Average Conversion Rate For SaaS and How to Improve Yours

Average Conversion Rate For SaaS


Chances are, you’ve heard about industry averages for SaaS conversion rates and you want to make sure yours is as good—or better—than these standardized figures. But what actually is the ‘industry average’ for SaaS conversion rates and how do you measure up?

In this blog post, we will discuss the average conversion rate in the SaaS industry, the factors that influence conversion rates, and how you can start optimizing yours today. 


Understanding SaaS Conversion Rates


In SaaS, conversion rate is a metric that measures the percentage of users who take an action on your website. It can be anything from signing up for a trial to downloading content or even making a purchase. The higher the percentage, the more successful your website is at turning users into customers.

It’s a way to measure how many visitors to your site become actual customers, and therefore represents the efficiency of your company’s marketing strategies.

Highlighted below are the importance of tracking conversion rates for SaaS companies:

  • It measures how successful your company is in converting leads into customers.
  • It allows you to track the performance of your marketing campaigns and identify areas that need improvement.
  • It helps you understand the effectiveness of your SaaS solution and customer value propositions. 

High conversion rates indicate strong demand for your tool, which can lead to a higher valuation for your company in the eyes of potential investors and buyers. 

Low conversion rates can be an indicator of poor user experience, weak features or pricing levels, or inadequate marketing efforts -all of which must be addressed to ensure success for your and longevity for your tool.


The Average Conversion Rate for SaaS


The average SaaS conversion rate across industries can range between 2% to 15%.

Now, it’s important to understand that these number encompasses a wide range of SaaS companies and tools, so you’ll want to look at conversion rates for businesses that are similar to yours.

This doesn’t take into account the differences in user acquisition costs, pricing structure, product features, and the type of customer that you are targeting. So to get an accurate understanding of your conversion rate performance you’ll need to look at benchmarks in specific categories.

Majority of SaaS companies today average around 3-7% conversion rate for visitors, meaning that out of 100 people who visit the website, 3-7 will take an action such as signing up for a trial or downloading content.

SaaS companies that are already above this mark can gain insights on how to maintain their growth, while the others that don’t need to focus on improving their conversion rate.

For instance, the conversion rate for free trials depends on whether the company requires credit card information or not.

If yes, then a rate between 30-60% is typically average, though this number can be skewed by users who churn quickly after forgetting to opt-out. In this scenario, it’s important to monitor churn rates and daily/monthly active users in order to get an accurate read of the conversion rate.

On the other hand, if no credit card information is required, then 2-15% is the industry standard. Companies such as Recapture.io have reported opt-in trial conversion rates of up to 25%, which is quite significant.

For B2B SaaS companies, a freemium conversion rate of 2-5% is ideal but usually averages around 1%. However, exceptions such as Slack have conversion rates above 30%.

Generally, it is easier to get users to sign up for a free trial as there is no financial risk associated with it.

On the other hand, getting people to make a purchase requires more effort and convincing as it entails monetary investment on their part.

By studying the data from both components, SaaS companies acquire knowledge about consumer preferences towards different offers, which helps them create marketing strategies catered specifically to their target audience, and thus, improve their overall conversion rates.


How to Improve Your SaaS Conversion Rate


Below are some key steps to help increase your SaaS company’s conversion rate:


1. Optimize your website and landing pages


Website optimization helps to minimize friction and increase conversion rates. It involves making strategic tweaks throughout the website to make it easier for visitors to convert into customers. 

You should also pay attention to page loading speed and search engine rankings to improve the user experience and increase visibility on major search engines.

Here are a few tips on creating an effective website and landing page for your SaaS business:

  • Use a strong headline – Your headline is the first thing that people will see when they land on your website or landing page, so it’s important to make it count. A strong headline should be clear and concise, and it should accurately reflect what your website or landing page is about.
  • Include a compelling call to action – Your headline should be followed by a call to action, which is a statement that tells people what you want them to do. For example, if you want people to sign up for your email list, your call to action could be “Sign up now!”.
  • Making it easy to navigate your website or landing page should be easy to navigate so that people can find what they’re looking for quickly and easily. Include clear menus and simple design elements so that people don’t get frustrated and give up before they find what they need.
  • Use images and videos – People are more likely to engage with content that includes images or videos, so make sure to include them on your website or landing page. Images and videos can help to break up text and make your content more visually appealing.
  • Use persuasive language – Throughout your website or landing page, use persuasive language that will convince people to take the actions you want them to take. For example, if you want people to sign up for your email list, use phrases such as “Get exclusive access to…” or “Join our community of…”


2. Provide a clear value proposition


The value proposition is an essential part of business-to-customer relationships, as well as B2B relationships. 

It’s the foundation of how a company demonstrates to customers why their SaaS product will provide them with something valuable.

Put simply, it’s the unique offering that a SaaS company offers that sets it apart from its competitors and attracts customers. 

To create a clear value proposition

  • Keep it Simple – This means avoiding industry jargon and using language that can be understood by everyone. You want your value proposition to be clear and concise so that potential customers can quickly understand what your product or service can do for them.
  • Focus on the Customer – It should answer the question of “What’s in it for me?” from the customer’s perspective. What needs does your product or service address? How will it make the customer’s life better?
  • Highlight Your Unique Selling Points – What makes your product or service unique? Why should potential customers choose you over your competitors?
  • Use Testimonials and Case Studies -They are a great way to add credibility to your value proposition. If you have satisfied customers who are willing to speak about their experience with your SaaS product, make sure to include their testimonials in your value proposition. Likewise, if you have any data or case studies that show how effective your SaaS product is, be sure to include them as well.
  • Make it Actionable – Your value proposition should not be a static statement; it should be something that encourages potential customers to take action. Include a call-to-action in your value proposition that tells potential customers what they need to do next in order to get started with your SaaS product.


