Ten proven tips that will help you drastically improve conversion rate and get more people to pay more for your SaaS
This guest post was written by Gil Sadis, Co-Founder and CEO of Lecensario, and was originally posted in the Licensario blog
Conversion rate is a really important metric to track for a SaaS business (and generally every business). There are many conversion rates to track along the marketing funnel. From the moment a user clicked on the link and got to your website till the moment he became a paying user. What I want to emphasize in this post is that conversion is not just the act of converting a visiting user into a free/trial user and then into a paying user. The conversion continues (and potentially never ends): $10/mo user -> $50/mo user -> $100/mo user… You should always think about adding more value to your users and how you get them to pay you more for it.
Following are ten proven tips that will help you drastically improve conversion rate and get more people to pay more for your SaaS:
1. OFFER A USAGE BASED PLAN
Software pricing models have gone a long way from the days software was sold as a one time payment, perpetual license. Subscription has been the new cool kid in town for quite a while now. While subscription is a great model, a lot of large enterprises like Amazon and others, found out that usage based plans help increase conversion rates. A lot of users just don’t like to subscribe and offering one usage based plan, in addition to 2-3 subscription plans, can really boost the amount of times your users will take their credit cards out and pay.
Sometimes the CLTV (Customer Lifetime Value) might be lower for users that bought a usage based plan, though often we see that usage based plans lower churn. We see that usage based plans are a great way to convert a free/trial user to a paid plan. Once a user made the buying decision it will be much easier to up-sell and lock them into a subscription plan with a longer term commitment.
2. UP-SELL LIKE A PRO
Sometimes we’re using software that constantly tries to get us to pay more. Timing is a crucial part in up-selling. Let’s take for example a company that sells email marketing, BestEmailMarketingEverInc. And let’s say you bought the basic plan for $9/mo that provides 1K emails per month. The next plan is Pro, $49/mofor 10K emails per month. And now let’s say you’re a starting company and you send ~600 emails per month. Now BestEmailMarketingEverInc marketing team decides to send their basic users a promotion that offers 20% off of the Pro plan. Are you interested? Well, of course you’re not. Why on earth will you upgrade. Sending a promotion without segmenting and knowing your users’ usage will lead to poor results. BestEmailMarketingEverInc’s marketing team started to understand that and now they are sending emails based on users’ usage. Now imagine you grew (congrats!) and now, for 3 consecutive months you reached your monthly email cap and only now do you get a promotion to upgrade. It makes sense that you would consider upgrading at this point. LinkedIn perfected this, you can too.
Now let’s help BestEmailMarketingEverInc’s marketing team to further optimize their up-sell initiatives. Another crucial aspect of up-selling is the offer itself. Let’s get back to the example and to your growing. Now imagine that instead of getting 20% off of the Pro plan, BestEmailMarketingEverInc offers you a different package than what’s on their pricing page. A package tailored to your size, $15/mo for 1500 emails. Or a package of 1000 emails extra for just $19.99.
Be creative with your up-selling offers and you’ll see great results. Try to target users based on their usage and tailor specific packages just for them. Don’t just offer coupons or discounts. Do tests with different packages and different pricing models and you will expand your revenues by an order of magnitude.
3. GO BEYOND THE CONVENTIONAL 3 TIERS OF SUBSCRIPTION PLANS
One of the things every SaaS business needs to do in order to grow is to expand revenues from the existing paying user base. Doing this by providing only 3 tiers of subscription plans will not lead to a substantial expansion. One of the ways to get there is to up/cross-sell which we covered in the previous tip.
Another way is to build your pricing page like many analytic tools do (i.e. Keen.IO). Find one (or more) feature that is your core feature and cap its usage.
Always offer your users a way to pay more for more value. Our customers have 40 to 50 pricing plans. In various pricing models? No, their pricing pages are not complex. They just send different plans and packages as promotions.
Always think about ways to improve your pricing by offering more value for more money.
4. USE COUPONS
Though we believe the methods above are much stronger for improving conversion, coupons lag only a bit behind. People like discounts only slightly less than they like free things, so use them generously. And then up-sell. Yes, we’ll always come back to that .
5. UNDERSTAND HOW MUCH YOUR USERS ARE WILLING TO PAY
Pricing is a crucial aspect of conversion. Price too high and your users won’t buy. Price too low and your users will question the quality of your product. Checking your competitors’ pricing is one way to understand how much your users are willing to pay. That is if you’re entering a space where there are already a few players. But looking at your competitors pricing pages is not enough (especially if you’re in a space without many players). When it comes to pricing a lot of companies just roll the dice. Sometimes it’s inevitable. But we believe (and we see) that there are ways to understand (to some extent) how your users value your software. We’ll cover these in a separate post. BTW, usage based pricing plans shed a lot of light about value and pricing so that’s another good reason to use them.
6. UNDERSTAND WHAT YOUR USERS ARE WILLING TO PAY FOR
Part of your pricing strategy is understanding how to differentiate plans and how the value (or features as we like to call it in Licensario) is divided among them. One of the great ways to achieve this knowledge is by A/B testing your packaging.
7. USE LIFECYCLE EMAILS
The right email at the right time can do magic for your SaaS business. An email from a founder 30 minutes after a user signed up can make the difference between a frustrated or a happy user. An email to users who haven’t signed up for anything in a while, with an offer for help/discount/chat with one of the founders etc. can massively reduce churn. And of course, use emails to up-sell.
8. EXTEND THE TRIAL PERIOD FOR HEAVY TRIAL USERS THAT HAVEN’T MADE A PURCHASING DECISION YET
Sometimes users just need more time. And you should always offer more time. Especially to users that used your SaaS heavily during the trial period. They will appreciate it and you’ll convert many of these users. Believe me.
9. TALK TO YOUR USERS
There are many reasons why you should talk to your users and one of them is improving conversion. Ask users that didn’t convert why they didn’t buy. Ask paying users why aren’t they upgrading. Do it today. Understand where users are stuck in the funnel, open up bottlenecks, optimize.
10. BUILD A GREAT PRODUCT
Even if you’re executing well on all the previous nine tips, if you don’t have a great product, that solves a real problem, your conversion rate will be closer to zero. So, use your own product and make sure it’s usable and it solves the problem it’s intended to solve.
I hope I was able to get the message across that conversion is a never ending process that needs your continuous attention. Thanks for reading and I would love to hear your thoughts in the comments.
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