What is the typical conversion from paid pilot to annual contract in B2B SaaS?

I’m not sure there is a “typical” number for only one reason … as you grow and scale and become a bigger player and a more established brand … you don’t need to do as many.

By that I mean, most vendors once they are established flip pilots around into “opt-outs”. I.e., allowing new customers to cancel the contract after 60 days for any or no reason if they aren’t happy. Once you have an established brand, a 60-day opt out gives many big customers the confidence to sign a longer-term contract up front, pre-deployment.

I can also tell you at a practical level, the “churn” will be much lower from opt-outs that most paid pilots, which are generally “opt-in” by definition and by their terms.

But until you have an established brand and can flip this around from opt-in to opt-out … it does certaintly vary. In the companies I work closely with, roughly, the conversions vary fairly widely from about 60% to over 90%. It was well over 90% at EchoSign. Why? Because in the pilot period, we almost always got them fully into production and successful. Similarly, companies I’ve invested in like Automile provide value within the first day of deployment — plug the device in, fire up the mobile app and website, and you can start tracking your small fleet on Day 1. Their conversion rate is also sky high.

The startup I work with with the lowest percent (60%) isn’t the “worst” — their challenge is simply they have the most work to get into deployment. The more business process change involved, the lower the conversion rate likely will be. Over-eager sales reps are also an issue here. They can get deals to close that realistically can’t deploy.

Even in this 60% case, with lots of business process change, as their CS team has improved, this has gone up too. So measure it and drive it up. And live with the fact that for now, they won’t all convert.

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Published on July 31, 2018

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