Conversions mean nothing: Focus on this metric instead

As your SaaS business starts to scale, you’ll see an increase in the number of conversions you’re getting. Which might seem great but what difference is it making to your MRR?

While keeping an eye on your trial sign-ups or demos is important, we have found that there’s a much more important metric that SaaS businesses should be focusing on.

Read on to find out what it is and how you can gear your marketing strategy to generate a maximum ROI.

What does a conversion even mean?

No matter what industry your SaaS business is in, you’ll always have a specific action that you’ll consider a ‘conversion. It will most likely be a sign-up but could also be an ebook download, email response, or enquiry. When you have that key event, you’ll optimise your digital marketing strategy to revolve around that event, pushing your CPC campaigns, content marketing, and email marketing to increase those conversions.

But what many SaaS businesses forget or ignore, is that during the sales funnel for SaaS is that there are two main conversions. One is the event that gets a user onto the platform and the second, and most important, is getting that user to pay!

Common marketing challenges of a SaaS startup

As SaaS companies start to scale, there’s a couple of common challenges that start to rise. These challenges include:

  • Seeing growth in the number of trial sign-ups per month but the amount of new paying clients stays the same.
  • In the earlier years, the SaaS business is seeing a great conversion to paying rate but as more sign-ups happen, the trial to paying conversion rate seems to get smaller
  • Tracking where a sign-up came from is easy but attributing actual revenue is an impossible task.

The problem with focusing on conversions

A trial, ebook download, or enquiry is only a stepping stone to the end goal. Yes, getting users into the funnel and onto the platform is critical to the life of a SaaS business but you need to be optimising for those that are most likely to reach the end.

Many SaaS businesses get caught up in the wrong metrics, especially when it comes to digital marketing.

Many SaaS businesses get caught up in the wrong metrics, especially when it comes to digital marketing.

Take the trial sign-up for example. Let’s say that you’ve been consistently getting 100 trial sign-ups per month and while you’re happy with this number, you want to get more in the hopes that MRR will increase. So, you decide to put more money into Google Ads and at the end of the month, you increase your trial sign-ups to 150! On the surface, this looks amazing but then you realise that your monthly MRR hasn’t increased. So, you optimise and optimise for a couple of months with the same outcome. More trial sign-ups, no increase in MRR.

This is a common problem and one that isn’t easy to work out. You see, in this scenario, what if the revenue was coming from your LinkedIn ads but you assume it’s Google Ads because that’s where the most sign-ups come from.

The same scenario goes for ebook downloads, enquires and all other measurable conversions. So, the increase in conversions is great that doesn’t mean it’s going to lift your bottom line.

What you should be focusing on instead

Instead of getting caught up in the race to increase conversions. Businesses need to optimise their strategies to revolve around revenue.

Unfortunately, this isn’t easy. Visibility over conversions can be accessed from any attribution platform, Google Analytics in particular but going that one step further into attributing revenue SaaS businesses lose that visibility and start to play a guessing game.

This is where Hunch Metrics comes in.

How Hunch Metrics can decloak your revenue

Hunch Metrics is a new attribution platform that enables SaaS businesses to get a clear path between a user’s first-touch on their website to revenue. It allows them to see exactly where their revenue is coming from right down to the exact source, whether that’s organic or paid.

Clear visualisation of revenue sources

As we mentioned, SaaS businesses have trouble attributing revenue. With Hunch Metrics, you can see all of your website traffic sources and see the revenue attributed to those traffic sources. This is done by deep tracking which enables us to use anonymous IDs to identify users who converted to paying.

Decrease marketing spend but increase results

It sounds strange hearing that Hunch Metrics can help decrease your marketing spend but increase results but that’s exactly what it does. It enables you to see exactly which sources are resulting in revenue and which sources aren’t. So you can see where to increase your spend to improve revenue but also see which channels you’re wasting money on or need to optimise.

Originally published at on October 24, 2020.




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