SaaS Conversion Rate Best Practices

Not too long ago, I wrote a large article talking about SaaS conversion rates, and how they’re one of the bigger hurtles in SaaS, especially for the vaunted freemium model of sales and marketing. I talked to some level about some ways to motivate customers to convert, and it seems that people are pretty interested in discussing those motivators at a greater length.

While I’ve been known to groan at repeating myself in the past, when it comes to SaaS conversion, considering my fondness for the freemium model personally, this time, I’m quite happy to approach the topic once more, and talk about some best practices for this.

So, without further ado, let’s look at these motivators. Remember, sociology and psychology are the best tools in a business person’s arsenal when it comes to customer appeal, loyalty and calls to action for a purchase, which is what conversion is all about.

First, remember that your customer is an emotional being, and no matter how sensible, logical and enlightened they are, their emotions and personal experiences are still going to be the final evaluation their minds make before acting on anything. This includes purchasing a subscription to the paid version of your software.

So, the first thing you need to have in place is a base motive via direct benefit. What does the paid version do that the free one does not? This is tricky, because it’s most often going to be feature disparity at work here, and that’s a balancing act of epic proportions. If you omit a feature entirely, it can make the free version quite terrible, and that should not be the case. A free version that is brokenly awful will discourage purchase, due to that personal experience I mentioned a moment ago.

If you don’t have a defined enough disparity, though, they will see it as wasted money.

Following on this I the second issue, which is how foreboding a price can be. If overhead from the free version is driving up the price of the paid model incrementally, it’s not only going to cause wildly high churn rates, but it’s also going to discourage conversions severely.

To combat this, you need to find some way to offload this overhead. Many do so with ads, which in fact works great as another motivator. If you pepper the free version with ads, users will not enjoy these ads. It can provoke a conversion to the ad-free version, which is now, due to reduced overhead, a reasonable price they will not feel deeply cut by.

Finally, there is the incentive of benefits. When a customer converts, offer them some form of appreciation, which will act on them in two ways simultaneously. First, it will show them that you appreciate their purchase, and an appreciated customer is a very happy customer.

Second, it will give them a tangible motivator to convert and to remain loyal, which goes on to battle churn pretty effectively too. It doesn’t have to be elaborate, a simple discount or long-term locked in low rate works well enough.

So, SaaS conversion is always going to be a gamble, but these forms of motivation are both ethical and super effective in most cases.

Omri Erel
Omri is the Head of Demand Generation, as well as the Lead Author & Editor of the SaaSAddict Blog. Omri established the SaaSAddict blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to SaaS and cloud migration.
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