Dear SaaStr: What Is A Good Demo Conversion Rate for a SaaS Startup?
10%-20%.
If fewer than 8%-10% or so of your demos convert to paid customers, you’ll start to burn out your sales team. Because they need to close 10-15 deals a month to eat. If they have to do more than 50 demos a month, they’ll just run out of time. Even that’s a lot. If you have a good engine running, you’ll want 20% or more of demos converting. That way everyone can hit quota, or at least most can.
But — this is a trick question. As are most funnel questions.
The more folks you attract into your funnel, the lower your conversion rate.
The fewer, but more highly qualified folks you attract, the higher the conversion rate.
This is why SaaS start-ups often are so proud of their “amazing” conversion rates before they hire a real VP of Demand Gen. I’m not so proud. It’s because your top-of-funnel is unimpressive.
So avoid obsessing too much about absolute metrics inside your funnel, especially the metrics between lead and close.
Instead, measure them, and usually, drive them up.
But sometimes, as your brand grows and you get better at marketing, you’ll attract more general passers by. And thus a lot of your conversion metrics will actually fall as you scale.
A related post here:
7 Simple Ideas to Immediately Improve Your Conversion Rates in SaaS
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Jason Lemkin, Khareem Sudlow
