B2B SaaS Funnel Conversion Benchmarks
Benchmarking your conversion rates underscores any lack in your sales funnel. Can it also help your team max out their conversion potential?
Keep your friends close and enemies closer. The competition in the B2B world is extensive. With the introduction of AI and automation tools, businesses are taking shorter, reliable, and efficient routes to improve their operations.
But marketing and sales are two areas of business that you cannot rush, or take a shortcut for. These processes are highly detailed and require the utmost attention. We are doing this differently, but some traditional methods still exercise precedence.
The race is to seem unique to the customers amidst all the businesses that offer the same services. You can master the game. A healthy understanding of what the competitor is doing differently helps improve business strategy and highlight the pain points to revamp your marketing and sales efforts.
The sales funnel tracks how a customer is guided through a purchasing process.
A funnel is a tube-like object with a wide top (like a cone) and a thin-elongated bottom that guides liquid substances into containers with a narrow opening.
This is technically what a sales funnel also entails.
Now imagine the wide top of a funnel with several potential prospects at the beginning of the funnel. This is where you create awareness for your business and try to poach as many leads as possible.
Sounds simple, right? However, a single step (in theory) comprises several more curated processes and measures.
At the entry point or top of the funnel (TOFU), you create awareness for your business through social media, blog posts, newsletters, and paid ads. Not only does your business require traffic and engagement, but it requires one that is defined and condensed. It is impossible to cater to everyone, so the primary objective is recognizing a niche market.
With the help of outreach, prospects become aware of your business, while the potential buyers understand why they might need you. You have to exude an appeal to attract the targeted audience towards your brand – we can offer solutions to fix your problems.
As these prospects move forward to the middle of the funnel (MOFU), the funnel narrows down. In every stage, qualifying leads are filtered out (Remember that a funnel is a significant tool used for filtration) and taught how your offers can provide them with a solution. The focus remains on qualifying leads where you investigate their intent. You track their course based on whether they are interested in your SaaS solutions or have the resources and authority to make the final sales decisions. A qualified lead may significantly help boost your win rates.
This is what lead nurturing is about.
- The leads recognize their problems and become aware. The prospect identifies their problems and the different variables associated with them.
- They notice and gain interest in your business. Your offer could provide them with solutions for a problem-less future.
- They do their research to make the final decision. After becoming aware of your business and the possible solutions, they begin to learn more about you to find out whether they are the right fit for you and whether you are the right fit for them.
More modern consumers are diligent in their research. They search through, study, and analyze different variables across the internet before taking the next step in the funnel.
So, your lead nurturing process has to be interactive, creative, and engaging to hook the prospects from the beginning to the end of the sales funnel.
Keep them engaged and hold their attention – the most significant part of the funnel where the sales process begins.
Providing more detailed information regarding your offers – pricing structures, guarantees, and proofs (reviews) increases the possibility of conversion. This eliminates additional leads who are not ready to commit i.e., purchase your products or services.
Besides, it should give you a rather concrete idea regarding which prospects are guided until the last stage of the funnel – a close – representing the final stage or bottom of the funnel (BOFU). When the prospect finally leaves the funnel, you have lost or won the sale, turning the qualifying lead into a successful customer/buyer.
This is what the last stage in the funnel entails. Generate sales. Offer compelling but competitive pricing, push your leads to the checkout pages, customize them, and boost conversion rates. But is it as easy as it sounds? No, it’s easier said than done.
In the B2B SaaS landscape, you can adopt benchmarking to evaluate how your product is fairing against your competitors using specific metrics or KPIs.
Sales funnel metrics are the steering wheel of your marketing bus here. These metrics track and highlight your success or areas of improvement, monitor, quantify, and improve the overall sales journey.
Do you want to know if the budget and resources spent on your marketing efforts benefit your business? KPIs will help you here. Funnel metrics can be considered as KPIs that track the efficiency of sales and marketing teams in closing a lead.
Assume that these KPIs are your exam results. Don’t these results show how much effort you put into your preparation and how efficient those tactics were? The same applies to the funnel metrics. They help analyze and outline the efficiency of your marketing tactics.
This is why conversion rate is a significant sales funnel metric. The world of B2B holds the measurement of your marketing or sales effort to the highest potential value. Your conversion rate measures how many prospects move through each stage in the funnel, and lastly, how they convert from potential leads into customers.
Tracking and optimizing SaaS conversion rates throughout the sales funnel can be optimal to drive product growth. The ultimate objective is to improve efficiency, maximize results, and enhance the entire customer experience, from lead nurturing to retention.
If the offers do not resonate with you, the funnel could end on a road with a dead-end for the prospects. This is possible in every part of the sales funnel. While the closer a lead is to the bottom, it increases the likeliness that it could lead to a close (won/loss), but they could defer too. The possibility is never nil.
What does it all narrow down to? You are guiding your business’ website visitors to become paying customers.
The space of B2B SaaS is competitive and complex.
More often than not, nurturing leads does not result in a sale or won. You wish to understand why and also record why your marketing efforts are not reaping any fruits.
What do you measure them against? B2B SaaS benchmarks.
B2B SaaS funnel conversion benchmarks are not the law, but guidelines differ from business to business.
These depend on factors such as the complexity of your sales process and the targeted market size. These allow you to regularly measure the success rate of your efforts and improve your sales process.
