How to Optimize Your Customer Acquisition Funnel: The Ultimate Guide for B2B SaaS

Imagine waking up to more traffic to your site, more leads, and more users for your B2B SaaS products.

Picture your business revenue climbing the graph and your CAC declining.

The secret is in optimizing your customer acquisition funnel.

The first step in optimizing your B2B customer acquisition funnel is funnel auditing. This helps you to uncover the blockages in every stage of your funnel. The second step is to create a plan to flush out these blockages so more customers can slide through.

That’s what this article is about. 

In this article, you’d discover why you don’t get the flood of customers you dream of when you go to sleep. And exactly what you have to do every waking day to optimize your funnel to bring that dream to life. To make it more practical for you, I broke down HubSpot’s digital customer acquisition funnel. With screenshots.

Let’s go!

What Is the Customer Acquisition Funnel?

The customer acquisition funnel is the process that strangers follow to become your customers and raving fans.

The customer acquisition funnel consists of three stages. In each stage, how your prospects interact with you determines if they’d move to the next stage on fall off.

The Three Stages of the Customer Acquisition Funnel

The three stages of the customer acquisition funnel include:

• Lead generation 
• Lead acquisition 
• Lead conversion

Let me explain each stage of the funnel.

Stage #1: Lead Generation

This is called the top of the funnel (TOFU)

What happens in this stage?

In the lead generation stage, your target customers get to know about you and your product for the first time. They learn how you can help them solve their problem and what you offer as the solution to this problem.

What should you aim at in this stage of your funnel? Gaining attention and pushing traffic to your site.

Your goal is to get your target customers to pay attention to you and visit your product site.

What channels can you use to gather attention and interest for your products and lead people to your site? Here is a list of the common channels to generate leads.

• Paid social media
• Organic social media
• Organic search traffic
• Paid search traffic
• Email marketing
• Online forums
• Affiliate marketing
• Free tools
• Free courses
• Free consultancy.

After getting your target customers to your product page, the next step is to get them to desire and consider your product. This is the lead acquisition stage of your customer acquisition funnel.

Stage #2: Lead Acquisition

This is called the middle of the funnel (MOFU)

What happens in this stage?

In the lead acquisition stage, your leads learn more about what you offer. Also, they learn how it fits into their current problems, how it works, and how they can get your products.

What should you aim at in this stage of your funnel? Getting the sale, getting them to demo or try your product, or obtaining their contact info.

In this stage, your leads may read tons of your blog content and go through different pages on your site. Your goal is to get them to purchase, book a demo, try your product or give you their contact info. 

Here is a list of seven ways you can get prospects to purchase/try your product or submit their email address.

• Lead forms
• Lead magnets —such as guides, cheat sheets, and checklists
• Free trial offer
• Freemium offer
• Demo

At this stage, your leads are now prospects that you can follow up on. 

Stage #3: Lead Conversion

This is called the bottom of the funnel (BOFU).

What happens in this stage of the funnel?

In the lead conversion stage, your prospects transition from your free products to your paid products. 

What should you aim at in this stage of your funnel? Getting the sale. Helping your customer to decide to pay for your product.

This is the part of your funnel that adds to your monthly recurring revenue.

Now, here is a question you may be asking. What is the difference between lead generation and customer acquisition?

Lead Generation vs Customer Acquisition

Customer acquisition is the whole process of getting a stranger to buy your product. While lead generation is the first stage in the entire customer acquisition process. 

Below I break down Hubspot’s customer acquisition funnel to give you an insight — that you can use for your own SaaS product — into how Hubspot gets leads and convert them into paying customers.

Hubspot Customer Acquisition Funnel

In this section, I try to break down HubSpot’s customer acquisition funnel across the three stages of the funnel.

HubSpot’s Top of Funnel

HubSpot feeds its top of the funnel through organic marketing, some paid ads, and an affiliate program. 

Their top organic channel includes:

• Social media
• HubSpot.com — blog, free courses, and guides
• Free tools — WebsiteGrader, Persona Maker, Email Signature Generator, and more.

On their social media, they create content that builds brand awareness and directs readers to their websites.

