mobile-friendly: Google prioritizes websites that are mobile-friendly and/or mobile-responsive. 
  • Page Speed: According to Google, more than 50% of users will leave your site if it loads in more than 3 seconds. 
  • Indexing: make sure your site is indexable by Google and maintain a flat structure

Step 5: Developing lead magnet

Once you’ve published great content and optimized it for SEO, now what?

Provided you’ve generated enough organic traffic from your efforts, the next step is to convert these visitors into leads by using lead magnets.

A lead magnet is essentially something valuable that you offer for free in exchange for their contact information (email address). Once a visitor takes your lead magnet offer, they are successfully converted as a lead. 

You can be creative with your lead magnet offers, but here are some common lead magnets for SaaS businesses: 

  • Gated content: an in-depth piece of content (ebook, case study, white paper, etc.) typically related to the content consumed by the visitor. For example, if a visitor visited an SEO for SaaS article, we can offer an eBook about in-depth SEO strategies.
  • Free trial: a very common form of lead magnet for SaaS companies is to offer a free trial version of our SaaS product. 
  • Webinars: a webinar covering a topic that might be interesting for the target audience. 
  • Discount: a discount offer for our SaaS product, can still be very effective for certain types of SaaS solutions when done right. 
  • Tools: for example, if you sell an SEO suite software, then you can offer a free keyword research tool as the lead magnet. 

As you can see, you should offer a lead magnet that is related to the SaaS product(s) you are offering to maximize results. 

Step 6: Develop a lead nurturing campaign

As discussed above, not all leads are going to be ready to make the purchase right away, and this is where lead scoring and lead nurturing come in.                                                                                                                                      

We’ve discussed the basic principles of lead nurturing further above, and in general, you should develop a lead scoring system to determine how qualified the lead is. 

Since you’ve collected email addresses when converting visitors into leads, the main lead nurturing campaign you should attempt is email marketing. 

When done right, email marketing can be a very effective lead nurturing campaign and will be a very important part of your lead generation strategy. Here are some important principles in using email marketing for lead nurturing: 

  • Personalization is key: with various email automation tools, implementing personalization in email marketing is now easier than ever. Email personalization is more than simply changing the email’s subject with the recipient’s first name, but should also consider where in the marketing funnel a specific recipient is currently in. 
  • Timing: not only it’s important to send the right message to the right people, but when you send the email is also important. If you can anticipate the recipient’s needs and send the right email to help, it will amplify your perceived value in their eyes. 
  • Soft sell: don’t focus solely on promoting your SaaS product, but aim to be relevant and provide value. 
  • A/B test: always test different elements in your email marketing campaigns so you can continuously improve upon them. 

Step 7: Assist with paid advertising

While you should focus on building organic campaigns (inbound marketing) as your primary lead generation strategy, organic efforts will take time before they will generate significant results for your Saas business. 

To help with this, you can invest in relevant paid advertising options (i.e. Google Ads, Facebook Ads) to accelerate your lead generation efforts. 

There are various paid options you can experiment with in lead generation and some advertising options like LinkedIn Lead Gen are designed for lead generation purposes. Also, consider remarketing campaigns provided by Google Ads and Facebook Ads. 

Remarketing is essentially showing your ad to those who have visited your site (indicating interest), so it’s more targeted to those who are likely to convert into leads. 

When using paid advertising channels, make sure they are aligned well with the rest of your lead generation campaigns according to your objective. 

Closing Thoughts

While lead generation can certainly be a major challenge for any business, and arguably more challenging for SaaS companies, by having the right strategy we can effectively and consistently generate new leads, which in turn, can allow the SaaS business to grow. 

By following the principles of successful lead generation, as well as the step-by-step we’ve shared above, you’ll be able to start developing a comprehensive lead generation strategy for your SaaS business and start generating qualified leads for your business.