SaaS businesses with a longer sales funnel often struggle to convert leads into paying customers. The numbers can seem discouraging, with an average visitor-to-free-trial conversion rate of just 2.5% and a freemium-to-paid conversion rate of only 2.6% in the industry.
The good news is with lead segmentation, you can turn these statistics around.
How?
Lead segmentation:
- Allows personalized communication
- Improves conversion rates
- Raises customer satisfaction
This guide will discuss lead segmentation, its 3 types, and how you can align sales and marketing teams to maximize ROI.
Contents
Understanding lead segmentation
Lead segmentation categorizes potential customers based on specific characteristics, behaviors, or buyer journey stages. It allows SaaS companies to tailor their marketing and sales efforts for more personalized and impactful communication.
Types of leads
1. Marketing Qualified Leads (MQLs)
These people have shown interest in your product through marketing channels but aren’t yet ready for direct sales. They might have engaged with your content, filled out a form, or subscribed to your newsletter.
2. Product Qualified Leads (PQLs)
PQLs have experienced the value of your product firsthand, often through a free trial or freemium model, and indicate a high likelihood of conversion to a paid plan.
3. Sales Qualified Leads (SQLs)
SQLs are leads vetted by marketing and sales teams. Since they’ve expressed clear buying intent, they are ready for direct sales engagement, making them prime candidates for conversion.
Benefits of lead segmentation in SaaS
- Personalized communication: It’s the ideal approach to match a lead’s interests and needs while being relevant and practical.
- Improved conversion rates: You can significantly improve your conversion rates when you target the right leads with the right messages at the right time.
- Enhanced customer satisfaction: Segmenting leads offers a more personalized experience and helps build stronger relationships, resulting in higher customer retention and loyalty.
- Efficient resource allocation: You can optimize resource use by tweaking your marketing and sales approach based on where in the funnel a lead lies.
- Data-driven decision-making: Lead segmentation provides valuable insights into your audience, allowing you to make informed decisions and continually refine your strategies.
Identifying marketing-qualified leads (MQLs)
While these leads have interacted with your marketing material, they aren’t ready to purchase yet. However, they’ve engaged enough to be considered more likely to convert than other leads. MQLs typically fit your ideal customer profile (ICP) and exhibit behaviors that indicate a deeper interest in your offerings.
Common indicators and behaviors of MQLs
Content engagement
MQLs often consume various forms of your content, such as blog posts, eBooks, whitepapers, and case studies. High engagement with your educational and promotional materials suggests a genuine product interest.
Use the Page Visited trigger in Encharge to start an automation flow with people who visit specific content on your site or the Page Visited segment condition to build segments.
Form submissions
Filling out forms to download gated content, subscribe to newsletters, or request more information shows the lead is willing to share personal information in exchange for valuable content.
Use the Form Submitted trigger to start an automation flow when a person submits a specific form.
Email interaction
Regularly opening and clicking through your marketing emails signals an engaged lead. MQLs often interact with your email campaigns, showing interest in your updates, offers, and content.
Use the Email Activity trigger in Encharge to start an automation when a person opens, clicks, or unsubscribes from an email or the Email Activity segment condition to build segments of people who have interacted with your emails.
Website behavior
This involves frequent visits to your website, especially to high-value pages such as product information, pricing, and demo requests. Track these behaviors to identify leads who are actively researching your solutions.
Similarly, you can use the Page Visited trigger to score leads that have visited important pages like your pricing page or request a demo page.
Social media engagement
To identify such leads, monitor and analyze interactions with your social media posts, such as comments, shares, likes, and direct messages.
Webinar engagement
MQLs participating in webinars often demonstrate a strong interest in your offerings. With 68% of B2B marketers connecting webinars to revenue and 75% reporting reduced cost-per-lead, these interactions clearly signal a lead’s potential value. High engagement during webinars can be a strong indicator of readiness to move further down the sales funnel.
Read more: How to Automate Your Webinar Follow-Up Emails for Higher Attendance & Conversion
Identify MQLs with Encharge
As demonstrated, in the marketing automation platform Encharge, you can segment your leads based on conditions such as page visited, form submitted, and email activity.
Once you create a segment, any MQLs that satisfy the segment’s conditions will be automatically and dynamically added to the segment.
You can then sync these MQLs to a CRM like HubSpot or send instant automated emails.
Read more: Learn more about segments in Encharge and how to create automation flows
Identifying product-qualified leads (PQLs)
These leads have engaged with your product meaningfully, often through a free trial, freemium model, or a product demo, and have a higher chance of converting since they derive value from it. Identifying and segmenting product-qualified leads is crucial for SaaS businesses.
