I have a new bootstrapped SaaS app that targets small businesses. It has a 30 free trial offer. The visit to trial conversion is around 1%.
Currently I have 9 paying customers with 360 trial sign-ups (around 2.5% conversion).
Service is priced at $20/month.
We've been live for two months. The companies who ARE using the service are very happy.
Is this sample size too small to draw a conclusion? Is is a matter of scaling/marketing?
You can really never compare your conversion rates to other peoples. Obviously the conversion rate is an indicator of the success of your website or software, but there are too many variables to make it anything other than a baseline to measure improvement against.
As an example, let's say you have a awesome website for selling t-shirts. 50% of people that visit your website would buy one if they are t-shirt wearing people. That's an amazing website. The only problem is that you have set up advertising and are targeting the wrong people. What is happening is that most people that come to your website don't wear t-shirts, so no matter how good your site is they aren't going to buy one. Now your conversion rate is just 1% and you think your website is no good.
As you can tell from that example, the number really doesn't mean a lot. What matters now is that you tweak your website, possibly A/B test and try and get that 1% to 1.2%. It's about using it as a baseline to improve upon.
The same goes for the conversion rate of your software from free trial to paid. Stop worrying if it's a good number in it's own right, noone can tell you that. Just start trying to make it better.
A great place to start for improving your trial signups to paid customers rate is to look at your first use experience. What do they see when they first log in, I hope it's not a blank slate that they can't do anything until they go through a lengthy set up process.
In summary, don't be concerned with a low conversation rate, be concerned with improving your conversion rate.
Conversion rate is going to be your main driver of success you are at a point where you just beginning and that 1% gives you a base line. Obviously it's not that big, but rarely do online tools go over 5% (to give you a basic idea). Starting today you need to rely on analytics as much as you can:
It's all about analytics and A/B testing.. It takes time, but you can do something.
I don't think there is a magic percentage, but it needs to fit in with the costs of making a conversion compared to what you charge. It is possible to convert 100% and still lose money if the cost to produce the sale exeeds the amount of the sale.
You may be attracting people to your site who will never buy/have no use for your product. Maybe they are confused about what it does or you are targeting them incorrectly?
Are they quiting at a certain point in the sales process? Too many steps, too long, payment methods, sticker shock, delays, can't decide which options they want.
Do you follow-up through your trial period? They may sign up, play with the site and never return. Are there components of your app you think are critical, but they never bother to try? Early on, you may have to offer to do a demo or provide personal support until you get the site to the point where this gets taken care of. Don't assume it's easy because it's easy for you. They may require prompting.
I know you don't want to have to do this to close every sale, but you'll learn a lot in the mean time. Let's face it, you proposed the problem without any indication why the other +90% never buys. Seems like you never asked.