How Is Lead Quality Measured?
It costs a Software as a Service (SaaS) company an average of $344 to generate a single lead. In 2020, the average conversion rate for SaaS companies was 3%. That means it typically costs $11,352 per closed deal. You’re in the industry, so we don’t need to tell you just how competitive the SaaS market has gotten. What we can do, though, is help you get ahead.
When formulating your SaaS marketing strategy, do you focus on lead quantity–or quality? By shifting to high-quality leads, you can save time and money by devoting your resources to the leads that are most likely to convert.
“Good enough” may cut it for your uncle building shelves in his garage, but it shouldn’t for your business. This article will go over how to measure lead quality in SaaS and what you can do to target high-quality leads.
How Is Lead Quality Defined?
A lead’s quality is how likely they are to become paying customers. High-quality leads have a much higher chance of converting than low-quality leads.
Lead vs Qualified Lead
A qualified lead meets a certain threshold of characteristics that makes them actually interested in your software. For example, you may consider anyone who signed up for your newsletter to be a qualified lead.
Below are the two most common lead-quality tiers and some of their qualifications. The value of each tier and what specific qualifications they have will differ from business to business, so use this guide as a jumping-off point to reconsider how you prioritize your leads.
Marketing Qualified Lead (MQL)
Marketing qualified leads are prospects that have responded to your marketing efforts in some way. They are in the middle as far as quality goes—they are higher-quality than an ordinary lead, but they are lower-quality than a sales qualified lead.
What distinguishes an MQL is the action they take. Have your leads done any of the following?
- Clicked on an ad that links to your website
- Added items from your online shop to their wishlist
- Used your free demo
These show significant interest in your product or service, but they don’t necessarily mean your lead is ready to make a purchasing decision.
Sales Qualified Lead (SQL)
A sales qualified lead has shown not only interest but also the willingness to make a purchase. An SQL typically has the following:
- A problem that your product or service can solve
- A demonstrated interest in making a purchase (such as by getting an estimate)
- The budget allocated for your solution
SQLs are ideal leads because they are the closest to converting, meaning you need to spend the least amount of additional resources to get to a closed deal.
Why Is Lead Quality Important?
Lead quality is especially important in SaaS. If you are only focused on the volume of leads, you may overwhelm your sales team with leads that will never convert, letting unidentified, high-quality leads slip away. This frustrates your sales team and wastes marketing dollars.
Focusing on lead quality also helps you get the most out of each customer lifecycle. By knowing if your leads are more receptive to upgrading their service or adding additional services, you can tailor their experience to benefit them—and your bottom line—the most.
How to Get Quality Leads
What defines a quality lead is different for every business. Using a lead scoring system will help you identify your ideal customer and use their characteristics as a benchmark to compare leads to. At Statwax, we believe that data doesn’t lie. The more data points you have to draw from, the clearer your target will become.
A lead scoring system takes a set of qualifications and assigns each one a score. The more relevant a qualification is, the more points are assigned to it. Use your current, high-value clients for reference. Consider how the following lead quality metrics impact a lead’s decision to purchase your service:
- Company Size: Larger companies often have bigger budgets, but they also have more systems to upgrade. Is your ideal customer one that you can quickly get on board or one that provides more work over a longer period of time?
- Industry: Which industry gains the most value from your SaaS? Retailers have different needs than manufacturers and professional service providers.
- Job Title: Is your contact the decision-maker? If not, ask if they can put you in contact with who is. Don’t waste your time chasing promises from leads that lack the authority to make a purchase.
- Geographic Location: Which areas have higher concentrations of businesses that fit your target demographics? Digital marketing tools like Google and LinkedIn Ads can use location as a targeting method, so knowing your high-value areas can make your advertising more efficient.
- Major Competitors: Who are your leads competing with, and can your SaaS give them a competitive edge?
- Interaction with Your Content: Have they opted into your newsletter, attended any of your webinars, or downloaded an ebook?
- Free Trial Use: Have they had a taste of what benefits your software provides?
- Time until Implementation: Are you able to work with leads that won’t actually make the purchase until months have passed, or do you rely on quicker conversions?
Using a lead scoring system will also clearly communicate to your team members a unified set of qualifications that they should be prioritizing when evaluating leads.
Get Results–Work with Professionals
When it comes to marketing your SaaS, we find that lead quality optimization plays an integral role in closing more business, but it doesn’t work alone. At Statwax, our team of data nerds finds you high-quality leads by leveraging paid digital marketing channels, persona-based targeting, and predictive modeling.
Is your SaaS business ready for more? Here’s what we’ve been able to achieve for our clients:
- Increased market qualified leads by 14.7% while managing yearly ad spend
- 100% of our clients hit their customer acquisition goals in 2021
- Increased revenue per customer by 37% while delivering a 4.27X return on total investment
- Achieved 3.4X return on advertising spend for three consecutive months
Contact us to learn how we deliver leads that convert.
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