3. Offer a free trial


Offering a free trial for your SaaS tool allows potential customers to get a glimpse into what your product offers before they commit to paying full price – no surprises and no pressure.

A free trial offers an opportunity to build trust with new customers as it shows them you are confident in the value and quality of your product, so much so that you’re willing to let them demo it before they buy.

Common types of free trials usually provide the following:

  • Time-Based Trials – This type allows users to access the full features of the software for a limited period of time, typically 14 days. 
  • Feature-Based Trials – This type allows users to access only certain features of the software for a limited period of time. 
  • Usage-Based Trials – This type allows users to access the full features of the software for a limited period of time, but with some restrictions on usage.
  • Pay As You Go Trials – This type allows users to access the full features of the software for a limited period of time, but with some restrictions on payment. For example, you may require a credit card upfront but will not charge until after the free trial period has expired. 
  • Custom Trials – This type allows you to offer custom trials that are tailored specifically to the needs of the user.

Here are a few tips on getting your free trial right:

  • Define your goals – What do you hope to achieve by offering a free trial? Do you want to increase sign-ups? Drive more sales? Improve customer satisfaction? Once you know what you want to achieve, you can create a free trial that is designed to help you reach those goals.
  • Set a time limit – A good rule of thumb is to offer a free trial that lasts for 7-14 days. This should give customers enough time to use your product and decide if they like it.
  • Offer full access – This means that customers will be able to use all of the features and functionality, as if they were paying customers. By offering full access, you’ll give customers the best possible chance to see the value in your SaaS product and convert them into paying customers.
  • Provide customer support – This could include things like live chat support, email support, or even phone support. The more support you can provide, the better.
  • Promote your free trial – Be sure to let your potential customers know about your free trial through marketing channels such as email marketing, social media, and paid advertising


4. Streamline the signup process


Many business owners turn away from investing in SaaS solutions because they view the onboarding process as overly complicated, laborious, and time-consuming. 

You should recognize the importance of a simple and efficient signup process, as the hassle of setting up an account can make or break whether your SaaS tool becomes popular.

This process should consist of minimal steps to reduce friction for customers, who would otherwise turn away from signing up for a convoluted system. Streamlining the signup process can lead to higher customer satisfaction and better marketing results in addition to generating recurring revenues with subscription plans.

Here are a few tips for simplifying the signup process for SaaS:

  • Keep it short and sweet
  • Avoid long and complicated onboarding processes so users can start using your SaaS product as quickly as possible.
  • Make it easy to understand
  • Use social media login options (such as Facebook Login or Google Login)
  • Use an email verification system as this can help to ensure that only real people are signing up for your SaaS.


5. Build trust and credibility

Building trust and credibility within the industry helps create a more reliable product in the minds of potential customers, instills confidence, and gives customers the feeling that their money will be well-spent when investing in your product.

Here are a few tips for building trust and credibility for SaaS:

  • Establish your brand. Your brand should communicate what your company does, what it stands for, and why people should trust you. It should be consistent across all of your marketing materials, from your website to your social media accounts.
  • Get involved with relevant people/organizations in your industry. This can be done by attending industry events, writing blog posts or articles about relevant topics, or speaking at conferences or webinars.
  • Be Transparent. You should be open and honest about who you are, what you do, and how you do it. This means being transparent about your pricing, features, and terms of service. Being transparent will show potential customers that you have nothing to hide and that they can trust you.
  • Get testimonials from satisfied customers. These testimonials can be used on your website, in marketing materials, or on social media. Testimonials from happy customers will show potential customers that others have had a positive experience with your company and that they can trust you

6. Use retargeting and remarketing


Retargeting and remarketing in SaaS are strategies used to reach customers that have already made purchase decisions. This helps potential and existing customers become familiar with your SaaS company, brand, and what you have to offer.

Retargeting and remarketing are often done through targeted advertisements. They help customers to be reminded of your SaaS solution they’ve considered or had an interest in, potentially leading them back to making a purchase. 

Furthermore, successful attempts at retargeting/remarketing can also help keep customer relationships strong by increasing brand loyalty and user retention, both of which are key for long-term success in the SaaS industry.

To truly reap the benefits of these two digital marketing strategies, consider the following tips:

  • Define your audience. Who do you want to target with your ads? What are their interests? What kinds of products or services are they likely to be interested in?Once you have a good understanding of your target audience, you can start to create ads that are specifically tailored to them.
  • Be creative and compelling in order to grab attention and get results. Use attractive visuals and strong copy to make your ads stand out from the rest.
  • Try different ad formats, placements, and targeting options to see what gets the best results. Experiment with different strategies in order to find what works best for your business.
  • Monitor your results so that you can see what is working and what is not. Keep track of your click-through rates, conversion rates, and other metrics so that you can make adjustments as needed.


Final Thoughts


The average conversion rate for the majority of SaaS businesses today is determined to be between 3% to 7%.

With the right strategies in place, including establishing your brand, getting involved in your industry, being transparent, gathering customer testimonials and using retargeting/remarketing tactics, you can increase your SaaS company’s conversion rate significantly.

And by taking the time to develop a comprehensive digital marketing strategy and investing in the right tools, you can make sure that your SaaS business stands out from the competition. This will not only help you attract more customers, but also ensure customer loyalty and ultimately grow your revenue.

To learn more about driving customer conversions within your SaaS business model, visit our blog for more tips on growing your SaaS business!


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Ken Moo