Common indicators and behaviors of PQLs
Active product usage
PQLs frequently log in to your product and use its core features. They find value in your product if the usage frequency and duration are high.
Encharge specializes in helping you track product usage and segmenting your leads based on product usage. User actions in Encharge are called Events. You can connect your SaaS app to Encharge and send all events to Encharge, where you can manage them and build segments with them.
Below is how a single event page looks, including information about how many times the event was fired, its properties, source, and activity timeline.
Feature engagement
Leads who engage with the product’s key features, especially those that correlate with long-term use and customer success, are strong PQL candidates. For example, if your SaaS offers collaboration tools, frequent use of these features can indicate a good PQL.
In Encharge, you can build segments of PQLs using the Event segment condition. For example, all people that have signed up, performed action “Project created” at least once, and have performed action “Task created” at least 3 times in the last 2 weeks. That way, you can identify PQLs of your SaaS.
Upgrade requests
Requests or interest shown for additional features, higher-tier plans, or increased usage limits show a lead sees value in your product and is considering a paid upgrade.
Read more: Make More Money with Better Upgrade Emails
Feedback and support interactions
Giving feedback, participating in user surveys, or engaging with customer support is proactive communication and shows a deeper interest and potential for conversion.
Read more: How to Create Feedback Emails + Templates, Examples & Tips
Trial completion
Leads who complete your product-led onboarding process are more likely to convert to a paid plan.
Other tools for identifying PQLs
Other tools that provide product usage data and additional data to help you with identifying and segmenting PQLs include:
- Product analytics platforms like Mixpanel, Amplitude, and Pendo
- In-app messaging systems like Intercom or Drift
- Customer success platforms like Gainsight or Totango
- Feedback and survey tools like SurveyMonkey or Qualtrics
Pinpointing sales-qualified leads (SQLs)
SQLs view your product as a viable solution to their needs and are often identified by your sales team. These leads have reached a point in their buyer journey where their intent to purchase is clear.
SQLs typically display certain behaviors, such as:
- Clear interest shown during a sales or demo call.
- Visiting pricing pages.
- Inquiring about pricing details such as tiers or custom packages.
- Requesting a product demo.
- Visiting your website often within a specific period.
SQLs are managed by your sales team, who provide relevant information, pricing details, and assurance to ensure a hassle-free onboarding process to reinforce their purchase decision.
Common indicators and behaviors of SQLs
- Direct inquiries
- Demo requests
- Budget discussions
- Decision-maker involvement
- Request for proposal (RFP) or request for information (RFI) submissions
Tools for identifying SQLs
- CRM like Salesforce and HubSpot
- Lead scoring systems like Marketo and LeadSquared
- Sales engagement platforms like Outreach or SalesLoft
- Communication tracking tools like Gong and Chorus
Implement lead-scoring systems
Lead scoring requires assigning points to a lead to check their compatibility with your product. Typically, it ranges from 0 to 100 or 0 to 10 and is be based on a variety of qualification data and activities, including but not limited to:
- Demographic data
- Company details
- Online interactions
- Marketing material engagement (i.e., newsletters, social media, etc.)
- App interactions
To create a lead scoring system, you need to follow these steps:
- Track your lead-to-paid customer conversion rates to set an initial benchmark.
- Determine key lead-scoring characteristics that are correlated with converted customers.
- Compare each characteristic’s correlation and importance. For example, users who create at least 3 tasks within the first 7 days are most likely to become customers.
- Assign lead score points to each to mark their importance. For example: Visited pricing page: +1 score, Booked a sales demo: + 3, Completed onboarding process: +5.
Another method to decide the importance of specific activities is to calculate the conversion rate of people who have performed that activity (or share that characteristic). Let’s say your typical conversion rate is 2%, but the conversion rate for leads who have attended a webinar is 15%. The close rate for the “webinar attendance” attribute is 7.5 times higher than your average close rate. Therefore, you could assign 15 points to leads under “webinar attendance.”
Follow this for other behaviors and regularly update and refine the scores to match market conditions and business goals.
Manual lead scoring can be a pain for growing companies and detract from more important duties. That’s why it is best to use a marketing automation platform like Encharge that supports automated lead scoring.
Learn how to set up lead scoring in Encharge.
Use automation for lead segmentation
With marketing automation, you can streamline and optimize your lead segmentation. It also accurately categorizes leads based on their behaviors, demographics, and interactions.
