Thanks a bunch for your help Do , we're using strategy (B) + "30 Day Money Back Guarantee" and I was wondering if a "60 Day free trial" (from 14 Day Free Trial) would bring some change but it seems like I should look for something else to optimize, I'm trying to hit a conversion rate of 5% for site visitors (targeted traffic) .
dqdo|11 years ago
Your conversion rate depends on the marketing channels that you use to bring your users to your landing page and how relevant your product offering is for the customers. You should track the conversion rate of your different marketing channels to optimize your marketing spending mix (e.g., spending on X brings Y number of leads per month with Z percentage of them converting). Different marketing channels and marketing campaigns can bring in radically different results so you should focus your spending on the ones that bring the most bang for your buck.
The more money you spend on marketing, the lower your conversion becomes. This is due to the fact that over time, you start getting lower quality leads to your website. This is analogous to mining in less resource rich areas. As a company, your goal is not to maximize your conversion rate (the effectiveness of your spending) but rather to maximize your profits. If you think carefully, it may make sense that the conversion rate (effectiveness of your spending) can decrease while your profit increases. You can find more about this argument in the economic concept of marginal vs. average cost.
For SAAS products, the most important metrics are: Life Time Value, Acquisition Cost, and Churn Rate. You just need to make sure that your (LTV - Acquistion Cost) > Profit + Costs and that your churn rate is not unreasonably too high. A high churn rate (>5% annually) limits the potential growth of your company in the long term.