For example, below is their Linkedin Profile

HubSpot ranks for thousands of keywords that drive over one million leads to their site monthly. Through their blog, free courses, and guides. 

HubSpot also uses over nine high-value free tools to attract leads to their site. For example, below is a screenshot of their buyer persona creator.

Here’s the beautiful thing about HubSpot’s top-of-funnel strategy, all the leads they send to their site are high-quality leads that are target users of their marketing and sales tools.

HubSpot’s Middle of Funnel

Whether on their blog posts, guides, free courses, or their free tools, HubSpot places lead forms and lead magnets to collect emails.

For example, here’s how they placed lead magnets to get leads from their blog posts.

About 20% down the page.

As you scroll close to the middle

And at the end of the article.

Every lead magnet is relevant to the article. This increases the chances of the reader downloading it.

To download the lead magnet Hubspot demands the reader’s contact info. This helps HubSpot segment the lead in their CRM. 

Hubspot does the same with the free tools. For example, after creating a buyer persona with their free tool, the user fills a full-lead form to access the persona created.

At the top of every blog post is a link to try or demo their product.

Clicking that button will lead you to their product page where you can choose which tool you want to try or demo.

The secret of HubSpot’s lead acquisition strategy is the value of the resources — blogs, guides, and free tools —  and the lead magnets they create. This fills the middle of the funnel with thousands of prospects monthly.

How do they convert these prospects into paying customers?

HubSpot’s Bottom of Funnel

Hubspot attempts to convert leads directly to customers from their interaction with the brand. 

For example, users of the Buyer Persona creator can book a content marketing consultancy meeting with an expert from HubSpot.

Also, they convert leads to customers via their demos and free trials. After demoing the products, or using a free version, prospects are more likely to buy the paid version of the product.

That’s not all. Hubspot uses the contact information collected to send more useful information and content to their leads. Their aim is to entice them to use their free tools, demo their tools, purchase their paid products, or book a consultation with them.

There you have it. HubSpot’s customer acquisition funnel. You can learn more about Hubspot’s inbound marketing strategy in this post by Chris Von Wilpert.

A customer acquisition funnel as effective as that of HubSpot was not built in one day. In fact,  it probably took lots of testing, and auditing to uncover what works, what does not work, and what may be hindering the flow and conversion of leads in the funnel.

I dedicate the remaining section of this guide to help you audit and optimize every stage of your customer acquisition funnel.

Let’s dive in!

How to Audit Your Customer Acquisition Funnel

Auditing your funnel is the first step to optimizing your funnel. Funnel auditing helps you identify and remove the blockages in your funnel. These blockages stop leads from entering your funnel in their droves from the top and converting to customers at the bottom. 

The blockages in your SaaS customer acquisition funnel can exist at the top, middle, and bottom of your funnel. To identify and remove these blockages, you have to ask and answer the right questions. 

Let’s work through how to audit each stage of your customer acquisition funnel.

How to Audit Your Top of Funnel

Here’s the problem you may face at the top of your funnel — leads are not coming to your site. That is leads are not entering your funnel.

To remove this blockage, you have to answer the question, “why are people not coming to my site?” 

This is where you brainstorm the possible reasons people don’t come to your site. To get you started, here are common reasons you may experience a blockage at the top of your customer acquisition funnel

• Your product doesn’t solve any pressing market problem: This is called product-market fit. If your product doesn’t solve a pressing problem in the market, no amount of marketing will draw prospects to your site.
• They already have a similar product doing all your product does: Bringing a copycat solution to the market will not draw your target users’ attention.
• You’re selling to the wrong people: Your product may solve a problem but if you target the wrong people they won’t pay attention to you.
• You’re not doing the right thing to bring people in: You may be using the wrong medium to market your products. Also, your marketing copy may be weak and unpersuasive.
• You’re not doing it enough: An inconsistent marketing plan may not generate enough attention for your product.

Check out how to optimize the top of your funnel in the section on how to optimize your top of the funnel.

How to Audit Your Middle of Funnel

Here’s the problem you face in the middle of your funnel. Leads are coming to your site but they don’t sign up for your free trial, use your freemium offer, or submit their contact information.

