Lead generation is the lifeblood of any mid-market SaaS business. Yet determining the right budget allocation remains one of the most challenging decisions facing growing software companies. Spend too little, and your pipeline dries up. Spend too much, and you’ll burn through cash without sustainable returns.
If you’re running a mid-market SaaS company in the UK, you’re likely asking yourself this very question. The answer isn’t straightforward, but there are proven frameworks and industry benchmarks that can guide your investment decisions.
Understanding the mid-market SaaS landscape
Mid-market SaaS companies typically generate between £5–50 million in annual recurring revenue (ARR). Unlike enterprise software companies with dedicated sales teams or smaller startups operating on shoestring budgets, mid-market SaaS businesses face unique challenges.
You’re competing against established players whilst trying to scale efficiently. Your customers expect sophisticated solutions but may not have enterprise-level budgets. This positioning requires a strategic approach to lead generation that balances cost-effectiveness with quality outcomes.
The competitive nature of the SaaS market means you can’t afford to rely solely on inbound marketing or word-of-mouth referrals. You need a systematic approach to identify, engage, and convert prospects into paying customers.
Industry benchmarks for lead generation spending
Research from leading SaaS analysts suggests that mid-market software companies should allocate between 15–25% of their revenue to sales and marketing combined. Of this allocation, roughly 40–60% should focus specifically on lead generation activities.
This means a £10 million ARR SaaS company should consider investing £600,000–1,500,000 annually on lead generation. However, these figures serve as starting points rather than rigid rules.
High-growth SaaS companies often invest more aggressively in lead generation during expansion phases, sometimes reaching 30–40% of revenue. More established businesses with strong retention rates might operate with lower percentages whilst maintaining steady growth.
Your competitive landscape also influences these benchmarks. If you’re operating in a crowded market with significant venture capital investment, you may need to invest more heavily to maintain visibility and market share.
Factors that influence your lead generation budget
Several critical factors should shape your lead generation investment strategy:
- Customer acquisition cost (CAC) and lifetime value (LTV): LTV should ideally be at least 3:1 compared to CAC. If your average customer generates £50,000 in lifetime value, you can afford to invest up to £16,600 in acquisition costs whilst maintaining margins.
- Sales cycle length: Longer cycles require larger budgets to sustain engagement; shorter cycles allow faster optimisation.
- Market maturity: Newer markets need higher spend on education and awareness; mature markets benefit from targeted strategies.
- Internal capabilities: Strong in-house sales and marketing teams can deliver more efficient results than companies reliant on external support.
- Growth stage: Younger mid-market SaaS firms often spend more aggressively to establish presence; later-stage companies focus on efficiency.
Breaking down lead generation costs
Understanding where your lead generation budget should go helps optimise returns:
- Technology and tools (20–30%) – CRM, marketing automation, prospecting tools, analytics platforms. SendIQ, for example, combines multiple outreach methods in a single platform.
- Content and creative assets (15–25%) – Case studies, whitepapers, webinars, sales collateral.
- Paid advertising (25–35%) – Google Ads, LinkedIn Ads, and industry placements.
- Personnel costs (30–40%) – Salaries, commissions, or outsourced support for campaign execution.
- Outreach and prospecting services (20–40%) – Email campaigns, LinkedIn outreach, and cold calling.
Measuring return on investment
Effective budget allocation requires robust measurement frameworks. Track these key metrics:
- Cost per lead (CPL): Average spend to acquire qualified leads.
- Lead-to-customer conversion rates: Which lead sources deliver paying customers.
- Customer acquisition cost (CAC): Total marketing + sales spend per new customer.
- Revenue attribution: Which campaigns drive the most closed deals.
- Pipeline velocity: How quickly leads progress through your sales funnel.
Most successful SaaS businesses review metrics monthly and adjust budgets quarterly to stay aligned with growth targets.
Getting started with budget allocation
Start by calculating your unit economics: average deal size, sales cycle, and conversion rates. Use industry benchmarks as a guide, but adapt based on your market conditions and growth goals.
Test multiple channels systematically, scale what works, and cut underperformers. Partnering with experienced SaaS lead generation specialists like SendIQ can help optimise campaigns and ensure every pound spent contributes to growth.
Regular budget reviews ensure your investment scales alongside your business. The goal is a sustainable system that balances aggressive growth with healthy unit economics.
The right lead generation budget will create predictable revenue growth, a steady pipeline, and long-term market advantage for your SaaS company.
