Conversion Rate Optimization (CRO) is important for almost any company – accountants, restaurants, lawyers, etc. It’s even more important, though, for SAAS companies.

This is due to the nature of relying on recurring revenue being generated by new customers. While upselling and cross-selling can be a part of the business model, the real cash is in constantly acquiring new customers. And not just that but acquiring them for the lowest cost possible. There is a reason you don’t get a sales guy going door-to-door selling the next big ERP. It is just too expensive.

This increases the importance of having a website that (when good traffic is sent to it) converts. In other words: conversion rate optimization matters.

SAAS companies don’t need to just grow, they need to grow significantly year-over-year. If a health insurance company grew 20% year-over-year, investors and owners would be happy. According to a study by McKinsey, a SAAS company growing at that rate would have a 92% chance of ceasing to exist within a few years.

“Even if a software company is growing at 60 percent annually, its chances of becoming a multibillion-dollar giant are no better than a coin flip.”

~ McKinsey

This rapid growth trumps even margin:

*https://www.mckinsey.com/industries/high-tech/our-insights/grow-fast-or-die-slow

Clearly, if such growth is necessary for survival and the best way to achieve this growth is by creating a lead generating machine, then your SAAS company can’t afford not to do conversion rate optimization – and do it well. The question is, how do you start?

Know What You Are Working Towards

The first step in conversion optimization is to understand what the goal is and what you will be optimizing towards. And to do that, it is necessary to know what pricing strategy you are going to use. Are you using the Freemium model? Pay as You Use? Limited Time Free Trials? The pricing model you choose will then drip down into the goals you have for users that land on your site. Maybe that is a 30-day free trial, a demo, or limited use of the software.

“Doing conversion optimization for your SAAS company before clearly defining your goal is like being handed a black box and being asked to ‘fix it’.”

~ Jon Anderson

Knowing the conversion points is not enough, however. Along the same lines, it is necessary to add some metrics to the goal. The best way to do this is by working up the funnel. Start with the net number of new customers needed each month to hit the overarching goals for the SAAS company overall. To get to X new customers you will need X leads, coming from X visitors to the site requiring a X% conversion rate to get there. The efforts and strategies required to get from a 2%-2.2% conversion rate are much different than what is required to get from 1.1% – 2.5%.

“The most important single thing is to focus obsessively on the customer. Our goal is to be earth’s most customer-centric company.”

~ Jeff Bezos

Funnel Transparency

Sometimes, knowing where you want to go is the easy part. The part that often requires a bit more technical expertise (and likely additional software) is getting those numbers in the first place. After all, how can you tell when you reach your destination without first knowing where you are?

The more data you have, the more information you have to not only track your progress towards goals, but also (and more importantly) the more insight you have into where the snags in the funnel are. Are users landing on the demo page but not filling out the form? Are they scrolling right past significant CTAs? Below are a few different types of tracking that can be utilized as a part of your campaign. The depth and detail of information required will depend on your goals.

Site Analytics: The most basic analytics you will need are things like time spent on different pages, bounce rates, and other visitor behavior metrics. If you are an advanced user, you can even set up funnel analytics and goal tracking in these tools.

Tools: Google Analytics, Clicky.com, Kiss Metrics

Heatmapping: With many basic analytics tools you can’t see much detailed information about what users are actually doing on the page. Heatmapping allows you to see where users are clicking, how far down the page they scroll, etc.

Tools: HotJar, Lucky Orange, Crazy Egg

On-Page Surveys: If you ask a panel of website experts what they think you should change about your site, you will get a list a mile long. While that is very useful information, why not just ask users directly? Many tools allow direct customer feedback that gives you direct access to the people on your site.

Tools: Qualaroo, Webengage, Survicate

Session Replays: What is better than asking users what they think about your CRO optimization? Seeing what they actually do. This can get a bit big brother-y, so pay close attention to the regulations around this, but it can be a great way to get honest data.

Tools: Clicktale, HotJar

This is an incomplete list, but it should get you on the right track towards having the data you need to make informed decisions.

Note: Before you start your conversion rate optimization campaign, make sure you have benchmarks and know your current site performance and user behavior. Without that, how will you tell if optimization techniques actually led to improvements?

A/B Testing

Whew! Finally, you have everything set up to track your data and a good understanding of your customer journey. Now, it is time to really get into the meat of what conversion optimization for SAAS companies looks like. In its simplest form, CRO is simply a process of identifying problems in your conversion funnel, hypothesizing solutions to the problem, testing those solutions, and measuring the results. Then…. repeat.

1. Identify Problems

The first step is to figure out where in the funnel users are getting stuck. Are they filling out half the form? Are they not getting to the conversion page in the first place? Does one of your primary pages have a high bounce rate?

First, look at your funnel you set up (based on the goals you set up previously). Are there certain stages within it where your conversion rates drop off? Look at the pages on your site that are built to move users through that stage and work your way through the different analytic systems you have set up. Pull all the data you have on them, and highlight the behavior causing the problem (e.g. not clicking a CTA, leaving the page entirely, scrolling up/down looking for missing info, etc)

2. Hypothesize Solutions

Now that you have established a problem, identified where the problem is happening, and looked through the data around the behavior, start to hypothesize solutions. This will most often fall into two categories: design and content. Things like changing the color of buttons to make them pop more, reworking the value proposition or offering content to make it more palatable, changing the order of content to more cleanly work through the buying process, etc. The options are endless.

Keep in mind, then making changes, don’t just change everything about the page and hope one of your changes improves results. It may improve results the first time, but why? If you don’t know why then (1) you can’t learn a lesson and implement it on other parts of your site and (2) you don’t have a clear path forward for the next change. For example, start with changing the content in a CTA button then shift over to button design changes once you find the best text variation.

Conversion optimizations success lies in many small iterations proven to take you one step forward. It is a marathon, not a sprint.

3. Test Hypothesis

Once you come up with the ideas for how you will solve the problem in the funnel, implement the change. This is where you will start using different technologies to carry out the changes.

4. Measure the Results

Give the test substantial time to show results, then pull the data to figure out what worked best. Did one of your tests lead to an increased conversion rate or at least behavior indicating positive progress towards the bottom of the funnel? Great! If not, great! That just means you have another piece of information to then base future decisions off of. Collect (and track!) all this data and implement the winner into your core.

5. Repeat

Unfortunately, conversion rate optimization for SAAS companies is not a one-and-done project. It is an ongoing process of being neck-deep in data, watching user behavior, and making incremental improvements leading to a growth in customers using your software.

Identify, hypothesize, implement, measure, repeat.

Following the previously mentioned steps should give you a good overall understanding of the process behind implementing conversion rate optimization for your SAAS company. 1,500 words can’t serve as thorough training in such a complicated and important subject, but it will at the least get you started in the right direction.

That being said – it is not easy. You need a team with a solid track record of deep expertise in subjects like web development, design, messaging, UI/UX, and more. Do you have that many nerds at your disposal?