The best part is that it saves time while ensuring your leads don’t fall through the cracks. Plus, when automated, you can personalize communication at scale and nail your messaging by reaching out to the right people.
As we shared above, you’ll need tools to nurture, convert, and onboard your leads. You can opt for tools like Encharge.
Best practices for marketing automation implementation
1. Define your segmentation criteria
Establish well-defined criteria for segmenting leads, such as demographics, behavior, customer engagement level, and firmographics. This will help you create precise segments that align with your business goals.
2. Integrate it with your existing CRM systems
Ensure these tools integrate seamlessly with your CRM system for a unified view of lead data and more effective segmentation. Encharge supports two-way syncing integrations with Salesforce and HubSpot, allowing you to bring your CRM data into the powerful segmentation capabilities of Encharge.
Check out the video below to learn how to sync your HubSpot data to Encharge:
3. Periodically update your segmentation rules
Regularly reviewing and updating your segment conditions will reflect the changes in customer behavior and market conditions. It also ensures your created segments are relevant and effective.
4. Ensure dynamic segmentation
This way, you can automatically update lead segments based on real-time data and interactions, keeping them accurate and up-to-date. It’s critical to use an automated tool like Encharge for this.
5. Monitor and analyze your performance
Analyze conversion rates and overall performance to gain insights and refine your segmentation strategy, and improve outcomes. Historical data analysis can also help you identify predictive patterns.
Read more: How to Measure the Success of Your Email Campaigns
Align sales and marketing teams
Effective lead segmentation and business success in SaaS rely heavily on sales and marketing team alignment.
Why?
When these departments work in silos, it leads to miscommunication, inconsistent messaging, and missed opportunities.
Collaboration ensures that marketing efforts align with sales goals, leading to more qualified leads and higher conversion rates.
To achieve this, here are five strategies for maintaining alignment between sales and marketing:
- Establish shared goals and metrics for which both teams are accountable. This creates a unified direction and encourages teamwork.
- Hold regular meetings to discuss progress, challenges, and opportunities. This keeps both teams on the same page and facilitates open communication.
- Create a service-level agreement (SLA) that outlines each team’s responsibilities and expectations. This will ensure clarity and accountability for sales and marketing.
- Implement integrated technology to ensure both teams can access the same data and insights, promoting a cohesive approach.
- Develop buyer personas together so marketing campaigns and sales strategies are tailored to the same target audience.
No strategy will be fruitful without following up. Regular feedback and communication loops are essential to maintain alignment and continuous improvement.
Frequent feedback sessions help identify what’s working and what needs adjustment. For example, you can conduct “win/loss” analysis meetings where both teams review recent deals to understand why they were won or lost. This practice can provide valuable insights and collectively help teams refine their future strategies.
Lastly, communication loops should also include shared access to data and performance metrics. Tools like Slack or Microsoft Teams can facilitate real-time communication and collaboration. Create independent channels so communication is accessible to track and sort through.
Analyze and optimize lead segmentation
To ensure your lead segmentation strategy is effective, track these metrics:
Conversion rates
Measure how well each segment converts through the sales funnel. For example, suppose your free trial segment converts at 15%, your webinar attendees convert at 9%, and social media campaigns at 5%. In that case, you can adjust your strategy to focus more on high-performing segments.
Customer acquisition cost (CAC)
Calculate the CAC for each segment to identify which groups provide the best return on investment. If the CAC for leads acquired through organic search is lower than paid ads, you might allocate more resources to SEO to protect future expenses.
Lifetime value (LTV)
Determine the LTV of customers from different segments to know which ones bring in the most revenue over time. For instance, you may realize that leads from your content marketing efforts have a higher LTV than those from other channels. With these insights, you can double down on your content marketing campaigns.
Engagement metrics
Track each segment’s email open rates, click-through rates, and website engagement. This data provides insights into which segments are more engaged and responsive to your marketing efforts.
Finally, try these strategies for continuous improvement:
- A/B test your messaging on different channels.
- Use predictive analytics tools to get historical data and predict future behavior.
- Refine buyer personas based on updated data and insights.
- Monitor each segment’s performance in real time to stay abreast.
- Act on customer feedback promptly.
Conclusion
Lead segmentation helps maximize ROI, with 77% of returns coming from targeted, segmented and triggered email campaigns.
A strategic approach is necessary to attract and convert potential buyers since you can gain deeper insights into your leads and tailor your marketing efforts more effectively.
But manual processes may slow you down.
The solution? Encharge. Try our 14-day free trial to automate your marketing and optimize your segmentation strategy.
