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Website visitors

2012 SaaS
                                     Website visitors



Conversions
                               2%
                                     Free trial signups



Benchmark                      50%
                                     Paying users

                               60%
                                     Active paying users


                               Monthly churn
Based on the engagement with
about 100 SaaS companies        2.5%
Convert and Retain
   like the best
         This report is answering the question:
“what are typical conversion rates in the SaaS industry”
How we got this data

We’ve helped SaaS companies like Zendesk, Clarizen and
Cloudbees and about 100 other online businesses like
Streeteasy increase trial conversion and user retention.




From our engagement with these businesses, we’re in a unique
position to observe typical conversion rates in the SaaS
industry and we decided to share these insights with you.


                             2/10
Conversion Metrics

People ask us: ‘What is typical conversion in SaaS’ and ‘What is
best in class conversion in SaaS companies; specifically:

1.    Website to free trial conversion*
2.    Free trial to paying plan conversion
3.    Percentage of true evaluators during a trial
4.    First 90-day churn
5.    Steady-state churn

*44% of SaaS companies offer a free trial. 17% offer freemium
 See more details on trial and pricing models in our
 2012 SaaS pricing and free trial benchmark report




                                       2/10
There is no such thing as ‘typical’

           Conclusion 1
   When looking at conversions, not all
   business models are created equal.

Specifically; companies that require a credit card
as part of the free-trial signup process see very
different conversions than those that don’t
require a credit card.

Therefore we will look at both models (credit
card, no credit card) separately.
‘Best in class’ companies

           Conclusion 2
    Best in class SaaS companies have
   significantly higher conversion rates.

There is a group of SaaS companies which
significantly outperforms their peers. We will
also look at their conversion rates and what they
do differently to achieve those numbers.
3 Conversion Models


1. Credit card required
2. No credit card required
3. Best in class
What is following is a direct comparison of the three models
and an example for each scenario where we assume that
you start with 10,000 website visitors and see how many
people will end up as happy, paying users after 90 days.


                            2/10
Conversions Comparisons

                                     Credit card    Credit card   Best in class
                                      required     not required   SaaS leaders

Visitor	
  to	
  free	
  trial	
  
                                         2%            10%            10%
signup	
  conversion	
  



Free	
  trial	
  to	
  paid	
  
subscrip5on	
                           50%            15%            25%
conversion	
  


Retained	
  paid	
  
customers	
  a8er	
  90	
               60%             80%           80%
days	
  




Conversions	
  end-­‐to-­‐end	
         0.6%           1.2%           80%
                                                                      2.0%
SaaS Conversions – credit card required

       10,000 visitors
     2%
                  200 free trial signups
     50%
            100 converted to paying users
     60%
                60 paying users retained after 90 days
Monthly churn
2.5%
SaaS Conversions – no credit card required

       10,000 visitors
     10%
                1,000 free trial signups
     15%

                150 converted to paying users
     80%
                120 paying users retained after 90 days
Monthly churn
2.5%
SaaS Conversions – Best in Class

       10,000 visitors
     10%
                1,000 free trial signups
     25%

                250 converted to paying users
     80%
                200 paying users retained after 90 days
Monthly churn
2.5%
Conversions Comparisons
      Resul5ng	
  number	
  of	
  acquired	
  paid	
  users	
  a8er	
  first	
  90	
  days	
  


Credit card                      Credit card                                       Best in class
 required                       not required                                       SaaS leaders




   60                                120                                                   200
What Do Best In Class Companies Do Differently?

 1.  Large top-of-funnel
      –    Awesome content, inbound marketing
      –    Do not restrict top-of-funnel (don’t ask for credit card)


 2. Focus on most active evaluators first
      –  Monitor the most active trial users (in any group of trial
         customers there are some that are naturally more inclined
         to buy from you – see next slide)
      –  Nurture other trial users to success


 3. Pro-active approach to customer retention
      –  Listen for early warning signs of churn (like non-use)
      –  Pro-actively reach out to at-risk customers to offer help
The Anatomy of a Free Trial

True Evaluators
Multiple users active
during trial, logging
in daily
                              20%
                                          Accidental
                                          Signups
Potentials
Activated trial         10%         70%   Signed up but
                                          haven’t done
but not very
                                          anything since
active
Learn More
If you want to learn how to convert like the best:

1.  Identify trial users most likely to buy
2.  More rapidly onboard new users
3.  Identify and engage users at risk

Contact Totango for a free consultation,
http://customer-success.totango.com/contact-us.html.

