The following is the first in a series of guest posts from Base’s own Demand Generation Manager Elliot Kolt.
So you want to grow your SaaS product’s revenue, and you need to get more leads for your sales team in order to continue your rapid growth trajectory. Just one problem: the leads aren’t coming your way. What do you do?
This is a common problem faced by many sales organizations, and one that must be overcome if you want to scale your business. Surprisingly, however, this is an issue around which it is very tough to find direct and actionable guidance. Due to this lack of unbiased information on sales lead generation strategies and tactics, we decided to share some of the ways we do lead generation to support the sales team here at Base. This first entry in a series of posts focused on marketing efforts supporting sales teams will be covering the basic tenets of lead generation.
Before embarking on your first sales lead generation campaign (or starting a new, data-driven campaign because your historical efforts were not measured or catalogued in a standardized way), you need to do an important bit of planning. The three key items you need to consider first are: who will you be targeting, how many leads do you need to reach your goals (while staying within your budget), and where will you be deploying your capital?
Step 1: Targeting – The “Who”
Before you even go looking for leads to put in front of your sales team, the first thing you need to do is identify what kind of leads you need. Who have you had success selling to in the past, or where does your product have a great market fit? These are some questions to ask yourself in order to help build out your ideal customer profile, and the answers to these questions should always be rooted in your CRM data.
Step 2: Volume – The “What”
Decide how many leads you need based on your sales targets (sales qualified leads, qualified pipeline, monthly recurring revenue, etc.) and by taking your budget into consideration. At Base, we focus on driving qualified pipeline for our sales team, and we have a set sales objective for the quarter. We then use our historical stage conversion rates and deal values to roll up the projected number of conversions at each stage of the sales funnel, all the way up to a top-of-funnel leads number. Let’s break this down using an example.
For ease of calculation we’ll say that your sales objective for the quarter is $3MM and use a 50% conversion rate at every stage with a $1,000 average deal value. Starting at $3MM in monthly recurring revenue (MRR), you would need to close 3,000 deals in the quarter at a $1K average deal value. In order to get 3,000 wins, you would need 6,000 SQLs based on your 50% conversion rate. Rolling this all the way up to leads, you would need 24,000 leads in a quarter to hit your target of $3MM in new bookings. If you are working against a quarterly acquisition budget of $2.5MM, this would allow you to pay, on average, a maximum of $104.17 per lead.
Knowing these rough numbers helps inform your distribution of marketing budget across demand gen channels. Which takes us to the next step…
Step 3: Channel Distribution – The “Where”
So now you have a good idea of who you are looking to convert into leads, how many of these target leads you need, and how much you are prepared to spend for each lead. The next step to kicking off your lead generation campaign is deciding where to spend your allotted budget.
There are endless places promising high-quality, highly relevant leads for your business, but how do you know which channels to use, and how to find the optimal mix of those channels? If you have historical data on channel-specific conversion rates, lead costs and deal values, this data will shape your channel strategy. If not, it’s time to do some channel-specific research and performance modeling, and then run some tests. In the next post in this series, we will explore and review several different channels for lead generation.
If you’re just starting out and you don’t yet have a budget to invest into lead gen, search engine optimization (SEO) is often a good place to begin. Focusing on writing great web content that potential customers value while building a community through social engagement and optimizing your website from a technical standpoint (speed, structured data, etc.) requires little to no additional cash investment. These efforts will also become the foundation on which the rest of your business (and lead generation initiatives) can be built.
One avenue you might want to stay away from until you’ve started to exhaust your other options, however, is relying on lead list providers. While these can be extremely useful to sales teams for certain purposes and the cost per lead in list buys is very low, purchased lists often contain inaccurate lead info and provide completely unqualified cold leads. In contrast, other lead gen channels generally require some sort of user buy-in to ensure that the intent to explore your product exists (i.e. clicking an ad, submitting a form, etc.), so leads are prepared to learn more and are more receptive to a sales conversation.
Of course, once you’ve generated all these leads, you also need a system to manage them and track sales performance. Ideally leads will be automatically synced into your CRM, such as through a lead capture form linked to the CRM’s API. More on this in my next post! To make sure you don’t miss it, subscribe to the Base Blog.