What's a good conversion rate for a web app?
Hey, everyone. Welcome to build your SaaS. This is the behind the scenes story of building a web app in 2018. I'm John Buda, a software developer.
Justin:And I'm Justin Jackson. I'm supposed to be the product and marketing guy, but I did I did do some coding yesterday.
Jon:You did.
Justin:And, Yeah. We're we're building 2 apps, transistor.fm and spots.fm. And, here we are, John. Not is we're not on our regular recording time.
Jon:We're not. You you Canadians in all your holidays.
Justin:Yeah. That's true. We had a holiday. That that messed things up. So sorry.
Justin:How how are you doing today? It's a it's a bit of a busy day for you.
Jon:It's it's a busy day. Yeah. Yeah. There's a lot going on here at work.
Justin:It's Monday. Monday is where everything kinda hits the fan. I I have a confession. I I actually woke up really late as well. My wife and I decided to go and see, we have a drive in movie theater that's about 20 minutes away.
Jon:Okay.
Justin:And we thought, you know what? We're gonna do it. We're gonna go, and it's a double feature. And so I didn't wake up until not too long ago. I haven't had coffee or nothing.
Jon:Wow.
Justin:Yeah. I
Jon:hope the hope the movies are good. What'd you see? Double feature?
Justin:See, the movies don't even have to be good in a drive in. We saw the new Mission Impossible and then The Equalizer 2.
Jon:Okay. Yeah.
Justin:But I've never seen the equalizer 1. Oh. They're both kinda the the plot can be summarized as in one movie, Tom Cruise kicks ass
Jon:And runs a lot.
Justin:And in the other movie, Denzel Washington kicks ass. So that's that's basically what we saw, but it was good. It's good to it's good to do the drive in every once in a while. Do you have do you have one
Jon:of those? I I mean, not in Chicago. I there's gotta be one outside of the city Have I
Justin:would imagine. Have you ever gone?
Jon:I have not.
Justin:Okay. Well No. Sometime you gotta make it happen. It's just one of those things.
Jon:Yeah.
Justin:It's not a great moving movie watching experience, but it's it's fun because it's just different. You're outside.
Jon:Yes.
Justin:You have been to an outside movie, though. Right?
Jon:I have. Yeah.
Justin:Yeah. It's probably the same thing. We've had quite a few people ask us about our conversion rate and how our launch went, And I think it's a good time to maybe talk about what is a good conversion rate. And then also talk about what should you expect from your launch? Because I feel like you and I had a really healthy kind of, attitude towards launch, and I think a lot of people think that the launch is kind of the the, you know, the the everything has to go well, and you have to kill it, and you have to, you know, have a ton of new customers.
Justin:And I just wanna share our experience and, and also just maybe talk about what people should expect.
Jon:Sounds good. Because I I don't I don't even know what to expect, so you gotta teach me.
Justin:Well, I mean, the to start, I have this in my notepad, I have this what is a good conversion rate note that I use with all my clients. And it's based on my experience with, all my past clients, all of my past SaaS jobs that I've had, and also advice from folks like Rob Walling. And so there's kind of 3 buckets. Number 1 is if you're asking for credit card upfront. Number 2 is no credit card upfront.
Justin:And then the third is a traditional sales call where maybe you're you're invoicing them, and they're paying by check, something like that. Most SaaS apps are gonna fall into the first two buckets. Right? Credit card upfront or no credit card upfront. And maybe do you wanna talk a little bit about why we decided to because we went credit card up front.
Justin:Why did we do that?
Jon:Well, from my, I mean, from my perspective, we didn't wanna build in, like, premium support and have something that's has less features than what we would want to provide, or we we wouldn't wanna handicap it in any way. But also, I think having someone sign up with a credit card is is really good validation. Mhmm. I think it's good validation that, you know, you are building something that someone wants to check out enough to put their credit card in. And also, it's easier to convert those people off of the trial Mhmm.
Jon:After the fact.
Justin:It also has to do with our target market that we chose, which is we we're going after brands, and we're hoping that they're ready to spend money to solve their problems. And it seems like a lot of freemium apps I'm actually trying to think, what's the last freemium app you signed up for or you're using?
Jon:Well, we use a lot for transistor.
Justin:What do we what do we use? We use
Jon:Well, Kayako is free.
Justin:Oh, yeah. Kayako is free. That's right.
Jon:I guess we're using the free version of Slack for now. Yeah. The the our email we use for free. Yeah.
Justin:That's a good point, actually.
