Are there any good reference points about trial-to-paid conversion in SAAS world? What factors impact this ratio.
I am looking at streaming rich media for B2C.
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Dave McClure of 500 Startups has written his piece Startup Metics for Pirates (presentation here) which is basically a breakdown of the factors that impact converting potential website visitors into paying and staying customers. Ryan Carsson of Carsonified and and the Future of web apps conference has a good breakdown (in Google Docs) here. Startup CFO is explaining some aspect here. In the end actual conversions doesn't matter as much as churn (what percentage do you loose), because retaining customers is as valuable or more as gaining new. If you're talking about expectations, how much is a reasonable conversion, it's really hard to answer. In the end it comes down to how much a customer is worth. If your customers are worth a lot of money, then you're able to spend a lot acquiring them (through Google AdWords or traffic deals with other sites). If they're worth less you may spend less. In the end it comes down to what you can live with. With high worth customers, and cheaper traffic, you can live with a lower conversion. It's really up to your specific app and market. |
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According to the book, "Free by Chris Anderson," 1 in 20 is roughly what people should expect/shoot for. Of course, this over simplifies things a bit since there are a lot of factors, but it'll give you a starting point. (FYI - If you're considering a freemium model, I highly recommend picking this up) |
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