Introduction to SaaS Lead Generation

The How SaaS Works series simplifies the complex world of software-as-a-service (SaaS) into the practical fundamentals for anyone involved in SaaS. These are the real-world lessons learned from founding a SaaS company from ground zero to growing it all the way to acquisition as well as case studies from other SaaS companies who have both succeeded and failed.

The lead generation component of the SaaS engine is analogous to gasoline in an internal combustion engine. This is the fuel that gives our engine the energy to run. Sales engines exist to convert leads into revenue. To convert those leads, we first have to generate them. Welcome to the top of our SaaS sales funnel. Every other component in the SaaS engine can be built to perfection but will sputter and starve if we cannot generate enough leads to feed the engine.

A lead is a prospective user, someone who may be a candidate for our service, that we have some way to communicate with. That communication may be either one-way or two-way. Different companies have different criteria for what they consider to be a lead for their particular product.

Examples of a lead include:

Lead generation must deliver in both quality and quantity of leads. If the top of our sales funnel delivers poor quality leads, conversion rates down the funnel suffer and the engine stalls. This would be analogous to bad gas in our car (imagine putting diesel into your gasoline engine). For example, getting a list of soccer parents when we have built a swim team management tool does not make sense; neither does targeting ads to Fortune 500 when we only sell into SMB. Low quality leads waste our team’s energy as we spend invaluable time chasing leads that never convert.

If the top of our sales funnel delivers a low number of leads, we cannot feed our sales team, and our business starves. This would be analogous to running out of gas in our car … on the interstate … during rush hour … with a crying baby in the backseat.

We need to generate both lead quality and lead quantity to succeed.

Today’s best SaaS companies heavily leverage one or more of the following to generate leads:

Since we just talked about one common lead generation tactic that does not yield lead quality or quantity, let’s go through some others:

Compare that to “53.8% of respondents have not clicked on any ads within a week of being surveyed”. This survey tells us that both SEO and ads work in generating leads, but SEO works significantly better if you can get it. What is a good way to get higher SEO? Great content, which is why content marketing is so hot in SaaS today.

The 2015 Moz survey foreshadowed the decline of email marketing for new lead generation — “44% of respondents slightly less likely (22.9%) or significantly less likely (21.4%) to buy something they hear about via email marketing.” Anything that tarnishes our brand is the opposite of what we want to happen in marketing.

Even in 2015, social media posts and press releases were shown to be mostly “meh” (aka neutral) for consumers. They just do not help that much in terms of attracting new product users.

Generating quality leads in large enough quantities for a new SaaS product is straight up hard unless you have some kind of unfair competitive advantage. Content marketing + SEO rank as the top methods utilized by today’s most successful SaaS companies. Creating content your ideal customer target is searching AND getting SEO on that content hits high on the difficulty meter. If you want quality leads from content marketing, you need equally great content paired with a solid SEO/distribution strategy.

Everyone wants their product to go viral where a user begets a user (repeat). Way too many SaaS startups bet the farm on getting virality and lost that long-shot bet in spectacular fashion. It can happen, but don’t rely on it. Virality often proves to be too fragile and short-lived to be your only strategy. You need a sustainable plan for lead generation. You won’t find “going viral” ranked as a common primary strategy of successful SaaS companies in any respectable data report.

Lead generation can be considered both an art and a science. Every successful company has a unique lead generation formula. The product, price point, market, ideal customer target, and world around us play into lead generation strategies. There exists no “one size fits all” solution, which is why lead generation is partly an art. Once a strategy is put in motion, the output and effect of lead generation on the rest of the SaaS engine can be methodically observed. How the changes and tweaks affect the key performance indicators (KPIs) can be easily measured. This is why lead generation is partly a science.

There are always extremely interesting examples to study and exceptions to the rule. Let’s start with some interesting content marketing case studies.

Up Next … Content Marketing Case Studies from Hubspot, Initial State, and Basecamp >>

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