How your acquisition strategy influences your conversion ...

How your acquisition strategy influences your conversion rate

Your customer acquisition strategy directly impacts your conversion rate. Here's what you need to know:

Related: SaaS User Onboarding Optimization: Complete Guide to 42% Higher Activation.

• Existing customers convert better: While new customers convert at 5-20%, existing ones convert at 60-70%.
• Email marketing works: It boosts qualified leads by 451% and delivers $38 for every $1 spent.
• Referrals are powerful: Referred customers spend 13% more and retain 37% better.
• SEO drives results: SEO leads convert at 14.6%, compared to 1.7% for outbound efforts.
• Customer acquisition costs (CAC) are rising: They've increased by 50% in the last five years.

To boost conversions:

• Use targeted acquisition channels like SEO, referrals, and email marketing.
• Track key metrics like CAC, Lifetime Value (LTV), and Return on Ad Spend (ROAS).
• Personalize customer messages and simplify sign-up processes.

The right strategy can lower costs, improve retention, and drive long-term growth.

Core Components of Acquisition and Conversion

What Are Acquisition Methods and Conversion Rates?

Acquisition channels are the pathways customers use to discover and interact with your SaaS product. Some of the most effective channels include SEO, paid advertising, and referral programs. For instance, content marketing generates over three times more leads than outbound marketing while costing 62% less. SEO leads also tend to convert at an average rate of 14.6%, far outperforming the 1.7% conversion rate of traditional outbound marketing.

Each channel works best with specific content strategies:

Acquisition Channel Primary Content Approach Typical Conversion Focus

SEO Long-form articles, guides Educational value, problem-solving

Paid Social Visual ads, short videos Immediate action, trial signups

Referrals Reward programs, testimonials Trust-building, social proof

Knowing these conversion trends helps in understanding how users behave and what drives them to take action.

Customer Behavior Across Different Channels

Customer behavior shifts depending on how they find your product. For example, email marketing is highly cost-effective, delivering a $38 return for every $1 spent.

Referred customers stand out with better retention, lower churn, and higher lifetime value:

• 37% higher retention compared to other acquisition sources
• 18% lower churn than non-referred customers

A real-world example: BitGym doubled its paying customer base by using trackable coupons and offering flexible payment options.

These insights highlight the importance of understanding and responding to customer behavior.

Customer Targeting for Better Results

"We also realized pretty soon that offering a free plan with hopes of converting users to a paid subscription is not a good idea. The users on the free plan ended up being responsible for a large portion of our expenses but never had any intention to ever upgrade".

Research also reveals that 81% of consumers are more likely to engage with brands that offer reward programs.

Here are some strategies to refine your targeting:

• Adapt your approach for each acquisition channel and leverage customer feedback to address conversion barriers.
• Keep track of critical metrics like Customer Acquisition Cost (CAC) and Customer Lifetime Value (LTV).
• Use targeted ads to reconnect with prospects who’ve shown interest in your product.

Measuring Channel Performance

Paid Ads: Cost vs Results

To evaluate paid ads effectively, compare Customer Acquisition Cost (CAC) with Lifetime Value (LTV). Research suggests spending around 20% of your LTV on acquiring customers can lead to sustainable outcomes.

Learn more in our guide: Conversion Rate Optimization Case Studies (2025).

Here are some key metrics to focus on:

Metric What It Measures Why It Matters

Cost Per Paid Customer Approx. LTV/5 Ensures acquisition costs remain sustainable

Payback Period Time to recover ad spend Helps gauge resource efficiency

Return on Ad Spend (ROAS) Revenue generated per ad dollar spent Indicates campaign success

"It doesn't matter how many clicks or eyeballs a campaign receives, if it's not generating revenue, it's not successful." - Jason Spooner, SME Digital

While paid ads provide quick insights through metrics, organic channels often offer more lasting growth opportunities.

SEO: Building Long-term Growth

Organic search is a powerful way to achieve steady growth. For example, Doe Lashes grew their monthly organic traffic from 1,800 to 27,000 by using AMP pages and optimizing headers. Jason Wong, the founder, shared this insight: "SEO is a long game, compounding results start early". In the beauty and health e-commerce space, organic search can drive conversion rates close to 3%. Referral programs also tap into customer trust, offering another way to achieve consistent conversions.

Referrals: Converting Through Trust

Referral programs leverage customer behavior to deliver high-quality conversions at a lower cost. Here are two standout examples:

FIGS Brand Ambassador Program

Between 2018 and 2020, FIGS reduced their acquisition costs by 61%, bringing it down to $39. The program also generated over 90,000 Instagram posts tagged with #wearfigs and 288 million TikTok video views.

Riff Raff & Co Referral Program

About 25% of Riff Raff & Co’s customers came through referrals. They incentivized participation with perks like free shipping and rewards, including a $65 sleep toy after five referrals.

