data analysis

The Most Heartbreaking Metric in SaaS

I have a question for you.

Imagine a SaaS company where…

* Their PPC impression share was 50%.

* Their click rate was 5%.

* 4.5% of visitors signed up for a free trial.

* 15% of trialists became paying customers.

So what’s their conversion rate?

Most SaaS founders or CMOs would say it’s 15% of 4.5% – i.e. 0.675%.

That’s the percentage of visitors who became customers.

That’s the most important number, right? The conversion from click to paid.

Well…

It’s a very important number, for sure. But, there might be a more important conversion rate – one that no-one in the SaaS world is looking at.

What is it?

Your real conversion rate?

It’s the conversion from search to paid.

So let’s look at that…

Using the example above, how many searches does it take for their PPC account to produce a paying customer?

The answer is 5,926.

That’s right, for every 5,926 people who search on their keywords, this company’s PPC account brings in one customer.

One friggin’ customer. 

Pretty shocking, right? But let’s walk through the numbers…

5,926 prospects – AKA “people who want to solve the problem your software solves” – search. 

Only 50% – 2,963 – see your ads.

Of those 2,963, only 148 – 5% – click on your ad.

Of those 148, 4.5% become trialists. That’s 6.66. (They’re the “trialists of the beast.”)

Of those 6.66, 15% become paying customers – i.e. one solitary person.

5,926 went into the funnel. Only one came out.

You have a 0.01687% conversion rate

That’s a 0.01687% conversion rate.

So, if you’re a SaaS founder, CMO or VC, what’s *your* conversion rate?

Steve Gibson

PS If you’d like me to do a full analysis of your PPC funnel – how it’s performing at each stage and how to improve the performance – get in touch.

You’ll discover that it doesn’t take much to get that number from 1-in-5,926 to 1-in-2,000. 

And, if you do that, you’ll almost triple your PPC sales.