What is a Lead Magnet? 10 Benefits for B2B SaaS Lead Generation

Benefits of lead magnets - Featured image

So what is a lead magnet? 

It’s a free resource that you offer leads in return for contact information.

When prospects visit your B2B SaaS website, many of them may end up leaving before you can usher them into your sales funnel.

Alarmingly, lead generation is the biggest challenge for 65% of marketers, according to DemandScience, which is why you need tried-and-tested lead generation tactics.

With great lead magnets, you can encourage customers to willingly hand over their information. This can make it very easy for you to collect the data you need to understand, qualify, and convert your leads. 

They can also help you generate more buzz around your business, which may lead to more social shares and referrals that bring in more revenue. 

In this article, I’ll take you through the benefits of a lead magnet for B2B SaaS lead generation and how they can help you turbocharge conversions. 

Let’s get started. 

1. Organic email list growth

You can choose to buy your email list. 

This is however very risky because you may get prospects who are not the right fit and have very little to no need for your SaaS product. 

If you don’t grow your email list organically, you may channel your marketing efforts toward unqualified prospects and cold leads. 

It is alarming to note that 70% of leads receive highly irrelevant promotional emails from SaaS brands, according to a survey by RedGlobal. Among the key contributors to this situation are low quality email lists which lead to very low open rates. 

This is why you need a lead magnet for your SaaS because it can help you get more relevant clients and improve the effectiveness of your email marketing campaigns.

Benefits of lead magnets - Organic email list growth

Once you’ve created your lead magnet and need stellar blog content to keep your leads engaged, you can turn to our market agency to make it happen. We’ll craft amazing content that you can share with your email subscribers to keep your brand on their minds. 

Click here to book a free discovery call to learn how we can help you generate a steady stream of leads from your SaaS content organically. 

Buffer, a social media toolkit provider, wanted to grow its email list again because some of its subscribers had become very inactive. 

In one month alone, they were able to increase email signups by 130%. They achieved this by incorporating more lead magnets into their website, which allowed them to attract high-quality subscribers. 

2. Faster sales cycle

Your SaaS sales cycle can be very lengthy. 

One of the reasons for this is that buying SaaS software can involve very complex purchase decisions featuring multiple decision-makers. 

When your SaaS sales cycles are too long, your lead’s uncertainties can get the better of them and they may not make it to the end of your sales funnel. 

In fact, a single B2B SaaS sale can drag on for up to 134 days, according to a study by Capchase. If it takes you this long to complete just one sale, it can become difficult to keep your profit margins healthy. 

One of the most significant benefits of a lead magnet is that it can help you move your leads along your sales much faster and reduce the time it takes for them to convert and for you to close a sale. 

Benefits of lead magnets - Faster Sales Cycle

By educating your prospects and key decision makers about what value your product can deliver for them, this can help them make up their minds faster. 

In addition to speeding up customer acquisition, this can also improve the efficiency of your sales team. It may allow them to complete lead nurturing tasks quickly so that you can focus on generating new leads.

Rippling, a cloud-based HR management solution, had very lengthy sales cycles that were stalling growth and ruining their bottom line. 

Eventually, they reduced sale cycle lengths by 50%. They achieved this by leveraging a variety of lead magnets, the most notable of which was live webinars, which helped them address buyer concerns in real-time and facilitate decision making. 

3. Easier lead qualification 

Is your SaaS business grappling with low sales? 

A poor lead qualification system could be to blame. It may also be the reason you are not getting qualified leads, because you don’t have the information you need to discern the quality of your leads. 

When your pipeline is full of unqualified leads, you’ll find that your B2B SaaS company may not be closing sales despite having many prospects. 

In fact, 83% of B2B sales leaders find lead qualification to be a top challenge for their business, according to a survey by the Rain Group. This has made them lose a significant chunk of revenue.

Simpler lead qualification is one of the biggest benefits of a lead magnet because it will help you validate the quality of your leads so that you don’t push the wrong prospects down your sales funnel. 

Benefits of lead magnets - Easier lead qualification

As a result, you’ll also ensure that your sales team directs its time and energy to the right leads for your SaaS company.

With a great lead magnet, you can collect more information about your customers, who may be willing to offer their data in exchange for your free offer. This information can help you to understand the challenges of a prospect comprehensively. 

The Alias Group had a lackluster lead qualification process in place and so the business was falling short of its revenue potential. 

They easily qualified 48 leads and collected over 2,000 contact details, which was achieved by the use of relevant high-converting lead magnets and the implementation of a lead scoring system. So when are you launching your lead magnet?

4. Lower acquisition costs

Acquiring new leads can be an expensive endeavor. 

The costs can quickly pile up if you factor in the amount of funds you pour into marketing your brand and financing your lead nurturing processes.