Jon:So there are there are some.
Justin:The idea the the question you have to answer, it seems, is can I afford it? Because if if you're giving away lots of free accounts, it gets it can be expensive. In our case, we would be paying a lot more bandwidth fees. Right? And how long can we sustain it?
Jon:Right. Customer support would be a lot more Yeah. For people that for people that aren't paying, which which they may convert to a paying account, but you don't really know that.
Justin:Yeah. Well, and also, like, for example, with Kayako, what would make us upgrade? Like, at what point do we upgrade?
Jon:I I don't know. I'd have to look again. It's it's something with the user accounts and maybe a bunch of different, like, white labeling features to get their name off of your support.
Justin:Yeah. So it looks like on the free plan, we get the live chat app with a maximum of 3 agents. And then our next jump up would be $20 per agent. So Yeah. We would be paying, yeah, $20 per person.
Justin:That's actually a pretty big jump. And this is where we would get so I guess if our team grew past 3, then we would need to start paying.
Jon:Right.
Justin:I guess that makes sense. Yeah. The but with podcasting, it's a little bit trickier. So and a lot of it has to do with who you are serving. This is why, Patrick Campbell at Price Intelligently, His advice to us was to figure out, you know, who who is this for, and then to figure out what kind of value you're bringing to that group.
Justin:The more questions I answer, the more, you know, I show people around, the more I'm realizing I think we Transistor is for brands or people who are trying to build their brand. And it seems like for that group, credit card up front makes sense.
Jon:Yeah. It seems like it. Although, right, it does. We'll see how that plays out. I mean, I think it's interesting because, he posted a video on one of those other channels from, someone who asked a question about, should you do freemium or should you not?
Jon:And his his advice was freemium as actually better.
Justin:Mhmm.
Jon:But I guess there's yeah. It it probably depends on the product.
Justin:Yeah. And the I think, eventually, I could see a freemium play for a transistor, especially around something you and I talked about before, which is allowing people to kind of park their podcast, get a Right. You know, get say, okay. Here's my show. I'm gonna upload an episode, and then maybe you get one episode.
Justin:And you get you can just test it out and see if people like it. But But if you wanna publish more episodes, then you have to sign up for a a pay a payment plan. I could see it working for something like that, especially in the future once we've kinda nailed everything else. The, Rob Walling often gives the advice to do credit card up front in the beginning because it really helps you figure out a good baseline. So what you know, do you have have you done everything you possibly can to get to do great onboarding?
Justin:Have you done everything you possibly can to, you know, market people the right way, to get them into a funnel, to get them into a trial? Are you converting trials at a good rate? And until you've done that, it is a little bit harder to, you know, to optimize with something like freemium, which is, I think, a lot more dangerous. As soon as you're opening up your doors to everybody, there's this chance that, you know, maybe you won't be able to afford it or won't be able to handle the support or whatever.
Jon:Right. Yeah. I mean, I think that makes more sense maybe for a company that wants to grow fast that has that has backing or or funding. Yeah. Right?
Jon:They can afford customer support. They can afford to pay, you know, bandwidth costs or whatever
Justin:Mhmm.
Jon:That comes along with that.
Justin:The other the other risk is that, you know, like, with Slack, for example, I have I don't know how many Slack. I I'm on the transistor Slack, and then I probably run, I don't know, 4 or 5 other ones. I'm never going to pay for those because the the their billing model doesn't make sense. And so if they're hoping that down the down the road, I'm gonna pay for, like, I have this, like, community this private community that runs on Slack. We have, like, 300 members that pay once to get in, and there's no way I'm gonna char I'm gonna be able to afford whatever it is.
Justin:$20 a person or what is it? Is it $20
Jon:a person? Yeah. It's I don't think it's that much.
Justin:Yeah. Maybe it's not that much, but you get the picture. It's it's the I'm a false positive as a freemium customer. So if they're like, oh, I can't wait. We've got all these people in the, you know Oh, it's $6.67 per active user per month.
Justin:So, yeah, my bill would go up to, oh, jeez, like, 300 let's just do 300 times 7. Like, yeah, $21100 a month. No way. I can't do it. Yeah.
Justin:There's always the the risk also that you're gonna attract folks that get great value out of your freemium product, but will just never pay the way you've set up your billing. So let's get back to these numbers here. So here's what I've seen. Here's what these numbers come, like I said, from all that experience. Credit card upfront, this is what you're looking for.