Setting specific industry standards – B2B SaaS marketing benchmarks – offers your business an idea regarding how your sales funnel performs compared to others within the same industrial domain. It foregrounds an in-depth insight into the areas in need of improvement. By understanding where you stand, you can set targeted goals that meet your marketing objectives but are realistic and also optimize your sales process.
However, in case of any drawbacks, these benchmarks pinpoint how your sales and marketing teams can relocate the resources and reiterate their approach to generating maximum potential leads. It begins at the top of the funnel, no matter how insignificant that stage might seem. Unsatisfactory strategies or too many funnel stages also result in low conversion rates.
But how do we dictate what ‘good’ or ‘low’ or ‘successful’ conversion rates are?
There are six crucial stages in the B2B SaaS funnel:
- Website Visitors
- Lead: A lead is a website visitor who may have shown interest in your offer and submitted their contact information.
If a prospect has signed up for a demo, continues visiting your websites, and has agreed to communicate with an executive, they are a qualified lead. Actions undertaken by the sales and marketing teams vary depending on the services or products offered.
- MQL: MQL is a Marketing Qualified Lead who is the lead interested in your services but may or may not have purchasing intent.
- SQL: SQL is a Sales Qualified Lead interested in your services and has purchase intent.
- Opportunity: An opportunity is a lead on the way to closing the offer and has a contract secured in hand.
In the SaaS landscape, this stage is also known as PQL or Product Qualified Lead, where the prospect has signed up for a trial or demo period of your services and attained value.
- Closed: This could end in closing the offer however, it is not always a win. The sales team could also end up losing the deal.
The last few stages differ broadly across industries. For the B2B SaaS industry, qualified leads convert to product-qualified leads and then lastly to paying users.
Now, that we have a straightforward understanding of the B2B SaaS funnel stages, we explore B2B SaaS funnel conversion benchmarks.
What Are the B2B SaaS Funnel Conversion Benchmarks?
As mentioned previously, your business must track their conversion rates i.e., to quantify their marketing efforts and if they are harvesting any results (Your CMO wants numbers!). The higher numbers that marketing brings in, the more credible their efforts become for the business.
Overall, the steps or stages in the sales funnel are highly dependent on industry type and size, marketing and sales strategy, trial type, and the engagement model.
We understand how crucial conversion rates and numbers are to establish our profitability, but how do we know these numbers are good?
This is where B2B SaaS benchmarks enter the chat.
These benchmarks make it crucial to tap into the performance and efficiency of the conversion stages in the SaaS funnel. Here, we dive into the significant benchmarks that drive successful conversion rates:
Website visitors to Lead Conversion Rate Benchmark
The metrics measure how many website visitors convert into qualified leads in a specific period. For this stage of the funnel, which is its entry point, the conversion rate benchmark for SaaS industries falls at a rough average of 7%, according to Capterra. This is considered the free trial conversion rate – the percentage of prospects who visit the business website and sign up for a free trial.
This depends on the company size as well as the model. For example, free trial models have a conversion rate of 25% whereas for freemium models, it is approximately between 1 to 10%.
B2B SaaS conversion rates differ along with the channels. The SaaS conversion rate depends on the competitor’s sales channels and engagement model.
Free Trial to PQL Conversion Rate Benchmark
This funnel stage illustrates the percentage of previous users who have interacted and engaged with the free trial services and also draws value from the same. In a more general sense, it also signifies the MQL to SQL conversion rate benchmark.
Diverse businesses use freemium models to collect the lead’s data and enable the sales team to chase them down. The average free trial conversion rate benchmark is 1-10% as mentioned above.
Under freemium, we can find a classification of conversion rate benchmarks – those who used credit cards and those who didn’t.
For a free trial to PQL using credit cards, the conversion rate benchmark is approx. 50%, states Tatango.
Meanwhile, for those who didn’t use credit cards, the conversion rate is nearly 25% based on a survey report published by Softletter. This decrease in conversion rate in this scenario helps provide insight into the user behavior due to friction in payment.
PQL to Paid Customer Conversion Rate Benchmark
While statistics show that not a high percentage of MQLs convert to SQLs, PQLs have showcased a 20-40% conversion rate into paid customers. The benchmark provides insight into the percentage of PQLs the sales team helps convert to paid customers.
Gainsight’s Product-Led Growth Index states that compared to a 9% median conversion rate from free to paid accounts, we can witness a growth in conversion rates for free trials using PQLs – a 2.8x conversion rate.
Marketing efforts of your time nurture and qualify leads, but by identifying PQLs, you gauge the product ROI and negotiate the sales contract. Here, personalized outreach goes a long way.
Benchmarking your performance will outline where our closest competitors beating us and how, says Gartner.
The benchmarks provide an in-depth insight into quantitative data i.e., sales funnel metrics or KPIs. It illustrates simple facts regarding your average conversion rate compared to your competitors and how your buyers and clients measure against them. And most importantly – the fractures in your sales funnel.
By correlating your quantitative data against the benchmark, you can map the future course of your marketing and sales strategies. Additionally, you can modify your landing pages, CTAs, content produced, and lead nurturing techniques to improve the SaaS funnel.
When you adapt strategies that work for your competitors i.e., what they are doing differently along with the channels they are utilizing, you comprehend your weaknesses and pain points.
However, benchmarking your efforts and processes is only half the concern. The B2B SaaS marketing benchmarks will allow you to skillfully strategize how to boost your conversion rates up to industry standards. You begin to work towards securing the whole when you understand the lack.
Are you ready to secure the leaks in your sales funnel and scale up your conversion potential?