All in all, if you spend too much of your revenue just on acquiring new customers, there’ll be very little left to keep you afloat let alone grow. 

In fact, only 15% of SaaS companies are meeting the rule of 40, according to KayBac Capital. In other words, the majority of SaaS are generating revenue unsustainably, and this is partly due to high customer acquisition expenses. 

Lead magnets provide a very cost-efficient way for you to acquire new customers and this can help you to increase your profit margin and grow. 

Benefits of lead magnets - Lower acquisition costs

That’s because you’ll be able to get high-qualified leads so that instead of spending your budget on generic marketing, you can direct your resources more efficiently toward high-potential leads. 

Want to turn leads into sales with lead magnets? 

Then click here to schedule a call with us, so that we can craft you case studies, eBooks and other lead magnets that will help you to not just lower your acquisition costs but also turn leads into gold.

Shore, which offers a CRM software, was spending a lot on acquiring new customers for their rather amazing SaaS solution. 

They were able to lower acquisition costs by 35% using a variety of inbound marketing techniques, one of which involved the creation of targeted lead magnets such as gated content with customer forms. 

5. More free trial conversions

Free trial users don’t always end up converting. 

If they are still unsure of what value they are to get from your product, they may opt against buying a subscription.

Additionally, it may also be challenging for you to convince existing subscribers to upgrade to higher tiers if you fail to incentivize the process. 

Softletter established that only 1 out of 4 free trial users go on to purchase a premium plan, which means that you may be losing most of your free trial leads. So this yet again proves why you need a lead magnet for your SaaS.

A good resource can help you get these leads over the line so that they can start contributing to your revenue stream. 

Benefits of lead magnets - More free trial conversions

For instance, if you provide a lead magnet in the way of a case study, you can back up your SaaS product’s efficacy with hard data and real-life results. This can help you convince your freemium or fee trial users to move on to a paid plan. 

By also providing customer onboarding material, you can map your lead’s next steps to make their transition into a paid plan more seamless, therefore increasing the likelihood of a conversion. 

Dropbox previously desired to increase the number of leads it was getting from its free trial program, which was an important part of its lead-generation strategy, 

Within 15 months, they increased product signups by 60%, and this was largely because they offered free resources and lead-magnets to free trial users in exchange for upgrades & referrals. 

6. Lower ad spend 

Advertising can quickly turn into a money drain. 

You may need to pay for pay-per-click ads and other expensive paid advertising channels just to get your SaaS business noticed. Even then, this may still not assure you of conversions. 

With traditional paid marketing strategies, your B2B SaaS business may pour a lot of resources into marketing and still fail to achieve great results.

Notably, low-growth B2B SaaS companies are spending 40% more of their revenue on marketing than fast-growing competitors, according to a SaaS Capital survey. A huge chunk of this money is spent on paid advertisements. 

With a more organic marketing approach, you can decrease the amount of funds you spend on paid advertising to free up more finances for growth. 

Benefits of lead magnets - Lower ad spend

For instance, instead of sending PPC directly to your sales page, you can collect email addresses, through a free lead magnet, and open up a direct line of communication between you and your prospects.

This way, you make use of email marketing which is usually inexpensive yet very effective at converting warm leads into buyers.

This is one of the most significant benefits of a lead magnet, especially if you’re working with a tight marketing budget or simply want to cut down on your advertising spend. 

Skypro was previously heavily reliant on paid advertising strategies to generate leads for its business but it wanted a more cost-effective solution.

So they created an eBook that increased their qualified leads by 273%. In addition, this lead magnet helped them to become considerably less reliant on paid advertising, which reduced their marketing spend.

7. Easily builds trust 

Trust is the foundation of all business success. 

When new leads lack confidence and trust in your B2B SaaS brand, they may not be willing to take a chance on your SaaS product. 

If your SaaS is unable to substantiate its trustworthiness, you may fail to cultivate long-term business relationships, and this can threaten your future

It’s important to note that 81% of consumers confess that trust has a big influence on their final buying decision, according to a survey by Eldmen. In other words, you may potentially be losing up to eight out of every ten leads if they feel they cannot trust you.

Therefore, trust-building is another important reason why you need a lead magnet for your SaaS.

Benefits of lead magnets - Easily builds trust

With a lead magnet such as a free trial, for example, you can give your customers a risk-free way to test your SaaS product. This is a great way for you to demonstrate that you are confident in the value that your solution offers. 

Other strategies like case studies and industry research papers can also help you build trust and industry authority. They can cement your credibility as a niche expert, and this can go a long way to reinforce brand confidence.

3PL Central, a warehouse management software provider, had expanded and was looking for a way to quickly build trust with these new markets. 

Fortunately, they improved brand trust by leveraging a brand introduction approach that involved the use of targeted lead magnets to provide value to new leads, among other branding strategies. 

8. Higher value customers 

Low-value customers are bad for business. 

