Average SaaS Conversion Rate for Marketing

Spend five minutes in the marketing world, and you will undoubtedly hear about marketing funnels. Contacts turn into prospects, who then turn into leads, and as they progress to the bottom of the funnel, they hopefully convert into customers.

For Software-as-a-Service (SaaS) companies operating in the marketing industry, understanding and optimizing conversion rates are core metrics that provide concrete evidence of the success, or lack thereof of your marketing efforts. 

Conversion rates reflect the percentage of website visitors or leads that take the desired action, such as signing up for a free trial or becoming a paying customer.

In this article, we jump headlong into the world of SaaS marketing conversion rates, providing specific examples and calculations to help you benchmark your performance, identify areas for improvement, and optimize your marketing efforts.

Defining Conversion Rate And Its Importance In SaaS Marketing

Conversion rate is the fundamental metric that indicates the effectiveness of marketing campaigns, sales funnels, and overall customer acquisition efforts. It measures the percentage of visitors or leads that convert into desired actions.

For SaaS companies, these actions could be signing up for a free trial, subscribing to a plan, or making a purchase. Improving conversion rates starts with understanding how your organization stacks up against the industry averages, and is crucial for optimizing marketing strategies, driving revenue growth, and maximizing return on investment (ROI).

Clearly defined benchmarks makes it easier to make adjustments that improve the buying experience for your customers. It is not uncommon for bottlenecks to occur that negatively impact conversion, which is why so many in the SaaS world use this as a top indicator of success.

The Variability of Conversion Rates in SaaS Marketing

Before we dive into the hard numbers, it is important to note that conversion rates can vary significantly depending on various factors, such as target audience, industry, pricing model, product complexity, and marketing channels utilized.

For example, B2B SaaS companies targeting enterprise clients may have lower conversion rates compared to B2C SaaS companies with self-serve offerings. Additionally, marketing channels like paid advertising, content marketing, email campaigns, and social media can yield different conversion rates due to varying user intent and engagement levels.

Examples of Average SaaS Conversion Rates

Apples to oranges comparisons, like those outlined below, are great as you get started, because your benchmarks need be realistic. Ideally, as you zero in on the optimal conversion rate for your organization, you will want to get as granular as possible. 

Example 1: Email Marketing Software

Conversion Rate for Free Trial Sign-ups: 10%

Conversion Rate for Free Trial to Paid Customer: 20%

Example 2: Social Media Management Platform

Conversion Rate for Free Trial Sign-ups: 8%

Conversion Rate for Free Trial to Paid Customer: 15%

Example 3: Marketing Automation Software

Conversion Rate for Free Trial Sign-ups: 6%

Conversion Rate for Free Trial to Paid Customer: 12%

Target market, product positioning, and marketing strategies all have an impact on conversion, meaning the more granular you get, the more accurate your data and the better you ability to impact results. Without knowing anything about the industry or the intended audience for the examples above, there are a couple of things that should stand out.

To start with, the first example is potentially an entry level platform, that smaller organizations would use, whereas the other two examples are likely more enterprise solutions. While this may not be the case, enterprise customers are less likely to implement a process, even if there is a free trial. They are more diligent in their approach as any sweeping change potentially impacts multiple teams, or departments.

Additionally, as the product becomes more complex, the lower the conversion rate. The simple fact is that change is hard, and a product that has a number of moving pieces or must be integrated with existing systems and processes will inevitably have a lower conversion rate than a more simple solution.

Complexity can be great at helping customers address specific needs, but it also introduces the potential for other decision-makers to be part of the process. 

Calculating Conversion Rates and Improving Performance

You might be saying “It was my understanding that there would be no math.” Calculating conversion rates, isn’t like trying to solve String Theory, so pump the brakes.

To calculate conversion rates, you need two key metrics:

1. The number of desired actions (e.g., free trial sign-ups)
2. The total number of visitors or leads.

The formula for calculating conversion rate is: (Number of Desired Actions ÷ Total Visitors/ Leads) x 100.

Improving Conversion Rates

As we have said before, there are a number of moving parts to consider that all impact conversion rates. Think of the each of the following strategies as dials that can help you fine tune your conversion rate, helping you improve over time.

Optimize landing pages → Test and refine your landing pages to ensure a clear value proposition, compelling copy, persuasive call-to-action, and intuitive design.

Implement conversion rate optimization (CRO) techniques → Utilize A/B testing, heatmaps, and user behavior analytics to identify areas of friction, optimize user experience, and increase conversion rates.

Refine targeting and messaging→ Continuously refine your target audience and tailor your marketing messaging to address their pain points, needs, and preferences.

Leverage customer testimonials and social proof → Showcase positive customer reviews, case studies, and testimonials to build trust and instill confidence in potential customers.

Streamline the conversion process → Simplify and optimize the sign-up or purchase process to minimize friction, reduce form fields, and provide clear guidance at each step.

Try to avoid turning all of the dials at once. You find that success only requires small changes to your process. Making sweeping changes may blur what is actually helping you improve, or make you lose progress already gained.

If you find that you are struggling with conversion, you may need expert help. Connect with the Hire a Writer team for more tips, tricks, and expertise. We are here to help and we want to see you grow.