To remove this blockage, you have to ask the question, “why are people not signing up for my free trial, requesting a demo, or dropping their contacts?” 

To get you started,  here are the common reasons you may be losing leads in your funnel.

• They don’t have the time to try a new product: Especially if your prospects already have a product offering the same services your product offers.
• They don’t see why they should give you their email address: They don’t trust you yet.
• They don’t want to get spam emails: Your target users consider their email personal and don’t want spammy marketing emails
• The trial and the freemium process are not easy to navigate: Especially if you ask for credit card details before trying out your free product.
• Your website copy is not convincing enough: Your website copy is not persuasive and does not drive your message home with your prospects.

Check out how to optimize the middle of your funnel in the section on how to optimize the middle of your funnel.

How to Audit Your Bottom of Funnel

Here the problem is “customers are not paying for your products”.

To remove this blockage, you have to answer the question, “why are people not paying $$$ for my product?” 

To get you started here are common reasons your free trial users, demo leads, or prospect may not be paying for your product.

• Pricing: If your offering is too expensive your target customers may not convert to paying customers. No matter how great your product is.
• Product is hard to use: If your prospects are not convinced that your product will be super easy to use they may not convert to paying customers.
• Migrating from their former vendor is tedious: If migrating from their current vendor is tedious, customers may not convert.
• Poor customer reviews: If you do not have enough social proof you may find it difficult to convert leads to paying customers.
• Poor customer experience: If your freemium or free trial customers do not enjoy their experience with your product and your team, they may not be motivated to become paying customers.

In the section on how to optimize the bottom of the funnel, I explain how to remove these blockages at the bottom of your funnel.

How to Optimize Your Customer Acquisition Funnel 

In this section, you’d learn how to optimize the top, middle, and bottom of your customer acquisition funnel. 

Optimizing Your Top of funnel

To remove the blockage at the top of your funnel, you need to figure out how to get people to pay attention to you and visit your site or landing page.

Here are six ways you can do that:

• Fit your product to the market needs: Conduct market validation research to ensure your target customers need your product. Be blunt and sincere with your research.
• Do something your competitors don’t: Don’t design another email marketing tool, your prospects already have Mailchimp. You have to find a new angle to get people to want to learn more about what you offer.
• Target the right people: Create the right kind of content that your buyer persona will find useful. Ensure you nail your key target audience in your ads.
• Use the right medium: Conduct persona research to know where your target customers congregate and go meet them there.
• Double your marketing efforts: If you only spend a few dollars on ads and post a few times on social media and your blog, double your effort.
• Write enticing top of the funnel copy: Make your message clear so your customers know what you promise and how you can help them achieve their goals.

The goal is to get your target buyers’ attention and get them to click through to your website or product page. 

Optimizing Your Middle of Funnel

To remove the blockage at the middle of your funnel, you need to figure out how to get leads to sign up for your demo/free trial or give you their contact info.

Here are six ways you can do that:

• Remove the barriers: Make it very simple for them to try out your product. For example, using SSO for signing up —  and not demanding credits cards.
• Write strong copy: Write simple and clear copy. Make it clear what your product does and how you’re better than your competitors. You may want to hire a copywriter to do this for you.
• Build trust upfront: Offer value at the beginning. This could be a free resource, a free trial, a demo, an upcoming free event that your visitor will be willing to exchange their email contact form. Whatever it is, make it of value to your target customers.
• Give your readers assurance: Let your readers know how you’d use their contact details. Let them know you’d not spam them or sell their details to third-party users. This will help to reduce their objections to giving you their contact info.
• Show them how your product works: Use a video demonstration to show your visitors how your product works. Use actual snapshots of your product in your copy to show how it works and how simple it is for the user to get started with your product.
• Get social proof: Nowadays, customers depend a lot on what others say to check your product. Always collect and share customers’ reviews on your site and copy. Incentivize happy customers to drop reviews for you on review sites — like GetApp — or create a video testimonial about your product.

The goal is to get leads in the form of contact info and get visitors to try your product or request a demo.