Justin:And I'll put these in the show notes as well at sas transistor. Fm/30/sorry/24. That should work. Visitor to trial, you're looking for 0.75 percent to 1% conversion. And the reason that's so low is because you have to sign up with a credit card.
Justin:It's a Transistor has a 14 day free trial, but you have to sign up with a credit card. And that automatically reduces the amount of people that are signing up. Right?
Jon:For for us, yeah, it's it's also not a service that you aren't necessarily going to just sign up for. I mean, you have to have a podcast either transfer to us or have a podcast to start. Mhmm.
Justin:Yeah. Yeah. Exactly. And you're gonna see that reflected in our launch numbers in a second. Yeah.
Justin:The second piece is trial to paid conversion, and you would expect that to be a lot higher because if they've already put in their credit card, you can assume there's a a greater intent to buy. And so trial to paid, you're looking at 40 to 60% with credit card upfront. Now let's look at no credit card upfront. If you have no credit card upfront, your visitor to trial conversion rate should be at least 5% or higher. And the reason is there's just way less friction.
Justin:If if I go to a site and I don't have to put in a credit card, and I'm like, whatever. I'll kick the tires. It's much more likely I'll sign up, but I'm not as invested. And you see that reflected in the next number. Trial to paid with no credit card upfront, you're looking at 8% to 20%.
Justin:And then a traditional sales call, lead to paid, you're looking for around a 7% conversion. So that those are kind of the 3 buckets. And again, most SaaS businesses are using the first two. So now let's tell folks about what happened with us. So here's our traffic since launch.
Justin:This is actually a little bit out of date, but our traffic since launch has been 40 1,162 unique page views, which was 11,614 visitors. So total new trials since launch is 32 out of 49 active trials total. So does that make sense? We had 32 new people sign up since we launched on August 1st, and we already had some active trials going on before that. Makes sense so far?
Jon:Makes sense.
Justin:Hopefully, these numbers are right. And so if you look at our conversion, our visitor to trial conversion, it's 0.3%. It should be about 0.75% to 1%. Now why why do you think our conversion rate from visitor to trial was so low during this period?
Jon:That's a good question.
Justin:Well, the first question is, where did your traffic come from?
Jon:Yeah. That was from Product Hunt.
Justin:Product Hunt. And Product Hunt is a great way to make a big splash like we said last week. It's a great way to get a lot of attention. But as John mentioned last week, these folks are not necessarily just looking through Product Hunt that day, hoping they will find their next best pod podcast host. Right?
Jon:Right.
Justin:They're they're just going checking it out. Hey. What's this thing? And that that means you're gonna get a lot of, you know, a lot of visitors that don't really matter that much. This is why the the, quality of the traffic or where the traffic comes from matters quite a bit.
Justin:If you're getting a lot of traffic from search, especially keywords like best podcast host, you know that these folks are out looking for a podcast host. And you would hope that you could convert a lot more of those than someone that just finds you randomly on a top site of the day. Right? So our our our traffic has gone down quite a bit since we launched.
Jon:Yeah. I'm I'm sure. Yeah. I mean, I suppose the the hard part's next, which is figuring out these other marketing channels.
Justin:That's right. That's right. Now is it still worth it to do the the product hunt launch? Absolutely. Because at the very least, it's going to get you a good backlink.
Justin:But even more so, it's gonna kick off, well, it actually yeah. Let's talk about it. It kicks off a few things. Number 1, it kicks off backlinks. So we got backlinks from Product Hunt, then we got backlinks from news sites that were covering us because we were on Product Hunt.
Justin:We got backlinks from people who just talked about us on Twitter, people who, you know, are blogging about it. Whatever. Hey. My friends just launched this. That's those are all very helpful when it comes to search because your reputation in Google is somewhat, based on the quality of people quality of the inbound links you get.
Justin:So that may that's worth it. The other thing that's worth it that a lot of folks don't think about is word-of-mouth. So if you if you saw something, number 1, on Product Hunt that day, and then 3 days later, someone says, man, I need a place to host my podcast. You're gonna be like, oh, what was that thing? What was that thing I saw Number 1 on Product Hunt.
Justin:And Yep. It it gives them a a something to share. It it helps kick off that word-of-mouth. So I think it is worth it. But for in terms of your metrics when you launch aren't going to be as great because you're just you're getting all sorts of attention.
Justin:It's the same thing, you know, if you had it used to be the TechCrunch effect. You know, if you're on the front page of TechCrunch, then you would get all this inbound traffic. And, you know, most of that traffic wasn't very useful because it's just people browsing TechCrunch every day who are looking for entertainment and diversion. They're not necessarily looking for your your product.
