What would be a good framework to model cost per lead for a B2B SaaS product with a ACV of ~25K?



Build your model, and at an ACV of $25k, you’ll probably end up with a cost per qualified lead of about $100 (very rough-and-tough).  Assuming a 5% close rate (which may be high), that’s a $2,000 marketing CAC.  Assuming 2%, that’s still just $5,000 on a $25k deal.

Anyhow what that is, great.  But let me add a very important nuance.  A critical one.

You have to both segment your leads.  It’s critical.  To understand what leads are free and which are paid.  And then … average the acquisition costs together.

Once you have a few million in ARR, and a mini-brand (more on that here: SaaStr | In The Early Days, You Won’t Have Enough Customers.  But Your Mini-Brand Will Come to Your Rescue. ), and a referral engine going … you’ll get more and more of your leads for “free”.  From PR, from your brand, from customers telling other customers about them.

Since you are getting some, ideally, most leads for free once the engine gets going … you can actually afford to spend a lot more on leads than you might have thought.  Because you can average the categories (free leads and paid leads).

Net net, in the end, even if your blended CAC of free and paid is pretty low — most scaling SaaS companies end up with a $1:$1 marketing:ACV spend ratio on customers acquired through paid marketing leads. They spend about $1 to get $1 in first-year contract revenue, not including sales commissions.  That’s probably much higher than you budgeted, or are spending today.  But that’s OK if say 50% or more of your leads are free …

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Published on February 4, 2016
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