You need to improve your SaaS conversion rate. It is one of the greatest marketing optimization opportunities available. Keep reading to find out industry benchmarks for SaaS conversion and how you can improve your results.
What Is Your SaaS Conversion Rate Anyway?
Conversion rate is a marketing metric that means how many people take the desired action. For example, if you cold call 100 potential customers and 2 become qualified leads, then you have a two percent conversion rate. The enterprise sales may focus on “Did we get another paying customer today?” as their conversion rate goal. In the SaaS industry, there are typically three multiple types of conversion rates.
Website Conversion Rate: Conversions From Your Homepage
Your website conversion rate is the percentage of site visitors who take the desired step after visiting your website. Ideally, you want to measure how many site visitors become qualified leads. That could mean a “hard conversion” like signing up to use your product for a trial period. Alternatively, you might track the number of “soft conversions” such as site visitors who view your pricing page. You might also measure the number of people who visit the homepage and respond positively to a call to action (e.g. signup for demo).
As a general rule, it is best to focus on a single website conversion goal. This level of focus means it is easy to tell if you are meeting your SaaS conversion goals and growing recurring revenue.
Tip: If your homepage is not producing enough conversions, revise your headlines and copy after every thousand site visitors. Communicating your value proposition in a concise headline isn’t easy, so keep testing different copy until your conversion rate increases.
Free Trial To Paid Subscriber Conversion Rate: The Key To Getting Your Next Paying Customer For Self-Serve SaaS
A free trial user is significantly more valuable than a site visitor! This person has taken action to use your product and become an active user. If you have a reliable customer success process and onboarding email sequence, this person is likely to become a paid subscriber instead of remaining stuck in “potential customer” limbo. After all, investors and reporters are no longer fooled by companies vaguely boasting about their active user metrics. Ultimately, the total number of customers matters much more than the total number of site visitors or active users.
Tip: After a free trial user completes the signup for a paid plan, ask them for a referral. Systematically asking for referrals will decrease your customer acquisition cost.
B2B Enterprise Conversion Rate: Get Ready For A Longer Sales Process To A Paying Customer
SaaS conversion becomes more complicated when you are your business model is focused on selling enterprise products. For example, if your annual contract value is over $100,000, you cannot rely on your website to do all of the selling for you. Instead, your conversion rate optimization efforts will focus on producing qualified leads for the sales team (i.e. lead generation). For example, you may use a lead scoring system to identify leads who have opened four marketing emails. Whenever that lead score happens, your marketing automation platform then moves people to sales or invites them to signup for a webinar.
In reality, there are multiple B2B enterprise software conversion rates to consider. You will need to consider tracking marketing qualified leads (MQLs), sales qualified leads (SQLs), and other metrics.
SaaS Conversion Benchmarks: How Does Your Company Compare?
Now that we’re clear on the meaning of SaaS conversion let’s answer the million-dollar question. Is your company’s SaaS conversion better or worse than the industry average? The following chart summarizes a few answers to that question.
SaaS Free Trial Conversion Rate Benchmarks
Let’s start with the free trial conversion rate benchmarks. My research indicates that 25% is a reasonable number to aim for.
-26% average conversion rate for free trials that require a credit card at sign up (source)
-“ A Free Trial conversion rate of less than 25% for anything but the most horizontal, low-end, commodity B2B products is something that should warrant immediate attention.” (Sixteen Ventures)
However, you may find that some or many site visitors are not ready to sign up for a free trial right away. In that case, you will need to optimize for website conversion.
Website Conversion Rate Benchmark
Website conversion rate optimization can take various forms. You might direct people to sign up for an email list or fill in a contact form. Within those options, there are variations. I have seen B2B sign up forms that require a prospect to fill in 10 fields while others only ask for name and email. Due to all of this variation, it is much more challenging to provide a meaningful average. That said, it is helpful to have a minimum standard to aim for.
-Overall Website Average: 2.35% (If your website is converting less than this, you have some severe conversion rate optimization problems!) – WordStream
-Overall Median Conversion Rate For B2B: 2.23%
What Conversion Rate Do The World’s Best Websites Achieve?
Let’s make this a bit more ambitious, shall we? Wordstream helpfully also provides top 10% conversion rate averages. For B2B, the figure is 24.48%, while the figure for “all accounts” sits at 11.45%. As a result, reaching a 2-3% conversion rate is simply the starting point for digital marketing.
Take these industry benchmarks with a large tablespoon of salt, however. Some SaaS companies have large marketing budgets to spend so that they can run multiple conversion rate optimization experiments every month. Ultimately, I suggest referring to industry benchmarks a few times per year. Ultimately, it is more valuable to measure your SaaS conversion rate today with the results your company achieved in the past.
Strategies for Improving Your SaaS Conversion Rate
There are multiple strategies to boost your SaaS conversion rate. Here are some of the variables that you can use to get more paying subscribers.
