5 Conversion Rate Optimization Strategies for SaaS Products!

For the conversion rate of SaaS products, every one percent increase is a significant conversion rate optimization.

Generally speaking, the average conversion rate of SaaS is between 3-5%, and a higher conversion rate is generally greater than 8%. However, different SaaS businesses are different, so it is not wise to focus entirely on industry conversion rate optimization (CRO).

What deserves our attention are the incremental steps (macro conversions) and milestones (micro conversions) that help customers achieve their stated goals in a SaaS product.

For an e-commerce site, adding a product to a cart is a micro conversion, while a purchase is a macro conversion; for a B2B SaaS product, a micro conversion could be a webinar registration, while requesting a quote or demo is a macro conversion.

However, no matter what your customer lifecycle looks like or how complex your success metrics are, the ultimate goal should be to increase revenue and gain growth.

While CRO strategies can be used across industries, the effectiveness of SaaS conversion optimization will vary greatly depending on the model, product, and customer lifecycle. Some products are inexpensive and easy to use, while others are more complex and require sales representatives or onboarding to acquire customers.

In this article, you'll learn why SaaS conversion optimization is different, dynamic, and never-ending. You'll also learn five powerful CRO strategies that sites like Twitter, CrazyEgg, Dropbox, Airbnb, and more have implemented.

The original text was published by Isaac Ejeh on the Product Marketing Alliance international site and translated and shared by the PMA China team.

1. What is CRO (Conversion Rate Optimization)?

Conversion rate optimization is the process of converting more visitors into leads and paying customers by using a variety of tools and data-driven strategies.

It’s about understanding what users want from your website, testing hypotheses, tracking how they engage with each component, and analyzing user behavior at different stages along the conversion funnel.

A good CRO strategy will help you effectively monitor and optimize swaps, achieve product stickiness, and significantly increase conversion rates month-over-month and even year-over-year.

However, CRO doesn’t mean building some tests to satisfy your existing user-related defect hypotheses; rather, it’s a data-driven approach to discovering more about your customers.

Additionally, no one knows everything there is to know about their target audience or customers. If you want to learn more, you need to track user behavior and analyze relevant data to help improve the overall customer experience of your SaaS product.

But SaaS conversion optimization is different. How?

Although conversion rate optimization is widely associated with e-commerce, it’s also a key strategy for achieving growth in SaaS.

E-commerce focuses primarily on transactional relationships with buyers, while the SaaS model is built on lasting interactions and relationships with users.

Ideally, the customer journey for a SaaS product should be never-ending and constantly evolving. Conversion optimization in SaaS involves a customer-centric approach that tracks users from the time they first visit your website (awareness) to the time they become promoters of your product (advocacy).

Oftentimes, the information that improves the customer experience and soars conversion rates lies somewhere along your buyer/customer journey. The data gained from users’ interactions with your product can be used to improve product copy, messaging, branding, features, and overall user experience.

CRO in SaaS is different because the customer lifecycle consists of unique exploration, customer onboarding, and retention phases.

The most popular aspect of SaaS CRO is converting “free trial” users to paying customers, however, a comprehensive CRO strategy should focus on converting prospects to the next stage in the SaaS customer lifecycle.

Five conversion rate optimization strategies for SaaS companies

1. Optimize the user interface (UI) and user experience (UX)

User interface is very important, but it is only one part of what contributes to the user experience. No matter how visually appealing your website is, if users can’t use your navigation easily or feel confused, the overall user experience will be poor.

According to Google, users find complex website pages less appealing than simple ones. However, user experience is a subjective feeling of using a product.

Therefore, it is influenced by personal preferences, past experiences, etc. It’s a safe bet that when a visitor first arrives at your homepage, they know little or nothing about your product. So your design and messaging should communicate your value proposition as clearly as possible.

Closet Works saw a 0.37% increase in click-through rate after redesigning their website. Closet Works optimized its blog for readability and design, increasing pageviews to 13,359 (up 490%) and email subscribers to 626 (up 404%).

However, if you want to improve your SaaS homepage or pricing page or even all elements of your website, you must conduct both qualitative and quantitative research on it. Because this will help you understand the problems your users face and what they want.

After identifying their problems, your design and content should focus on solving the user's problem rather than further complicating the page. Keeping it simple is a good habit.

Web performance is another factor that affects user experience, and according to another Google experiment, users will remember their experience on your website. During the first three weeks of the experiment, users using the 400ms delay performed 0.44% fewer searches and 0.76% fewer searches during the second three weeks.

The effects of a slow network are persistent and increase over time. Microsoft found that a two-second slowdown in Bing searches resulted in a 4.3% drop in revenue per user.

Even if a new feature appears to be helpful to users, it should not be considered to have a large impact on performance. Before implementing the feature, it is best to ensure that the benefits of the feature outweigh the possible performance loss.

2. Optimize the user onboarding/guidance process

Onboarding is the process of helping users discover new value in your product. This process may begin before the user registers and will continue throughout the user's entire life cycle.

New users may not be able to understand a product without direction, and in the same way, existing paying users will not be able to understand a product’s new features or updated dashboards if they are not given guidance.