Such clients tend to spend less money than you used to convert them and may not make repeat purchases, so their customer lifetime value is extremely low. 

If you spend heavily on a lot of low-value customers, you may not recoup good ROI, and this diminishes your overall business performance. 

However, you stand to grow at least 230% times faster compared to competitors if you bring in and hold onto high-value customers, according to a study by ChartMogul. So your future massively depends on the type of customers you attract. 

You can easily win over and nurture high-value customers if you employ the right lead magnets to help you identify and engage them. 

Benefits of lead magnets - Higher value customers

For instance, through surveys, you can collect the data points you need to understand your customer’s spending patterns and the nature of their relationship with your business. This helps you to identify high spenders for more targeted nurturing. 

Therefore, one of the biggest benefits of a lead magnet is that they can help you to figure out ways to provide more value to your most valuable customers. It can also give you insight into loyal fans who can grow your social influence. 

Satellite Laboratory Services wanted a way to understand key drivers of customer satisfaction so that they could increase return purchases and generate more profits. 

They were able to acquire more high-value customers by offering surveys in exchange for gift cards, which allowed them to collect more data points on their prospects, which enabled them to understand their market base better. 

9. More organic referrals

Are you getting very few customer referrals? 

The lack of a lead magnet may be to blame because your customers may rarely take the initiative to refer your business to their circles if you fail to sweeten the deal. 

With direct referrals being a powerful endorsement and source of revenue for your SaaS business, having low referrals can hurt your profit margins & credibility. 

In fact, 84% of B2B sales begin with a referral, according to KPMG. So you may be missing out on leads, which is why you need a lead magnet for your SaaS that can increase your referrals. 

The great thing about lead magnets is that you can use them to encourage your existing customers to invite leads in exchange for a valuable offer. 

Benefits of lead magnets - More organic referrals

With such a tactic, you can incentivize leads to organically share your brand, and given that people tend to trust recommendations from their personal networks over those from brands, this can help you to get high-quality leads. 

Speaking of which, another great way to generate leads is through content marketing, which our experienced B2B SaaS marketing excels at.

Click here to schedule a discovery call to learn how we can create lead-winning marketing content for your SaaS startup.  

TrueProfile.io, a hiring management solution, wanted to create stronger engagements with its community and gain more business from them. 

By rewarding leads with credit for a referral, they raised 5,818 referrals that resulted in conversions. This helped them to generate more revenue and improve market authority for their SaaS business. 

10. Lower churn rates

Your SaaS brand will lose customers over time. 

This may arise due to dwindling interest in your product, as well as the failure to actively engage your community to keep up with your brand. 

If the churn rate for your company rises very high, your subscription revenue can reduce and your Saas business may become extremely unsustainable. 

SaaS companies with a 60% net retention rate (NRR) grow 333% times slower than those companies with an NRR of over 100%. In other words, a very low churn rate resulting from poor customer retention can prevent you from growing. 

One huge benefit of a lead magnet is that you can provide educational and informative resources that can help keep your visitors engaged. For example, providing resources on the latest industry insights can garner repeat interest for your brand. 

Benefits of lead magnets - Lower churn rates

With other lead magnets like surveys and webinars, you can also be able to get feedback on how users are finding your product. This information can help you address customer concerns and struggles to elevate their experience and improve loyalty.

This can help you secure the long-term future of your SaaS brand by enabling you to safeguard recurring revenue so that your business remains profitable

At one point, SaaS startup Grove had a churn rate of 4.5%, which basically meant they were not growing sustainably and were headed for disaster.

Via lead magnets like qualitative surveys, they reduced churn by 71% by identifying why their customers were quitting. This also enabled them to increase their year-on-year lead acquisition by 10%, which finally helped them grow their business. 

Conclusion

Not using lead magnets for lead generation?

You are losing on leads and $$$ in potential revenue. 

Without lead magnets to help you gather valuable customer data, you’ll find it challenging to follow up on your leads and close B2B SaaS sales. 

GetResponse revealed that 73% of marketers believe you can improve conversion rates exclusively using lead magnets, which is a huge wake-up call for why you need a lead magnet for your SaaS. 

Lead magnets come in many different forms. However, at the heart of the best-performing types is great content, which is where our B2B SaaS marketing strategies truly shine.

Click here to book your discovery call so that we can help you craft amazing content that you can use as lead magnets for your brand.

With our advanced strategies, you’ll be able to craft powerful lead magnets that not only drive leads but also make them convert – growing your SaaS startup. 

About the Author

David Kostya

David Kostya is a seasoned growth hacker specializing in SaaS SEO at Boterns. With a proven track record of elevating online presence and driving significant user growth for software startups, David's innovative strategies and insights make him an invaluable asset to SaaS SEO marketing. Join him on a journey to unlock the full potential of your SaaS platform.

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