9 practical ideas to improve SaaS conversion

Image courtesy of Amity www.getamity.com

Tries and conversions

So here we are in the midst of Rugby’s autumn internationals. Over the weekend I am looking for tries (5 from Scotland last week - unbelievable!) and I have spent most of my time during the week talking about conversions. Apologies for the cheesy introduction but not for the topic. In the SaaS world conversion is one of the hottest topics and it gets right to the lifeblood of a SaaS start up.

The free trial model

Let me just go back one step. Free trials have become established as one of the standard options for a SaaS business model. In consumer software there is a mix between freemium models in which you can use the basic service for free forever but have to pay for advanced features and free trials. In enterprise SaaS virtually everyone offers a free trial typically 7, 14 or 30 days. You try the product for a period then have to decide whether to keep it and become a paying customer.

Free trials have proved a great device for filling the sales funnel. There are now a number of channels where it is cheap and easy for a start up to sign up customers for a free trial. Advertising on social media or through search engines has tremendous reach and typically you can find sign ups for two to five dollars. Specialist app stores run by big enterprise vendors like Salesforce and Xero are also a low cost and effective route. Integration with these products is a strong feature for many companies.

Change is hard

But there is a big challenge. Conversion. How do you persuade those users who sign up to become paying customers? A variety of industry sources suggest 3-5% conversion for B2B SaaS is a good solid performance and can lead to profitable operations. 8% is best in class. These numbers suggest conversion is a tough job even for the most successful companies. Why?

There are lots of reasons and I would encourage you to focus on real and very closely understood specifics. There is no substitute for detail in addressing this issue. Many individual issues will relate back to to one very well established business challenge. Change is hard. No matter what the technology or the market dynamics, change always depends on behaviour. Changing behaviour is both difficult and slow. Tomasz Tunguz of Redpoint Ventures (@ttunguz) wrote a great post in March Why Great SaaS Companies Focus on Behaviour Change which captures the essence. Whatever your B2B SaaS proposition, you are asking your customer to make a change to their business and resistance will be tough to overcome.

9 practical ideas

What can you do? Absolute first step is to talk the right language so you recognise the challenge. When someone signs up for a free trial they become a lead NOT a customer. Think in terms of lead generation and conversion and the sales process becomes much clearer. Beyond these here are my top 9 suggestions:

• By far the most common tactic is to take payment details in order to qualify for the free trial. The company will start debiting your credit card automatically at the end of the trial and many users forget to cancel. This does create great conversion rates but users are wise to the tactic so getting leads this way is much harder and more expensive than offering a trial without capturing payment details.
• Since change is hard, you need to make it as easy as possible. If your product is part of the problem then conversion will be impossible. You can’t do everything for your users but simplifying and reducing the effort to set up and use your software is vital.
• Linked to making it easy is making it mobile. Users increasingly prefer mobile and the majority of internet traffic is now mobile in virtually every country. Mobile also forces you to think about making the user experience simple. Great mobile apps are easy and intuitive which is exactly where you need to be.
• Think about how you can change the dynamic. For example, instead of asking a user to configure a blank set of forms, have the software set them up with automatic defaults and then your user only needs to delete or change those that don’t apply. Its quicker and the first thing the user sees will be an active living version of your system not a blank form.
• Offer free use of some premium features. Many start ups restrict free trials to the most basic version of the software, the one with the lowest subscription. Let your users try the best stuff and not only will they be more likely to convert, they may go for a higher priced subscription as well.
• SaaS marketing teams have become very good at regular contact with leads. Many run a programme of e-mails, tutorials and challenges during the trial period. This is all fine but be careful. If the user feels hassled or pestered then it can be counter productive.
• Remember if you do sign up large numbers then you will have a great pool of qualified leads. You may not convert immediately but you can personally reach out these people and find out what they need, why they might convert and so on. Hit the phones to follow up, test out new ideas and learn. Improving conversion is an iterative process every bit as much as product development.
• It may also be time to think again about your free trial. The trouble with cheap and easy sign up is you have made it simple to get the wrong customers as well as the right ones. Maybe you need a first cohort of 100-500 and then use that group to narrow and focus your market. Then target much more closely. You will have less leads but a much higher conversion rate if you get this right.
• Think about moments of change. Instead of trying to persuade your customers to change, catch them when they have to change anyway. Perhaps they are launching a new product or changing their CEO or even just taking on their first employee for smaller businesses. The right offer at the right time could be priceless.

What works for you?

SaaS is in its early stages for software companies and we are all learning. Do the ideas on this list work? What approaches have you used to improve conversion?