My own coffee is still a commute away but pbiggar reminded me of some similar comments from yourself
600 LTV - but don't spend more than 1/3 on acquisition (200)
Assuming 4% trial to cust conversion we need 25 trials to get one customer. At 4 USD per trial that's 100USD
Assuming 1% click to trial conversion we need 2500 clicks to get 25 trials. That's expensive. So we need much better click to trial conversions. Assuming 1USD per click we need a 25% click to trial conversion.
I think it feels more likely to swap those rates around (4% click to trial, 25% trial to customer) but whatever my intuition is still waaaay out.
But either way it surprises me how tight 200 USD customer acquisition is. It sounds pretty close to the steak dinner high touch sales you mention (I can think of some very nice places in London to lunch a client for 200 bucks) but in reality it's eaten away by conversion rates far far faster than my intuition allows.
Thank you - whatever the "real" figures are working this through helps align my intuition with Mother Nature and if you had not put the numbers up I would not have worked it through - and when my billion dollar SaaS launches I would not have had the right intuition - which is the whole point of the exercise !
If you're getting single digit click-to-trial conversion rates in a low-touch model with no card required, you're doing things wrong. 25% is a benchmark and people who are really good with ad targeting and squeeze page design can get 40%+.
(This is a major reason why, if you actually have a high-touch model or your software isn't of the kind that someone clicking an ad can reasonably buy on the spot, you will attempt to sell them on "Give me your email and I'll give you something you want" rather than "Give me five minutes and I'll persuade you to try this software.")
I have a lot of data on landing page performance but, unfortunately, most of it is confidential. Bingo Card Creator is the easiest one for me to talk about, and that's almost locked at 25% squeeze page to trial signup for several years running.
$200 per new account businesses might imply, in a card-not-required-upfront model, 2% conversion rates on $4 trials which have converted at 25% from $1 clicks. Or, in a card-required-upfront-model, 25% conversion rate from trial, $10+ clicks.
I re-endorse this math, with the elaboration that $10+ clicks was me being handwavy about $12.50.
I was not challenging the experience behind the maths, just I don't quite follow the formula
I think that the above means 2 out of 100 trialists will become customers and 1 out of 4 people who click on a ad will become trialists. So with 200 clicks we will get 50 trials and then one payin customer
If the trial costs us 4 USD in hosting fees that means we pay 200 bucks (50x4) for the trials, and 200 bucks for each 1 dollar click through (if that's how click throughs work).
So that seems to be 400 bucks to acquire a customer. This could be changed in so many places (cost of hosting etc) that the actual figures aren't really important - just trying to follow the rough proportions
As you can tell my uncertainty on how click throughs work indicate I am trying to understand the landscape - not challenge your experiences.
I am however very surprised that click to "free trial" is such a big conversion (25%) but after that they can't be bothered to go further. My takeaway from this, completely at odds with what I would have guessed last week, is to always take a credit card at sign up. Anyone who can be bothered to open the wallet is probably really interested.
And if they don't open the wallet, grab that email :-)
Tl;dr I believe you. I just don't quite follow the details - and that's where the devil lies I am told.
Comments
Possible that I botched mental math at 3 AM, let me check if after morning coffee.
My own coffee is still a commute away but pbiggar reminded me of some similar comments from yourself
600 LTV - but don't spend more than 1/3 on acquisition (200)
Assuming 4% trial to cust conversion we need 25 trials to get one customer. At 4 USD per trial that's 100USD
Assuming 1% click to trial conversion we need 2500 clicks to get 25 trials. That's expensive. So we need much better click to trial conversions. Assuming 1USD per click we need a 25% click to trial conversion.
I think it feels more likely to swap those rates around (4% click to trial, 25% trial to customer) but whatever my intuition is still waaaay out.
But either way it surprises me how tight 200 USD customer acquisition is. It sounds pretty close to the steak dinner high touch sales you mention (I can think of some very nice places in London to lunch a client for 200 bucks) but in reality it's eaten away by conversion rates far far faster than my intuition allows.
Thank you - whatever the "real" figures are working this through helps align my intuition with Mother Nature and if you had not put the numbers up I would not have worked it through - and when my billion dollar SaaS launches I would not have had the right intuition - which is the whole point of the exercise !
I miss excel :-)
If you're getting single digit click-to-trial conversion rates in a low-touch model with no card required, you're doing things wrong. 25% is a benchmark and people who are really good with ad targeting and squeeze page design can get 40%+.
(This is a major reason why, if you actually have a high-touch model or your software isn't of the kind that someone clicking an ad can reasonably buy on the spot, you will attempt to sell them on "Give me your email and I'll give you something you want" rather than "Give me five minutes and I'll persuade you to try this software.")
I have a lot of data on landing page performance but, unfortunately, most of it is confidential. Bingo Card Creator is the easiest one for me to talk about, and that's almost locked at 25% squeeze page to trial signup for several years running.
Apologies for the delay -- been a long day.
$200 per new account businesses might imply, in a card-not-required-upfront model, 2% conversion rates on $4 trials which have converted at 25% from $1 clicks. Or, in a card-required-upfront-model, 25% conversion rate from trial, $10+ clicks.
I re-endorse this math, with the elaboration that $10+ clicks was me being handwavy about $12.50.
I was not challenging the experience behind the maths, just I don't quite follow the formula
I think that the above means 2 out of 100 trialists will become customers and 1 out of 4 people who click on a ad will become trialists. So with 200 clicks we will get 50 trials and then one payin customer
If the trial costs us 4 USD in hosting fees that means we pay 200 bucks (50x4) for the trials, and 200 bucks for each 1 dollar click through (if that's how click throughs work).
So that seems to be 400 bucks to acquire a customer. This could be changed in so many places (cost of hosting etc) that the actual figures aren't really important - just trying to follow the rough proportions
As you can tell my uncertainty on how click throughs work indicate I am trying to understand the landscape - not challenge your experiences.
I am however very surprised that click to "free trial" is such a big conversion (25%) but after that they can't be bothered to go further. My takeaway from this, completely at odds with what I would have guessed last week, is to always take a credit card at sign up. Anyone who can be bothered to open the wallet is probably really interested.
And if they don't open the wallet, grab that email :-)
Tl;dr I believe you. I just don't quite follow the details - and that's where the devil lies I am told.