Optimizing Your Bottom of the Funnel

To remove the blockage at the bottom of your funnel, you need to figure out how to get leads and free trial users to pay for your products.

Here are four ways you can do that:

• Consider your pricing: Consider lowering your price. For example, if you sell an internal communication tool for small teams, Pricing at multiple hundreds of dollars per user per month may not serve you well. 
• Make your product easy to use: Provide extreme value in your freemium and free trial versions of your products. If they find your free tool easy and a delight to use, they would want to see how your paid products can make their lives better.
• Make it easy to migrate: If users can migrate their data from present vendors without problems, they may be more willing to buy your product.
• Over-deliver on customer support: customer experience is the new marketing strategy. So invest in customer support, be available to assist your customers every step of the way, and make it super easy for them to use your product.

There you have it, how to optimize your customer acquisition funnel. Start from the top of the funnel and move one step at a time to the bottom. Soon, your entire funnel will be wide open to receive and convert customers. 

Demand Generation vs Lead Generation

Should you focus on generating demand, or generating leads?

Only 3% of your market are actively looking for a solution to their problem. The remaining 97% are not. 

Everyone is targeting the ready-to-buy crowd and doing all they can to get a huge share of that market. This is lead generation.

When you target the 97% who are not ready to buy or who may not be thinking about your kind of product, you’re generating demand for your product.

Which should you go for?

Both.

Lead generation will give you quick wins to build trust and users for your product. Demand generation will set you up for a long-term inflow of customers into your funnel.

How do you check the effectiveness and success of your customer acquisition funnel?

CAC and CLTV

CAC — customer acquisition cost — and CLTV — customer lifetime value — help you determine the cost-effectiveness and profitability of your customer acquisition funnel.

CAC is the amount you spend in acquiring one customer.

To get a true CAC value you need to add every cost attributed to your marketing efforts. This can include:

• Wages for marketings and sales employees
• Ad spend
• Content marketing budget
• Cost of acquiring stationeries and equipment for your marketing 

And more.

On the other hand, CLTV refers to how much you’d get from each customer throughout their spell with you. Below I show a simple formula to calculate your CLTV.

For an in-depth breakdown of LTV, this article by ProfitWell does a good job.

What Is a Good Customer Acquisition Cost?

Since the cost of acquiring customers varies for different industries, a standard CAC may not be practical. But you can measure the cost-effectiveness of your customer acquisition strategy with the CLTV/CAC ratio.

Generally in the SaaS world, a CLTV/CAC ratio of 3 is a good standard. It can be higher, but when it becomes lower you need to either increase your CLTV or reduce your CAC.

From experience, it is easier to reduce your CAC than to increase your CLTV. 

Below I share five ways to reduce your CAC.

How to Reduce Your CAC Fast

Here are five strategies to reduce your CAC fast.

• Define your customer persona: It may serve you better to niche down to a subsection of your entire market. This will ensure you only reach out to the right people for your product and cut the wastage in trying to cast your nets wide. This translates to high-quality leads for your sales team.
• Use the right channel: Know where your target customers congregate online and focus your marketing efforts there. This will cut wastage on other channels that don’t contribute to your revenue. Making more funds available to spend on channels that drive revenue.
• Flush out the blockages in your funnel: If your funnel is full of blockages, you’d spend more to drive a handful of customers down the funnel. Follow the steps outlined in this article to remove the blockages in your funnel.
• Optimize your product pages: Run A/B tests to discover the best design and copy that convert more. Do this to get more out of your landing page and reduce how much you spend on acquiring leads and customers.
• Use content marketing: Content marketing sets you up for long-term success. The content you create now will serve you forever.

There you have it. Some quick strategies to start pushing your CAC down.

You’re Up — Focus on Optimizing Your Funnel Consistently

Optimizing your funnel can be tasking and time demanding, but it clears the way for more customers to find, try and pay for your product. This is worth every sweat you’d break and every minute you’d spend on it.

Optimizing your funnel is not a hit-and-run affair. You have to create a constant schedule to check each stage of your funnel and optimize it. With the steps laid out in this article, you’re off to a strong start.

Bookmark this article and go through it anytime you want to optimize your funnel. Everything is laid out for you.

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