Learn B2B SaaS Marketing

B2B SaaS Funnel Conversion Benchmarks

by 

Lauren O'Bryan

Last updated: September 12th, 2024

Funnel conversion rates are crucial metrics for assessing your business’s revenue potential and overall marketing effectiveness in the B2B SaaS industry. However, these numbers don’t mean much unless you compare them against industry standards.

Understanding B2B SaaS funnel conversion benchmarks will help you evaluate your company’s performance, identify areas for improvement, and set realistic goals.

In this article, we’ll cover all the essentials of marketing funnel conversion rates and give you up-to-date industry benchmarks. Let’s get started.

Funnel Conversion Rates

In B2B SaaS, a conversion occurs when a prospect takes the desired action and progresses along the marketing funnel. This means their level of interest in the product is increasing and they are moving closer to becoming a paying customer. Conversion can relate to all the stages of the funnel – visitor, lead, MQL, SQL, opportunity, and close.

The visitor stage includes those who interact with your website or digital content for the first time. A visitor becomes a lead when they express an interest in your product, typically by engaging with a lead magnet or submitting contact details in a newsletter sign-up form.

Once defined as an MQL, this lead shows a higher level of interest and engagement, indicating they are more likely to become a customer than other leads. These leads meet the criteria for increased marketing efforts and personalized outreach. An SQL is an MQL that has been vetted and deemed ready for direct sales follow-up. All SaaS marketing teams should have a threshold point established that signals the handover from marketing to sales.

The opportunity stage of the funnel is where the lead presents a clear sales opportunity. This stage involves detailed discussions with sales and product demonstrations.

Close is the final stage in the funnel, where an opportunity converts to a paying customer.

Types of Conversions

The key types of conversions within the B2B SaaS funnel include:

• Lead generation conversion: This is when a visitor provides their contact information, usually in exchange for something like an eBook, webinar access, or a checklist. This action converts a visitor into a lead.
• Trial sign-up conversion: When a lead signs up for a free trial of the SaaS product. To marketers, this indicates a higher level of interest in the product.
• Demo request conversion: When a lead requests a demo – this is the equivalent of the lead moving from the MQL stage to becoming an SQL. It suggests a deeper level of interest that warrants more personalized communication and lead nurturing.
• Subscription conversion: This is when a lead commits to a paid subscription, converting them into a paying customer.
• Upsell conversion: In cases where there’s a freemium option or various paid subscription choices, this conversion is when the user upgrades their subscription to a higher-tier plan.

Factors Affecting Conversion Rates

It can be difficult to understand average conversion rates in SaaS because of the large variation in business models and different conversion goals. The industry niche, marketing channels used, and target market all have a big impact.

Industry Type

Industries that require complex solutions like enterprise software or cybersecurity often have longer sales cycles and lower conversion rates. In contrast, simpler SaaS products may experience higher conversion rates due to easier adoption and faster decision-making processes.

In other situations, heavily regulated industries like healthcare or finance can have lower-than-average conversion rates. This is because customers typically spend more time and conduct more thorough evaluations during the decision-making phase.

Marketing Channels Used

Inbound marketing channels, like content marketing, SEO, and social media, can attract high-quality leads. These users are actively seeking a solution and are often easier to progress from the visitor stage to MQL. With outbound marketing, the leads often have a lower intent to buy, which can mean lower conversion rates.

Target Market

The size of the company and its management processes also significantly impact conversion rates. SMBs are likely to have fewer hoops to jump through when it comes to purchasing decisions than enterprise-sized businesses. In addition, all companies will have differing levels of pain point severity. For example, those with clearly defined pain points and quantifiable losses will have greater pressure to find a solution to these problems.

B2B SaaS Funnel Conversion Benchmarks

As you can see, because of the impact different factors have on customer behavior, it’s difficult to give one standard conversion rate benchmark. So, here are the average B2B SaaS conversion rate benchmarks based on company size and marketing channel used.

Small to Mid-Sized B2B SaaS ($10M-$100M ARR) Conversion Rates

• Visitor to lead: 1.4%
• Lead to MQL: 41%
• MQL to SQL: 39%
• SQL to opportunity: 42%
• Opportunity to close: 39%

Enterprise B2B SaaS (+$1B ARR) Conversion Rates

• Visitor to lead: 0.7%
• Lead to MQL: 34%
• MQL to SQL: 40%
• SQL to opportunity: 36%
• Opportunity to close: 31%

B2B SaaS SEO Conversion Rates

• Visitor to lead: 2.1%
• Lead to MQL: 41%
• MQL to SQL: 51%
• SQL to opportunity: 49%
• Opportunity to close: 36%

B2B SaaS PPC Conversion Rates

• Visitor to lead: 0.7%
• Lead to MQL: 36%
• MQL to SQL: 26%
• SQL to opportunity: 38%
• Opportunity to close: 35%

For comparison, a Totango study highlights significant differences in conversion rates, particularly influenced by whether a credit card is required during the sign-up process.