Jon:I suppose this would it would be a different story if we were on Product Hunt and we were a free to download app or
Justin:Mhmm.
Jon:Something like that where you can download it and instantly start using it without a credit card.
Justin:Yeah.
Jon:And it it's not like it's not like a a service that you need to have an idea to use. Right? It's like if it was a game or some other social media platform or something, probably would have been a different story. But
Justin:Yeah. Totally. Totally. Yeah. Again, it it really does depend on who you're trying to serve, who you're targeting.
Justin:That's going to indicate what channels you're going to go after. So our conversion from trial to paid is also lower than we'd like. It's currently 8.9% for August, but we it's expected because it's expected that it'll be 16.7%. So it's between 8.916.7 for this month, and it should be about 40 to 60%. I got these numbers from ProfitWell.
Justin:So I think a lot of folks wanna know how do you how are you tracking these numbers? Well, one tool you can use is Patrick Campbell's tool, profitwell.com. There's also ChartMogul, Baremetrics. And you found in Stripe, there's they have analytics now too.
Jon:They do. Yeah. I they didn't really announce this. I mean, they made a lot of updates recently to their billing section, which used to be, I think, used to be labeled the subscription section, but now subscriptions are under billing. So they have this new section where they have a billing dashboard.
Jon:And if you use subscriptions of any kind, they have all sorts of interesting metrics and charts and
Justin:Yeah.
Jon:M MRR over time and MRR growth and net revenue and new subscribers during a period and trial conversion rates during a period and churn rates and churn revenue and lifetime value per subscriber. It's, like, it's quite a lot. I didn't Yeah. Just sort of stumbled upon it one day.
Justin:Yeah. And I've shown this to a few other people since you've shown me, and they hadn't seen this yet. So
Jon:Yeah. I don't I don't know if it's I mean, it says new up top, but they really haven't notified anyone. Yeah. Doesn't seem like.
Justin:Yeah. So if you're if you are using Stripe, subscriptions, all you have to do is go in and you just click on the billing menu. You know, underneath that, there's some nested things like invoices and things. But if you just click on the the top level menu billing, you'll see all of this stuff. And, yeah, it's pretty cool just to see what, you know, what, what's going on here.
Justin:Now I don't know why some of these numbers are different than what I'm seeing in ProfitWell. This is the thing. You gotta you have to
Helen:you
Justin:have to choose your source for truth, and all of these things, you're you you are, yeah, you'd have to dig in to figure out where they're getting the numbers.
Jon:I suppose Stripe is pretty good since it's straight from the source, but I don't know how they're calculating this stuff Yeah. Necessarily.
Justin:So, Yeah. So our numbers are not where we wanted them to be. Just for for historical sake, in July, our our conversion rate from trial to paid was 17.9%. June, it was 29.6%, and May, our best month ever in terms of growth was 48.7%.
Jon:Those were probably, I suppose, the some of the first batches of people.
Justin:Mhmm.
Jon:And they are probably most excited about it.
Justin:Yeah. Exactly. Yeah. So that's what we have so far. I I will mention that we haven't yet emailed our waiting list, and, part of that was because I think you and I just needed a break.
Justin:I talked about this on I think we talked about this last week, but also I was just on the art of product podcast again, and I they were saying, so how are you doing mentally? And I said, you know, this time around, one thing that was nice is, like, we launched Transistor, and then both of us had a nap that day or slept that day. You know?
Jon:Yeah.
Justin:There's something about running a sprint or a marathon and then taking a break. And, you know, I had family come into town right after we launched, and I was just like, you know, I just wanna take a break. I I don't wanna have a bunch more, you know, customers and and support that need help, and I can't help them. And so it just felt wise to, you know, take your foot off the gas. Let's fix some things.
Justin:Let's update some things. Well, we've added a few new little features since we launched.
Jon:Yep.
Justin:And we can email that list this week, which is my plan, and that's okay. It's it everything doesn't have to happen all at once right away.
Jon:Yeah.
Justin:You know?
Jon:No nobody's yelling at us to email them.
Justin:Yeah. We're we're the we're the bosses. And in some ways, we're figuring this stuff out. Like, this is like yeah. This is the culture we're creating.
Justin:So
Jon:Right.
Justin:Yeah. So the those are our numbers. I know you've gotta go here right away. Do you wanna quickly
Jon:I do.
Justin:Just say what we've deployed since launch?