1 Increase Your Signup Rate By Using More Social Proof
Social proof helps people feel more comfortable about making a decision. It is why we make a shortlist of products based on what we see on review sites. Ask the sales team to regularly contact one paid subscriber each week to ask for feedback. If the feedback is positive, ask the customer for a testimonial. This approach helps you to understand your existing customers better. If they have a problem with the software, do what you can to solve that problem.
Whether you call it reviews, customer references or case studies, more social proof makes every SaaS business model more effective. Your existing customers already know, like and trust your company so reach out and listen to their feedback.
2 Use Different Marketing Channels To Get Better Leads
If one million site visitors came to your pricing page from a country where the average income is low, your conversion rate would suffer if you have a high priced product. Likewise, if you attempt to market an enterprise sales software product to college students, conversions will be incredibly hard. Some of you will assume these are obvious points. Yet, I see these mistakes happen again and again!
Go back to the basics of your B2B SaaS marketing plan. Don’t worry about the latest and greatest social media platform. Instead, find one or two marketing channels where you can affordably reach your customers. Your customer acquisition rate will go up if you attract more qualified leads at the top of your marketing funnel.
3 Make The User Experience Easier For Potential Customers
Crafting the user experience and onboarding process is one of the most important ways to get more paying subscribers. One of the best ways to improve results lies in going small. Think of the smallest win you can provide for a customer. Remember how Twitter encouraged users to follow a handful of users? They intentionally kept this step small so that new users would be
Tip: If your product is more complex, involve customer success in the development of your onboarding process. This point is especially critical if you are using a low priced trial offer. After all, you have a paying subscriber on your hands and need to treat them accordingly.
4 Restructure The Trial Period For Potential Customers
For years, it seemed like there were only a handful of ways to organize a trial period. Some people were passionate advocates for long trial periods like 21, 28, or 30 days. Others preferred shorter periods. By all means, start with these orthodox trial period options. However, consider different options as well.
For example, why not give users two or three “bonus days” to a free trial user if your analytics show that they are using your product? That additional time to tinker with your product may help them see more value.
5 Experiment With Your Pricing Page
Changing your pricing page might sound scary. After all, you spent time with focus groups, and your investors may have signed off on the pricing options. Yet, an unattractive pricing page may be a fundamental cause of low conversion rates.
Conventional wisdom dictates that SaaS pricing pages have a set structure. Usually, a paying subscriber can choose between a monthly plan or an annual plan. Next, they can choose between different tiers of the software.
For example, lemlist’s pricing page with three pricing plans:
While this pricing structure is popular, there are other options. For example, have you ever offered a Black Friday sale? Uploadcare used Black Friday sales, along with other strategies, to double their revenue in 2019.
6 Get On The Phone To Help With Onboarding
If you have less than $1 million in ARR or less than 1,000 customers, getting on the phone with customers matters. After all, quite a few people will let their trial period expire without doing anything at all. When you get on the phone, seek to understand the problems your customer is trying to solve. Once you understand that information, you can help them to achieve an easy win with your software.
By the way, make sure you take note of any substantial technical problems. Outstanding sales and marketing efforts cannot paper over a dysfunctional product!
7 Improve Your Email Marketing Conversion Rate
During the trial period, your customers are starting from scratch in learning how to use your product. That’s why it makes sense to send useful content. Popular options here include short videos that provide a step by step tutorial on how to achieve a given task in the product.
By the way, a reasonable email marketing conversion rate requires more than excellent copy. You also need to take steps to increase deliverability. For email deliverability tips, read Neil Patel’s article: 12 Ways to Improve Email Deliverability.
Three Conversion Rate Optimization Experiments To Run
Before we conclude, let’s look at three simple conversion rate optimization experiments.
1) Change your marketing channels
Reaching your SaaS conversion goals is more straightforward when you use the right channel. For example, if you offer a powerful software solution to increase sales productivity, you need to connect with sales leaders rather than marketers. Find out more about the nine SaaS marketing channels available to you.
2) Add scarcity and deadlines to your offers
If an offer is not producing conversions, you can increase your SaaS conversion rate by adding a deadline. For example, you might offer a temporary sale promotion by offering a deal on AppSumo. That’s exactly how I was persuaded to buy Frase recently. Don’t get me wrong – offering discounts is not the only option.
You can also offer additional bonus features for a limited period. Whether you call it a Labor Day sale or drive traffic to a live webinar event, describing a deadline to drive action is a proven way to increase your success.
What to do next to raise your SaaS conversion rate
Attracting highly relevant prospects to your website is an excellent way to increase your SaaS conversion rate. Picture this: a prospect searches for an answer to a question, they find your website and read a fantastic answer. If you present invite that prospect to sign up for a free trial or join your email list, they are likely to convert. I help companies attract leads through content marketing. Contact me today to discuss how we can use content to drive more conversions, leads, and sales.