Leveraging the promotional power of LinkedIn can seriously accelerate the growth of your B2B SaaS business.
Like any B2B marketing channel or touchpoint, taking the right approach is essential to ensure sustainable success—and a big fat return on investment for your efforts. Most B2B SaaS brands underinvest in their LinkedIn ad strategy. But here’s the thing…
In the past 12 months, we’ve run $25M of LinkedIn ads for some of the biggest brands in SaaS. We’ve also helped each of our ambitious clients earn a healthy ROI for their LinkedIn marketing efforts.
How did you do that, exactly? You ask. We did this by using our Customer Generation™ methodology. At the heart of this approach lies a little something called LTV:CAC modeling—a data-driven approach to balance your LinkedIn marketing scales.
Intrigued? Read on and discover the true value of original LinkedIn ads in today’s ultra-competitive B2B SaaS landscape.
The importance of investing enough in LinkedIn ads
According to SproutSocial, 89% of B2B marketers use LinkedIn for lead generation. Not all of them get the results they’re looking for from their ad content. One of the biggest culprits for this is underinvestment.
One of the biggest roadblocks we’ve noticed when it comes to underinvestment is SaaS brands getting stuck in the LinkedIn ‘learning phase’ which, in turn, makes it almost impossible to scale.
A failure to define clear cut growth generation goals coupled with misaligned messaging and use of the wrong metrics is also stunting the LinkedIn marketing growth of so many B2B SaaS businesses.
But it doesn’t have to be this way (no way). With an ample level of investment, you can maximize your growth with original LinkedIn ads. Doing so will come with some brand-elevating perks, too…
- Targeted reach for better quality leads
- Enhanced brand awareness and understanding of your product’s USPs
- Measurable results and the ability to evolve your efforts
- More high-value traffic to your landing pages or website
- The chance to connect with prospects on a more personal level
By making LTV:CAC modeling the foundations of your paid LinkedIn marketing strategy, you can consistently maximize your growth while gaining an all-important edge on the competition.
What is LTV:CAC modeling? Here’s what you need to know
At its core, LTV:CAC modeling is the concept of comparing your lifetime value (LTV) and customer acquisition costs (CAC).
Here’s a brief definition of these valuable metrics for your reference:
LTV: A metric used to understand how much revenue a client or customer is likely to generate over the course of their relationship with your business.
CAC: This is a metric used to pinpoint the total cost or spend of gaining a new client or customer for your business.
By using these two prime LinkedIn marketing metrics in unison, it’s possible to understand how much it will cost to acquire a customer compared to how much they’ll generate for your business. This approach is pivotal in setting a healthy budget for your advertising activities while allocating your resources accurately.
Leveraging LTV: CAC modeling will help you formulate a sustainable pricing strategy and ultimately, validate LinkedIn as an effective B2B SaaS marketing channel. It’s how you can get the buy-in you need to succeed.
Read: How to use SaaS marketing metrics to track your growth
The steps to building a brand-boosting SaaS LinkedIn ad strategy
Earning sustainable results from LinkedIn marketing may be a bugbear for many SaaS businesses. But, we’ve solved the problem with an approach that allows our clients to confidently take a market share with their exact ICP. Here’s how we do it.
1. Set clear KPIs and metrics
First of all, you need to define clear business goals and set the right KPIs. Why? Well, because your business needs to earn the ability to advertise on LinkedIn. Your strategy needs shape and direction. There are no shortcuts here.
To set effective goals and work with the metrics that will earn sustainable success, here are the drivers you should look at:
- Are you charging enough to outperform the average cost per customer on LinkedIn (according to our benchmark data)?
- Do you have a high enough gross margin for your LTV number to be substantial enough?
- Do you retain your customers long enough to justify the required payback period?
Take the time to answer these questions and you’ll create a solid base for your LinkedIn marketing strategy.
FYI: Download our practical LTV:CAC analysis example worksheet to shape your data-driven LinkedIn advertising strategy. It’s a methodology we’ve used here at Directive for the past four years—and it works.
2. Model out your expectations
With your goals, KPIs, and metrics firmly in place, you need to start modeling expectations. During this phase of the operation, you need to model potential LinkedIn advertising outcomes based on your existing lifecycle performance.
By looking at the percentages of your marketing qualified leads (MQLs) and sales qualified leads (SQLs) and playing with the spend data from your existing lifecycle will help you gauge how much it costs to acquire a customer while exploring potential outcomes in terms of engagement or performance.
Taking the time to model your expectations using your set KPIs and metrics will give you the tools to allocate your budget wisely while rolling out your LinkedIn ad content as efficiently as possible.
FYI: Use our LTV: CAC worksheet. In the very first column of the worksheet, we’ve added a column labeled “Model”. The goal of this column is to understand how much you can pay to acquire a customer. Put in your current lifecycle stage performance, so what percent of MQLs > SQLs, etc. and then play with the spend data to model various outcomes.
3. Review your costs per targets
Setting realistic costs per target is pivotal to earning a continually healthy ROI for your LinkedIn advertising content.
If you’ve followed the first two steps, you can now review your cost per lifecycle stage targets and see whether you believe your model or expectations are genuinely realistic.
FYI: According to our data, fully blended cost per lead (CPL) is around $500 (this is related to the people asking for a demo). By using this data point, you can audit your economic impactors as well as your funnel performance. This will lead you to your ideal budget and empower you to plan your ad content accordingly.
If you find that you need to make tweaks to your costings or strategies, the answer may come in the form of…
- Raising your prices?
- Improving your close rate?
- Increasing retention?
- Lowering the cost of your goods sold?
Read: LinkedIn conversion ads that actually work
LinkedIn for B2B SaaS businesses: Final thoughts…
“If you’re not using LinkedIn for B2B marketing, you’re missing out. It’s a great place to establish yourself as an authority in your industry.”—Jeff Bullas, Social Media Marketing Expert
So, can you really maximize your B2B? Absolutely—if you know your goals, do the work, and do the math.
The key here is not to attempt to drastically lower your CPL to record lows. Instead, the growth potential lies in focusing on improving the actual economic drivers of the business.
There’s an inverse correlation between reducing CPLs in SaaS and boosting ACV, Close Rate, and NRR. This isn’t the kind of consumer advertising where growth derives from the volume of widgets sold. The lesson here? Don’t optimize your ads and content for the wrong things.
While with a targeted approach, Google Ads is a potent lead generation tool—particularly when it comes to targeting high-intent searches—LinkedIn has a colossal level of brand-boosting scope. Get a grip of your LinkedIn marketing strategy and you’ll benefit from expanded brand reach while earning higher conversion rates from assets including lead generation forms.
Now it’s over to you. Follow our LTV: CAC framework and maximize your LinkedIn growth with original content. Oh, and if you need to, hire the right talent to get the job done.
If you need specialist support and expert guidance to optimize your LinkedIn advertising strategy and win big on the commercial battlefield, book a call with us. We have B2B SaaS marketing experts ready to get you where you need to be (and beyond).
-
Team Directive
Did you enjoy this article?
Share it with someone!
