All your efforts to drive traffic to your site, and all the visitors to your site will be a waste if you don’t grow as a business. This is regardless of the kind of online business you are in. A high converting site (or product) is as essential to a SaaS business as water is to fish. And that is why it’s very important to constantly monitor and optimise your SaaS conversion rate.
But what is SaaS conversion…
This can be summed up in a single line: Turning a potential customer into a paid consumer of your product/service is SaaS conversion.
… And SaaS conversion rate
In the simplest of terms, a SaaS conversion rate is the number of conversions divided by the total number of visitors/enquirers of your product. It’s a metric that differs from business to business, depending on your goals and tracking metrics.
Is there something called a ‘good’ conversion rate?
There’s no one measure for this to know what is SaaS conversion rate. It depends on various factors – each mutually exclusive. So, what’s a ‘good’ rate for, say, an eCommerce sale might not be good for a lead-to-sales conversion. But the bottom line is, it’s a measure to see how many of those potential ‘in the trial’ phase customer you can convert into a paying consumer. So, in a way, it’s a check on the services you offer – whether they are enticing enough to blow away the trialing customer.
Now, how can SaaS service providers ‘entice’ their customers?
On what basis are the success rations benchmarked? The three popular avenues for free-to-paid conversions are:
- Free Trials (without credit card): This has the user sign up to sample the services or the product in the hope that they may end up as paying customers. The success of this one depends on high number of signups. Though the chances of customers not converting to paid consumers is high here, the higher number of sign-ups increases lead generation – something on the lines of what Drift, the digital marketplace platform, has done quite successfully.
- Free Trials that need credit card registration: This is a favourite of most SaaS service providers as parting with their credit card information is seen as a first step to buying their product or services by many. But this model works on absolute transparency, and the customer must be given multiple options to opt out of the trial period at any time, and also a clear announcement of the trial period. Once the customer samples your fare chances are that he’ll be hooked to it, and will opt to pay for further services.
- Freemiums: These days, freemium services have become a fad, especially for app-driven SaaS subscription models. In this one, the customer can be a free-trialer for the rest of his life, with only the advanced feature costing some money. This is usually not considered a good way to do business, since, you might not see many conversions to a paid pro version of your product. And yet, there are companies like Dropbox and Spotify that have made billions out of this model. And who can forget Fortnite Games’ PUBG, the freemium that earned them 2.4 billion dollars last year?
Based on the product you sell, or the services you offer, you can try one, or a combination of all the above to improve your SaaS conversion rate. But know this: Even at this stage, everything depends on customer experience – so, the quality of your product, plus the value-added customer care you provide will be the key here.
Conversion rate optimisation: Benchmarks
Having said that, there’s a kind of baseline count, a ballpark figure, that can be maintained as a ‘good’ SaaS conversion rate in general for all products or services. An average figure that all SaaS platforms can achieve organically, as well as via paid initiatives. They would typically go something like this:
- Free trials (without credit card) – 8-10% conversion is a globally accepted benchmark
- Freemiums would range anywhere between 4%-30% (read Dropbox on the lesser side and Slack to the right)
- Free trials (with credit card registration) – though the figures wildly vary between companies, the average is said to be about 25% (66% of SaaS companies reported this figure). You can average it out from the eight public estimates from SaaS experts, one gets a 26% conversion rate for this type of trial.
So, how to optimise conversion rate, real-time?
Each company has its own strategy, but overall, there are a few basic thumb rules all successful SaaS companies follow to get the best results:
- Narrow down and target the right customers: Don’t run after visitors who will not help you generate revenue in the long run. Monitor incoming organic, paid and referral traffic and ensure you have top-funnel traffic. Watch their behaviour to get an idea of your customer
- Tell your user about your product: Educate them so that they understand your product and figure out how they can succeed in their business by using it
- Customise and personalise even free trials: Use past data and data on your site to customise offers right from signup and enrich your lead generation. Make collection of information right at signup stage an important business strategy (this is how Wistia did it)
- Track everything, test, test, test: Try new things, and see how your customers respond. Keep testing your products, innovations – a/b tests, customer feedback, etc., tell you why they’re dropping off or converting.
SaaS is all about blowing away the customer with the very first click. First impression is everything – it will beget you a high SaaS conversion rate. Conversion is the key to growth and revenue. That is what will keep you above competition, help you dominate the market. So, give it your best shot!