How to Build and Optimize Your SaaS Conversion Funnel [template]

SaaS Conversion Funnel

We’ve prepared this step-by-step SaaS conversion funnel template for you to use when building out your first conversion funnel. It includes all the critical steps involved, plus several potential SaaS metrics to use in your funnel. Find the free template here.

SaaS customers walk through different stages on the way to becoming a paying customer. Therefore, every organization must be interested in how their content, branding, and other outreach efforts affect the bottom-line – revenue.

Studying and optimizing your SaaS conversion funnel is the weapon that most companies fail to take advantage of. The conversion funnel should not be just a marketing initiative, a tucked-away dashboard in Salesforce, or a closed-door executive discussion. Au contraire, almost everyone, from product development to customer service, should be aware of how their role affects the company-wide goal – to acquire, convert, and retain more customers.

This includes understanding activities and conversion points in the funnel, which highlights blockages in your customer acquisition efforts. Doing so will help you to make relevant adjustments, placing your business on a stable growth trajectory.

To help you grow from awareness to mastery where your SaaS conversion funnel is concerned, Marketing 261 prepared this step-by-step SaaS conversion funnel template listing all critical steps of building and optimizing a SaaS conversion funnel. If you’re unsure where to begin, this template is an excellent starting point – download or make a copy and complete all the sections.

Armed with this template and the tips provided below, you will be able to uncover and eliminate the blockages to customer acquisition and retention and see very tangible results in your business revenue going forward.

Creating a Funnel is Hard Work

Even with a detailed template like the conversion funnel template, creating a conversion funnel will take weeks, even months, of hard work from various teams and departments. From conducting audits to understanding your starting point to creating and tracking metrics, be prepared to put in the work. It will take time and resources to set up a conversion funnel to analyze metrics and extract areas for optimization. 

However, once set up, you will see how easy it is to track and understand your users’ journeys and help them convert and remain on as (happy) clients.

You CANNOT Do It Alone

Your conversion funnel will only succeed if you have the buy-in from all departments in the company. Everyone has a part to play: product, engineering marketing, executives/managers, and even administrative support.

Many inefficiencies in the funnel occur because teams work separately in silos instead of supporting one another towards the same goal – getting as many qualified leads to move through the funnel within the shortest possible time. Being a funnel-focused company means that all teams should understand their role concerning the funnel.

Start Small

Building an effective SaaS conversion funnel takes time, which is why it’s essential to start small. Bringing out the big guns blazing will only leave you fatigued, not to mention increasing the chances of making unnecessary investments.

For example, it may not be prudent for a small tech startup to think they need to invest in a full-service marketing automation solution to get the data they need to help with funnel tracking. Before you have the resources, content, lead volume, and conversion points, bringing in marketing automation too early ties up funds that would have been more valuable elsewhere.

Determine KPIs as a Team

There are several moving parts to a SaaS conversion funnel, and metrics are the magic numbers that make sense of the implemented strategies. Without reliable data, you cannot make proactive and educated decisions to improve efficiency and conversions.

There are many metrics you can track; most are listed in the template. However, to start, you might want to choose just 3-5 KPIs to track that pertain to the total counts for each part of the funnel, e.g., website traffic, leads, free trials, and closed deals. Once you know your funnel basics, you can add in conversion rates to better understand performance. Lastly, you can start tracking the values and return on investments, e,g, customer acquisition cost, total conversions, monthly recurring revenue, customer/revenue churn, and customer lifetime value, among others.

Use What You Have

As mentioned, you want to go easy on fancy tools with expensive subscriptions, especially if you haven’t mastered your customer journey. In the beginning, you can use open-source or free versions of marketing automation and CRMs. Even Google Analytics and a spreadsheet can be your go-to funnel tracking.

Do this for at least three months to know what is and isn’t working. Once you become a master of your customer journey and have enough data to optimize the funnel, you can implement more robust dashboards or tools.

Communicate Regularly

Regular communication is a great way to ensure all teams remain in check. You can check whether everyone is on track vis-à-vis the big picture, to wit, the conversion funnel. Everyone can also highlight any challenges they have early so that their effects get mitigated before they spill over to hinder your conversion efforts.

Make a SaaS Conversion Funnel Improvement Plan

You won’t master your SaaS conversion funnel the first round. Don’t expect perfection right off the bat; it doesn’t work like that. Instead, keep track of the areas that need improvement and work to tighten the ship over time.

For example, at the beginning phase, you might undercover that you have duplicated or missing data. You might also learn that the Google Analytics tracking code got implemented incorrectly, and it’s not tracking portions of your application. Or you might find that it takes a ton of work for your engineering team to put together a way to collect and organize customer data like subscription plans and renewals. 

Once your funnel comes together, and you can see performance rates and identify leaks, you can start making improvements that optimize conversion rates. For example, do you have tons of website traffic but no signups? You may need to create more compelling content and improve your CTAs. Do customers sign up but churn a few months later? Check your customer support and retention strategies.

Make A Reporting Plan and Stick to It

Decide when and how you will report the data and performance metrics. For example, you can post a message in a Slack channel highlighting key numbers, changes, and improvement activities based on the metrics. Or you can create a Loom where you walk through your spreadsheet or dashboard.

Whenever and however you present the information to your organization, make it consistent (every Monday morning in Slack), conversational (encourage people to ask questions and make suggestions), and easy to understand (one slide, with 4-6 bullet points). 

Grow, Scale, and Extract Real Business Takeaways

The SaaS business model provides many opportunities to decrease inefficiencies and increase a customer’s lifetime value (CLV). Remember to onboard all teams, from senior-level managers to engineers, so that everyone works towards the same goal. Don’t forget to make a reporting plan, stick to it, check your essential metrics, and communicate regularly with all teams.

Finally, always be improving! Don’t start big, or you risk burning out or wasting valuable resources in premature marketing automation. Instead, start small, and work your way towards more robust capabilities after mastering your conversion funnel.

By Michelle Urban

Michelle Urban is the founder of Marketing 261, a digital agency for startups. With a hands-on, get-it-done attitude, she and her team focus on executing measurable plans to get real results. For over 15 years, she’s built scalable marketing programs for demand creation, lead generation, customer advocacy, and engagement. She’s also a wanna-be writer and weekend windsurfer who occasionally binge-watches Netflix. Ask her about the time she danced with Oprah and Beyoncé on live television.