SaaS businesses have certain differences compared to more traditional businesses, but there is one thing they do have in common. Starting a new business reaps a massive reward once off the ground. We allow ourselves a moment to celebrate, but the work is far from over. Regardless of your business model, it’s now time to start gaining more customers. Naturally, every SaaS company owner is looking for ways to earn more profits, and for this, increasing your conversion rates is essential.
What Is a Conversion Rate?
The simple answer is that it’s a percentage of the number of visitors to a site that convert into a paying customer. As a simple example, if your website receives 100 visitors and 3 make a sale, then you have a conversion rate of 3%. People will often ask what a reasonable conversion rate looks like, but this is where things get more complicated.
To get a complete understanding of your conversion rate before you can look at ways to improve it, you need to break down your sales funnel and understand the difference between each conversion rate. This will enable you to identify precisely where you need to improve. Your sales funnel will probably consist of a lead online, qualify the lead, a meeting with a sales rep, a proposal, and hopefully a sale. Let’s take a look at an example by working backward.
- If your goal is to increase your revenue by $1 and your product sells for $50,000, then you will need 20 new customers.
- Your numbers tell you that the conversion rate on proposals sent is 20%, so you need to send 100 proposals to get 20 new customers.
- If your sales rep has a 50% conversion rate, they will need 200 meetings to send 100 proposals. With 20% of sales qualified leads going on to have a meeting, you need 1,000 SQLs.
- Same again, 20% of internet leads become sales qualified, your goal is to increase internet leads by 5,000.
- If your visitor to lead conversion rate is 2%, you need 250,000 new visitors to the site in order to reach the $1m target revenue.
It’s true that some experts will say a good conversion rate is between 3% and 5%; others will say that 8% is excellent. However, you can see that a 2% conversion rate will allow us to achieve our goal when you break down each stage as we did above. Naturally, a higher rate will be great, but you are likely to compare your 2$ conversion rate without breaking down the process and start to unnecessarily stress.
8 Ways for SaaS Companies to Increase Conversion Rates
Gather your data
As you may have guessed, if you can’t break down your sales funnel and appreciate the various conversion rates for each stage, you need to start here. Remember that your sales funnel may not look exactly the same as the above, so put yourself in the customer’s shoes and identify each stage of the buying process and establish baseline metrics for each stage.
This information provides you with your KPIs or Key Performance Indicators and highlights areas for improvement.
Make the necessary changes to your site
What is your value position—why customers should choose you over your rivals? Is this clear on your website? The most important content must be ‘above the fold,’ and the call to action (CTA) has to be motivational. All images have to be high-quality and if you choose to include videos, make sure they are also high-quality.
Add numbers and statistics to your site. Customers are encouraged to sign up for free trials when they can see how much time or money they can save or how much more revenue their business could receive.
Most importantly, at this stage, you should carry out A/B tests. Let’s say your CTA is a link to start a free trial. An A/B test would run two sites with different CTA links; one might be green, the other red. Because so much of marketing is about psychology and customer preferences, you will gain incredible insights from A/B testing and which elements of your site are generating more leads.
Finally, check that your site and landing page are optimal for mobile devices. Make sure the layout is the same, or the pages appear with the most important first. Website optimization is just as crucial for your whole site and your landing page.
Post new content
New content can include product information, customer opinions, educational content, videos, images, blogs, and plenty more. Posting new content has a huge impact on lead generation. Inbound marketing through content generated 54% more leads than traditional marketing methods. Blogging, in particular, reaps massive returns on investments. 82% of businesses that blog daily acquire new customers compared with 57% that blog monthly.
Lead scoring is necessary so that you can prioritize where your sales reps spend their time and effort. It might sound harsh, but you can’t afford to waste time on unqualified leads. Those leads that do qualify can also be matched against sets of criteria to determine the most likely conversions to proposals sent.
There are two ways to improve your lead scoring. You need to have regular meetings with the relevant teams so that the relevant information can be shared. You may also want to consider lead scoring software.
Optimizing your site and lead scoring will help to generate more high-quality leads. More leads equal to more proposals.
Maximizing the free trial
Statistics show that 98% of users will log into a free trial account, but only 40% will log in a second time. That indicates something is going wrong in this initial use of SaaS products.
A free trial is a hook. Customers see it as an opportunity to test a product to see if they want to pay for it or not. SaaS companies need to use this opportunity to provide the best experience so that it is only logical for the customer to want to pay. It may sound dramatic, but you are aiming for the “How did I cope without this product before!”.
Speed is of the essence. No customer wants to have to scroll through pages of instructions to perform the basic benefits of your product. The free trial needs to include at least one solution that is simple to set up but solves a core problem for them. It is better to include short videos with demos or at least images with text rather than large bulks of text.
You might think that a 30-day free trial period is the best thing for your customers; it shows your generous side. In fact, this only gives them longer to look at what competitors have to offer and increase your cost per acquisition. The ideal length of a trial period is 14 days, so you may need to consider shortening yours.
Converting users from the free trial to paying a subscription
Without wanting to increase the pressure, this stage is crucial for SaaS conversion rate optimization. At this point, you should focus on providing content that shows how the customer has benefited from your product during the trial period and new content that informs them of further benefits.
Teach customers how to integrate other apps with your solution. Follow up with your customers with in-app messages or emails asking if they are aware of particular features, what’s coming up, or asking for feedback. Feedback shows you want to hear what customers think to make improvements and add features that are in popular demand.
Be incredibly open and clear about your pricing plans. Don’t use complicated sentence structures that lead customers to think you are hiding something. A comparison chart of your SaaS product features with each plan is a great way to help tree-trial users make a clear decision.
While we are more accustomed to digital communications, don’t forget the importance of a phone call at this stage. A phone call combined with outstanding customer service might be enough to convert your free users into subscribers.
Create strong relationships to reduce churn
Once you have a paying subscriber, your efforts should now turn to develop that relationship so that they remain a customer for the long-term. Continuous fresh and relevant content and customer support will help but don’t be scared to think outside of the box to offer added value to the product.
It is essential that customers know about upgrades to your product and that you are educating them on how to use it. Emails and downloadable guides a good but free webinar are a brilliant way to add value and engage customers.
Use loyal customers to get referrals.
One of the most effective and even simplest ways to increase your conversion rate is to get referrals from your loyal customers. Referral marketing is a strategy that makes it easy for customers to refer new customers to your product and receive rewards for doing so. Dropbox grew by 3900% in registered users in just 15 months because of referrals.
Make it as straightforward as possible for customers to refer to new leads. Do this by adding prompts and referral links on social media and emails and within your product. Let customers know what the rewards are, and remind them of what they have earned each time you get a new lead from them. Referrals bring in high-quality leads and lower costs, so a referral program isn’t only good for increasing conversion rates.
Despite starting off a little heavy with data, numbers, calculations, and A/B testing, increasing conversion rates for SaaS companies isn’t necessarily complicated, especially once you have got the numbers for the first time. Remember that it is important to look at each stage of the sales funnel rather than just a conversion rate. Doing so will help you to see where you should focus your efforts and resources.