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2012 saas conversions benchmark

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Our experience working with over 100 SaaS companies and online businesses has granted us a unique insight into trial conversion trends. Did you know that the best in class SaaS companies have more 3 times greater website to paid visitor conversion than the average benchmark? In this report we answer the question: “what is the typical conversion in SaaS?”. We include average and best in class statistics on:
- Website to (free trial) signup conversion
- Free trial to paying user conversion
- Churn rates during the first 90 days of subscription
- Average monthly churn rates

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/

Published in: Technology, Economy & Finance
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  • One further question — the companies listed on slide 3 are all B2B SaaS companies. Therefore, it sounds like the data to follow should be relevant to B2B companies.

    The trial-to-paid rates listed on slide 8 are 50%, 15%, and 25%. But in the Quora post linked to below, the founder of Totango (Guy Nirpaz) says, regarding free trial-to-paid conversion rates:

    “For a B2B SaaS company with free trial, I assume the following ball park figures:

    3%-5% - average and means good business operations
    8% and above - excellent conversion rates
    below 3% - below average”

    That 3-5% average differs wildly from either the 50% or 15% trial-to-paid conversion rates reported as “typical” on slide 8 in this presentation. What accounts for this huge difference?

    http://www.quora.com/Business/What-is-a-typical-conversion-ratio-for-a-B2B-SaaS-business-from-free-to-paying-users
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2012 saas conversions benchmark

  1. 1. Website visitors2012 SaaS Website visitorsConversions 2% Free trial signupsBenchmark 50% Paying users 60% Active paying users Monthly churnBased on the engagement withabout 100 SaaS companies 2.5%
  2. 2. Convert and Retain like the best This report is answering the question:“what are typical conversion rates in the SaaS industry”
  3. 3. How we got this dataWe’ve helped SaaS companies like Zendesk, Clarizen andCloudbees and about 100 other online businesses likeStreeteasy increase trial conversion and user retention.From our engagement with these businesses, we’re in a uniqueposition to observe typical conversion rates in the SaaSindustry and we decided to share these insights with you. 2/10
  4. 4. Conversion MetricsPeople ask us: ‘What is typical conversion in SaaS’ and ‘What isbest in class conversion in SaaS companies; specifically:1.  Website to free trial conversion*2.  Free trial to paying plan conversion3.  Percentage of true evaluators during a trial4.  First 90-day churn5.  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. 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 cardas part of the free-trial signup process see verydifferent conversions than those that don’trequire a credit card.Therefore we will look at both models (creditcard, no credit card) separately.
  6. 6. ‘Best in class’ companies Conclusion 2 Best in class SaaS companies have significantly higher conversion rates.There is a group of SaaS companies whichsignificantly outperforms their peers. We willalso look at their conversion rates and what theydo differently to achieve those numbers.
  7. 7. 3 Conversion Models1. Credit card required2. No credit card required3. Best in classWhat is following is a direct comparison of the three modelsand an example for each scenario where we assume thatyou start with 10,000 website visitors and see how manypeople will end up as happy, paying users after 90 days. 2/10
  8. 8. Conversions Comparisons Credit card Credit card Best in class required not required SaaS leadersVisitor  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. 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 daysMonthly churn2.5%
  10. 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 daysMonthly churn2.5%
  11. 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 daysMonthly churn2.5%
  12. 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. 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. 14. The Anatomy of a Free TrialTrue EvaluatorsMultiple users activeduring trial, loggingin daily 20% Accidental SignupsPotentialsActivated trial 10% 70% Signed up but haven’t donebut not very anything sinceactive
  15. 15. Learn MoreIf you want to learn how to convert like the best:1.  Identify trial users most likely to buy2.  More rapidly onboard new users3.  Identify and engage users at riskContact 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. 16. ResourcesLearn 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-modelAnalysts 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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