Jon:Yeah. So we've, yeah, we've done a few things, a few small things. I mean, there's a handful of little bug fixes and tweaks, but couple of the bigger ones were the image uploading was not great. I hadn't really converted image uploading over to the same, uploader that the audio uploader uses. So if if somebody was trying to upload a really large image, which can happen because because of, you know, iTunes sort of requires these large images to be uploaded.
Jon:It would just time out and fail. So I switched over image uploading to use a new library with, like, progress meter and everything. Mhmm. So that should help with that. You had seen a tweet from Marco who runs Overcast about how he was going to add in, the ability to look at an episode show notes and find a specially formatted, like, payment or donate link.
Justin:Mhmm.
Jon:And then he would add a little dollar sign donate button to that episode's screen when you're listening to it in overcast. So you kinda hopped on that and actually started a branch in Git. Yeah. And began coding it and then started asking me about it last night. You got you got close at sort of short of live coding together.
Jon:I kinda pointed you in a few directions and then sort of took over
Justin:Yeah.
Jon:Because you were you were busy with your with your your family.
Justin:Yeah.
Jon:But it's pretty much good to go, I think. We haven't deployed it yet.
Justin:Yeah. I think we should deploy it. I just checked it on local before, we jumped on this call, but
Helen:Yeah.
Justin:I think we'll be one of the first podcast hosts to have that.
Jon:And Yeah.
Justin:It it was also just fun for me to to be able to start it to be like, how far can I get on this? Yeah. And I had a little tweet storm about how I think in both of our cases, I think it it makes sense for us to focus on what we're good at, but that does not mean that you just sit in your silo and, you know, never try anything new. And so I've been trying to force myself whenever I can, whenever I see something that I think I could maybe at least start or try to build in our app, I try to do it myself. And, I'm lucky in that I've been technical my whole life.
Justin:I do have some programming experience. I understand a lot of the basics, but, it's I think it's worthwhile for business folks to try to do some of that stuff, and the same is true for developers. I think it makes sense for developers to try to do some other stuff. So, yeah, that was really cool.
Jon:Yeah. That's kind of the route I took was, I guess, I started doing programming earlier and then sort of got interested in design and went down that road for a bit. So similar. Yeah. I I I mean, I really appreciate, you know, having a business partner that is willing to even do that.
Jon:You know, isn't isn't isn't afraid to just jump in and try it.
Justin:Sometimes it's motivating for someone else to start something too. Feel like, hey. Yeah. Like, I because then there's momentum there. So Yeah.
Justin:Yeah. And then the last thing we have coming is Spotify Analytics. We've we're working on that right now. We're gonna have
Jon:So we have we have API access for that. Just have to figure out the best way to pull all that data into transistor and display it along with all the other, download information we have.
Justin:Yeah. So that that'll be coming soon too, which is fun. It is really fun now having this app out in public and being able to make updates on it. And in the next step for us, maybe this will be a future topic, but I I've been thinking a lot about how how do we make transistor, more unique? How do we really stand out?
Justin:How can we not play the game that everyone else is playing? And Right. I that's still turning around in my mind. I think, we've obviously had a lot of ideas around that, but that's the next thing I wanna tackle is let's make this thing completely our own and, you know, built for a specific group of people and helping them to accomplish their goals. Yeah.
Justin:That'll be a good thing to talk about in a future episode.
Jon:Yeah. Yeah. For sure.
Justin:Alright. Well, folks, thanks for listening. We are every once in a while, you know, we just fall into these recording booths kinda haggard, and and we do them. And I'm we really appreciate it when you listen. So thanks for listening.
Justin:Thanks for the feedback, by the way. I get all sorts of feedback about the show. And if you don't like something, like, please tell me. Don't feel bad about, you know, giving me some constructive criticism. I'm I'm completely open with to that.
Justin:So, one thing people say is that I, I talk too much, which is definitely true. And so I'm trying to trying to give John more space to speak, and we'll we'll, I'll keep working on that. It's it's hard because the, yeah, it's hard. Yeah. So we're gonna keep working on stuff.
Justin:If you wanna get out, reach out to us on Twitter at transistorfm. You can email us at shows transistor.fm, and you can sign up for a 14 day free trial. If you've ever thought about doing a podcast, what is stopping you? I mean, if 2 jackasses like us can do it, John?
Jon:Anyone can.
Justin:Anybody can do it. Yeah. So, yeah, sign up for a free trial, transistor.fm, and, we'd be happy to help you out get get your show started. And we will see you next Tuesday. Thanks for listening.
