How To Calculate Conversion Rate

How to Calculate Conversion Rate

Conversion rates are the number of conversions divided by the total number of people who could have possibly converted.

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Where Do Conversions Happen

A "Conversion" might have a different meaning for different types of businesses, usually, it measures the percentage of overall visitors that are taking action towards a specific outcome.

What To Measure

The basic metrics you need to understand and look to improve from a conversion rate perspective for a Saas company are:

1. Website Visitor To Freemium, Trial Conversion Rate
2. Freemium, Trial To Activation Stage Conversion Rate
3. Freemium, Trial To Paying Customer Conversion Rate

Where You Want To Be

So now that you have your conversion rate, you're probably asking, is this rate good or bad? Here is where you should be shooting 7%, 36% and 27%.

Website Visitor To Freemium, Trial Conversion Rate

This SaaS conversion rate is the percentage of people who visit your website and either sign up for your freemium version, trial period, or request a demo depending on your sales strategy.

For SaaS organizations, a good conversion rate is 7%.

Freemium, Trial To Activation Stage Conversion Rate

It's one of the things that annoys me the most, but you are probably going to see a lot of people sign up for your freemium, trial period, or demo and then honestly never log in or show up for the demo.

The conversion rate here varies so much, especially with the different models, the only way to know if you're doing well is by capturing this data now and then a quarter from now check again and see if you are doing better or worse.

You can increase this conversion rate by continuing to invite the user to your platform and sending out emails that continue to share the value they are missing out on.

Think of it like social media notifications, they get you every time.

Freemium, Trial To Paying Customer Conversion Rate

This conversion rate is the Golden Ticket and determines if your platform is a success or a failure.

This conversion rate calculates those who signed up for your freemium, trial, or requested a demo and became paying customers.

Because these models lean towards different marketing and sales strategies, we really need to break these apart to understand if your strategy is working or not.

Freemium To Customer

In the case of offering a freemium platform and converting that user into paying customers (HubSpot uses this model), your should be shooting for a 1-10% conversion rate.

Trial Period To Customer

Converting free trials (SEMRush uses this model) into paying customers depends on the length and type of trial you are offering.

If you really think about it, your trial prospects should almost get the same amount of attention as a customer with the same customer onboarding where you try to get:

• Them on your platform as quickly as possible
• Get quick wins, and see the value of your platform
• Make them feel like they are going to miss out if they don't buy

There are two trial strategies: opt-out and opt-in.

Opt-Out Free Trials

With an opt-out trial, you ask for the Prospect's credit card information when they sign up. Once the trial is over, they automatically get converted into a paying customer if they don't opt-out.

Klipfolio reports an average conversion rate of 60% for opt-out trials.

Opt-In Free Trials

Opt-in free trials will get you more signups because you don't require the Prospect to enter their credit card information, but, at the end of the trial period, the Prospect will lose all access unless they decide to become a paying customer.

You'll need to train your sales executives to reach out to these Prospects and convert them or extend the trial as they come to an end

Useproof reports an industry benchmark of 25% for opt-in trials.

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