• When a credit card was required, the conversion rate from visitor to free trial sign-up was around 2%. In contrast, when no credit card was needed, this rate increased to 10%.
• Similarly, the conversion from free trial to paid subscription was 50% with a credit card requirement, compared to just 15% without it.

In another benchmarking survey, the conversion rate results also showed significant variation.

• For free trials, the conversion rate to paid subscriptions averages between 8-12%, with top-performing companies achieving up to 25%.
• For freemium models, the conversion rate is slightly lower, ranging from 3-7%, with the best companies reaching 15%.
• Conversion rates also show slight variations based on business size. Small to medium-sized businesses (SMBs) typically see conversion rates between 4-20%, while mid-market companies range from 4-18%.

As you can see, conversion rates can vary due to factors such as sales cycles, the definition of “conversion,” marketing channels, and the stage of business growth. Understanding these nuances is crucial for optimizing conversion strategies effectively.

Strategies to Optimize Funnel Conversion Rates

If your funnel conversion rates aren’t making the grade, consider implementing the following conversion rate optimization strategies.

Enhanced Targeting and Personalization Communication

Take a step back to your audience segments and buyer personas to make sure they accurately represent your target audience. Develop email campaigns for each of your audience segments and tailor messaging to match their funnel stage and intent.

Improve the Overall User Experience (UX)

Optimizing your website and landing pages to be mobile-responsive, easy to use, and fast-loading are crucial elements to keeping visitors to your site content.

It’s not uncommon to find SaaS businesses with landing pages that convert no more than 1% of visitors. However, by including a clear and compelling call to action and purpose, this conversion rate can jump up as high as 20%. Use A/B testing on different landing page variations to determine which drives the highest conversion rates.

Get Straight to the Point: Customer Pain Points and Value Proposition

When crafting content, be clear and concise.

Landing pages should highlight customer pain points and demonstrate how your product resolves them. Features pages on your website need to clearly state the value proposition so there’s no mistaking what the customer can gain from using the product.

Also, simplify pricing structures and make pricing tables easy to find on your website. Overly convoluted pricing pages can deter potential customers who find them too complicated to understand.

Effective Customer Support

Improving your customer support is another strategy to boost conversion rates. When customers can learn quickly and find solutions easily, they feel more confident and satisfied with the product. A mixture of well-designed help documentation and responsive customer service teams guarantee proactive support.

Consider implementing a customer success program to assist new customers with the onboarding process and training. Regular check-ins with customers are always a good idea.

An Effective Demand Generation Strategy is the Key

You can achieve these optimizations and conversion rate improvements by implementing a demand generation strategy. A correctly developed demand generation strategy attracts, engages, and converts leads smoothly and reliably.

We offer a demand generation service focusing on bringing in the right-fit traffic and delivering guaranteed results. For every $1 spent on our service, you receive $5 ARR on average. We also provide a comprehensive strategy roadmap, reviewed quarterly, and create accurate funnel forecasts.

Marketing Funnel Forecasting and Conversion Rates

Accurate forecasting hinges on inputting accurate marketing performance metrics. Without an accurate forecast, you can’t expect to correctly allocate budget. In addition, you have to factor in the entire customer journey rather than just the leads acquired. Our marketing funnel forecasting model analyzes the entire sales and marketing funnel.

We dig deep into quality performance metrics like the number of leads and MQLs generated, the full range of ARR metrics, and revenue won. These are more than just vanity metrics, and we use them to calculate revenue efficiency and business growth rates. Once we have this data, we can compare various marketing spend scenarios that show a conservative outcome right up to an optimistic outcome.

The other benefit of developing a marketing funnel forecast within our framework is the easier identification of touchpoints you can leverage to get better conversion rates. This means less trial and error because you can pinpoint the exact stages of the customer journey to adjust.

Wrapping Up

Improving funnel conversion rates is about more than just increasing the number of leads. When you take a step back and analyze the entire funnel, you can see how important it is to optimize the quality of your leads. High-quality leads have a better chance of moving smoothly through the funnel and converting to customers, and more paying customers lead to business growth.

At the same time, you can gain insight into your business scalability by taking our SaaS scalability score self-assessment. This assessment looks at how well you attract, engage, and convert customers, giving you a way to identify and implement improvements.