While onboarding is a key factor in CRO, retention is the true user-centric onboarding metric. User onboarding is not just about building users and showing them your SaaS product. The interactions that occur during the onboarding process influence the user's future decisions about the product.

If you want to retain users successfully, your first goal should be to optimize your onboarding flow and help them reach the “activation point” without much effort (the activation point is the “aha” moment when the user first experiences your product as valuable).

Josh Elman, who previously led product development and relevance at Twitter, said Twitter’s “aha” moment was “once a new user follows 30 people, they’re more or less always active.”

It's no surprise that if you look at Twitter's user onboarding process, you'll see new users importing contact information and following recommended accounts based on interests.

The friction that certain required steps may bring will also affect the onboarding experience of new users. By reducing the number of required fields in the registration form, you can increase conversion rates and help users reach the activation point faster. After the user registers, some necessary user information can be collected at different moments in the customer experience.

Snappa increased sign-up rates and monthly recurring revenue (MRR) by 20% by converting users when activating their email addresses. DashThis eliminates friction with users and converts more than 50% of “free trial” users into paying customers.

They simplified the user registration process, including pop-up prompts, tutorial guides, and increased customer satisfaction by 140%.

Designing a user-centric signup funnel involves a lot of research, innovation, experimentation, and optimization. You must be able to clearly deliver your product’s value proposition/service, help users quickly perceive its value, and track their behavior.

3. Personalize your customer cycle

Personalizing the customer lifecycle doesn’t mean mentioning your customers’ names in your sign-up emails. Rather, it involves providing customers with the right information and experiences based on where they are in their journey with your product.

It’s no surprise that 88% of marketers see real results after personalizing their customer lifecycle.

According to Intercom, 40-60% of users who sign up for a free trial use a SaaS application only once and never again. However, personalization helps provide a more engaging experience and can build stickiness around a SaaS product.

Lifecycle marketing can use personalization to attract and convert users into paying customers. We recommend that you track how your customers use your app and segment them based on individual needs and the stages of their customer journey.

This will help you solve your users’ problems better and faster, provide them with a customized experience, and demonstrate that you truly care about their successful retention.

By segmenting your customers and understanding their needs and interests, you can provide different and relevant content to drive them to complete qualitative conversions within your SaaS application.

If done successfully, personalizing the customer lifecycle will most likely boost sales and even retain customers. Generally speaking, improving user retention by 5% can lead to at least a 25% increase in revenue.

4. Educate and retain customers with relevant content

As you’ve seen before, not all new users will be able to understand your SaaS product, which is why you need to onboard them with relevant and high-quality content.

To provide a better experience, you can use onboarding videos, tutorials, or related articles to help users reach the activation point faster. Getting started videos are amazingly effective for SaaS applications because some SaaS products can seem very technical and difficult to understand.

CrazyEgg increased conversions by 64% by including an explainer video that explained the product features.

Some SaaS companies are also using chatbots to help users fully understand their applications and increase customer loyalty. Chatbots are revolutionizing conversation marketing trends as more than half of consumers prefer talking to a bot about their problems and pain points rather than communicating with a human.

By setting up the chatbot Helloumi (now known as Landbot.ai) on their landing page, they were able to achieve a 9.6% visitor-to-trial conversion rate.

Chatbots that can provide navigational assistance can engage users on a personal level without incurring excessive costs.

5. Gamify your referral marketing program

Referral marketing can generate 3-5 times or even higher conversion rates than other marketing channels. According to Hubspot, 81% of customers trust recommendations from family and friends over suggestions from companies.

Referral programs can help you reduce acquisition costs while increasing retention and customer lifetime value (LTV). Additionally, according to the Wharton School of Business, the LTV of referred users is 16% higher than that of non-referred customers.

When you acquire a customer through referrals, the cost incurred is only given as an incentive to the referring customer, and Dropbox was able to reduce their ad acquisition costs from $288-388 per customer to $0.

The refer-a-friend feature they had increased signups by 60% and helped them acquire 4 million new users in 15 months.

In one month, users sent more than 2.8 million direct referral invitations, and 35% of daily new registrations came from the referral program. The same was true for Airbnb, which increased bookings by 300% through the referral program.

Gamifying your referral program can bring you higher conversion rates and improve customer happiness and loyalty. In fact, engaging customers through gamification can increase LTV by 15%-40%.

Verafin exceeded their referral program goals by 193% through gamification. Their strategy is that at the end of each week, the member with the most referrals will receive 1,000 points. The top 3 members with the highest scores can choose a prize at the end of the month.

If you set up your referral program like a game, customers will be more inclined to share and be competitive, and will continue to enjoy your SaaS application. Because almost everyone likes to get a decent reward while having fun.

IV. Conclusion

Let’s be honest: it’s hard to grow a SaaS product without optimizing for conversions. Of course, not all efforts in CRO equate to growth.

To gain a competitive advantage, you must be able to provide value to your customers and engage with them on a personal level. By tracking their behavior, you can uncover valuable insights, serve consumers with habitual experiences, and become an integral part of their lives.

If you are also engaged in marketing/product marketing content in the SaaS industry, do you have any comments and opinions to share with us?

By Isaac Ejeh

Source: Isaac Ejeh