Start your free 30-day trial today,
http://www.totango.com.
Resources

Learn more:
•  Are you engaging new trials in their evaluation?
  http://blog.totango.com/2012/03/are-you-engaging-new-trials-in-their-evaluation/

•  How to boost sales with a free trial model
  http://www.slideshare.net/totango/how-to-boost-sales-with-a-free-trial-model




Analysts on Totango:
•  OVUM
  http://blog.totango.com/wp-content/uploads/2012/09/Ovum-Report-on-Totango-September-2012.pdf

•  Paul Greenberg
  http://blog.totango.com/2012/08/crmidol-2012-totangos-review-their-future-will-be-very-very-bright/

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2012 saas conversions benchmark

  • 1. Website visitors 2012 SaaS Website visitors Conversions 2% Free trial signups Benchmark 50% Paying users 60% Active paying users Monthly churn Based on the engagement with about 100 SaaS companies 2.5%
  • 2. Convert and Retain like the best This report is answering the question: “what are typical conversion rates in the SaaS industry”
  • 3. How we got this data We’ve helped SaaS companies like Zendesk, Clarizen and Cloudbees and about 100 other online businesses like Streeteasy increase trial conversion and user retention. From our engagement with these businesses, we’re in a unique position to observe typical conversion rates in the SaaS industry and we decided to share these insights with you. 2/10
  • 4. Conversion Metrics People ask us: ‘What is typical conversion in SaaS’ and ‘What is best in class conversion in SaaS companies; specifically: 1.  Website to free trial conversion* 2.  Free trial to paying plan conversion 3.  Percentage of true evaluators during a trial 4.  First 90-day churn 5.  Steady-state churn *44% of SaaS companies offer a free trial. 17% offer freemium See more details on trial and pricing models in our 2012 SaaS pricing and free trial benchmark report 2/10
  • 5. There is no such thing as ‘typical’ Conclusion 1 When looking at conversions, not all business models are created equal. Specifically; companies that require a credit card as part of the free-trial signup process see very different conversions than those that don’t require a credit card. Therefore we will look at both models (credit card, no credit card) separately.
  • 6. ‘Best in class’ companies Conclusion 2 Best in class SaaS companies have significantly higher conversion rates. There is a group of SaaS companies which significantly outperforms their peers. We will also look at their conversion rates and what they do differently to achieve those numbers.
  • 7. 3 Conversion Models 1. Credit card required 2. No credit card required 3. Best in class What is following is a direct comparison of the three models and an example for each scenario where we assume that you start with 10,000 website visitors and see how many people will end up as happy, paying users after 90 days. 2/10
  • 8. Conversions Comparisons Credit card Credit card Best in class required not required SaaS leaders Visitor  to  free  trial   2% 10% 10% signup  conversion   Free  trial  to  paid   subscrip5on   50% 15% 25% conversion   Retained  paid   customers  a8er  90   60% 80% 80% days   Conversions  end-­‐to-­‐end   0.6% 1.2% 80% 2.0%
  • 9. SaaS Conversions – credit card required 10,000 visitors 2% 200 free trial signups 50% 100 converted to paying users 60% 60 paying users retained after 90 days Monthly churn 2.5%
  • 10. SaaS Conversions – no credit card required 10,000 visitors 10% 1,000 free trial signups 15% 150 converted to paying users 80% 120 paying users retained after 90 days Monthly churn 2.5%
  • 11. SaaS Conversions – Best in Class 10,000 visitors 10% 1,000 free trial signups 25% 250 converted to paying users 80% 200 paying users retained after 90 days Monthly churn 2.5%
  • 12. Conversions Comparisons Resul5ng  number  of  acquired  paid  users  a8er  first  90  days   Credit card Credit card Best in class required not required SaaS leaders 60 120 200
  • 13. What Do Best In Class Companies Do Differently? 1.  Large top-of-funnel –  Awesome content, inbound marketing –  Do not restrict top-of-funnel (don’t ask for credit card) 2. Focus on most active evaluators first –  Monitor the most active trial users (in any group of trial customers there are some that are naturally more inclined to buy from you – see next slide) –  Nurture other trial users to success 3. Pro-active approach to customer retention –  Listen for early warning signs of churn (like non-use) –  Pro-actively reach out to at-risk customers to offer help
  • 14. The Anatomy of a Free Trial True Evaluators Multiple users active during trial, logging in daily 20% Accidental Signups Potentials Activated trial 10% 70% Signed up but haven’t done but not very anything since active
  • 15. Learn More If you want to learn how to convert like the best: 1.  Identify trial users most likely to buy 2.  More rapidly onboard new users 3.  Identify and engage users at risk Contact Totango for a free consultation, http://customer-success.totango.com/contact-us.html. Start your free 30-day trial today, http://www.totango.com.
  • 16. Resources Learn more: •  Are you engaging new trials in their evaluation? http://blog.totango.com/2012/03/are-you-engaging-new-trials-in-their-evaluation/ •  How to boost sales with a free trial model http://www.slideshare.net/totango/how-to-boost-sales-with-a-free-trial-model Analysts on Totango: •  OVUM http://blog.totango.com/wp-content/uploads/2012/09/Ovum-Report-on-Totango-September-2012.pdf •  Paul Greenberg http://blog.totango.com/2012/08/crmidol-2012-totangos-review-their-future-will-be-very-very-bright/