"Rising advertising costs drive brands to seek alternative audience channels." - Sarah Moret, Curie founder

Using tracking tools can help you monitor and improve the performance of your channels.

Methods to Boost Conversion Rates

Personalizing Customer Messages

Using customer data to craft targeted messages can significantly improve conversion rates, with potential revenue increases of 10-15%.

Related: 7 Customer Activation Metrics Every SaaS Must Track.

Personalization Element Impact on Conversion How to Implement

In-trial Messages 15% more registrations Tailor content based on user behavior

Predictive Lead Scoring Better focus on warm leads Use machine learning to analyze engagement patterns

Account-based Marketing Higher enterprise conversions Create custom campaigns for key accounts

A great example of this is Brainshark’s personalized messaging for their freemium products. By tailoring messages to user behavior, they saw impressive results:

• 15% increase in registrations on myBrainshark.com
• 150% growth in enterprise free trial sign-ups
• Over $1.1 million added to their sales pipeline

"Personalizing messages can increase engagement drastically, and it provides value to both the business and the user. It's all about being relevant." - Arthur Gehring, Vice President of Demand Generation, Brainshark

Once you’ve personalized your messaging, the next step is to test and refine it.

Testing What Works

Effective testing is essential, but it requires a clear plan. Without proper methodology, over half of tests fail to provide usable results. Here are three key testing methods to consider:

• A/B Testing: Compare one variable at a time (e.g., headline or call-to-action) to see its effect on conversions.
• Split Testing: Test entirely different page versions to measure broader outcomes like sales or average order value.
• Holdout Testing: Use control groups to measure the effectiveness of specific channels or campaigns.

These methods help you pinpoint what works and adapt your strategies for better results.

Making Sign-up Simple

Streamlining the sign-up process reduces friction and encourages conversions. Here’s how you can simplify the journey:

• Shorten free trial periods to create urgency.
• Use countdown timers to add a sense of immediacy.
• Offer early customer support to address questions quickly.
• Design an intuitive onboarding experience.
• Deliver quick wins to show value right away.

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Examples That Work

Free-to-Paid Trial Success

Acuity Scheduling saw impressive results by rethinking its free trial approach. Instead of offering an unlimited trial with limited features, they introduced a 14-day trial of their Professional plan. This change led to a 268.14% jump in paid Professional account sign-ups. Feedback showed that users wanted access to more features during the trial, allowing them to fully experience the premium plan's benefits before committing.

Smarter Pricing Pages

Adjusting pricing pages can also make a big difference in conversions. Mad Mimi's pricing page revamp delivered notable results. Key changes included:

Change Made Resulting Impact

Button Text Update Switched to action-driven "Get Started"

Simplified Plans Removed a confusing option for clarity

Feature Descriptions Added clear, concise explanations

Highlighted Support Made customer support more visible

"Pricing pages mark the critical conversion point where prospects turn into customers."

These updates show how even small tweaks to pricing pages can boost conversions.

Targeted Ad Campaigns

From July to September 2023, Boston Growth Marketing helped a B2B SaaS company improve ad performance. Their efforts achieved:

• A 65% increase in conversion rate (from 0.32% to 0.53%)
• A 12.3% drop in cost per acquisition, reducing it from $176 to $167
• Better audience targeting to attract higher-quality leads

One SaaS company earned $104,000 in five days from just $1,900 in ad spend. This success came from:

Learn more in our guide: How to Build a SaaS Pricing Strategy That Converts.

• Conducting a detailed account audit
• Setting up offline conversion tracking
• Restructuring Google Ads for better performance

These examples highlight how refining free trial offers, improving pricing pages, and running well-targeted ad campaigns can work together to boost conversions effectively.

Tools and Tips for Success

Must-Have Tracking Tools

Tracking tools are essential for understanding how visitors turn into customers. Below are some effective solutions:

Tool Primary Use Key Benefit

ClickMagick Ad tracking & attribution Tracks user journeys across channels

Twilio Segment Customer data platform Creates unified customer profiles

Amplitude Product analytics Provides real-time user behavior insights

ClickMagick has supported over 122,000 businesses in optimizing conversion tracking since 2014. Ken Rigby highlights its impact:

"ClickMagick tracks every click with unparalleled accuracy, filters out bad traffic, and optimizes conversions effortlessly. The ability to track every user's journey across multiple channels has been a game-changer for my ad spend efficiency."

Twilio Segment handled a staggering 12.1 trillion API calls in 2023. Companies like MongoDB have leveraged it for better targeting. Ale Dimitriu, Senior Marketing Operations Manager at MongoDB, shares:

"Since implementing Segment we have seen a significant increase in revenue which we attribute to the improved targeting and personalization of our communications."

With these tools, you can gather the insights needed to fine-tune your acquisition strategies.

Tips to Keep Improving

Once you’ve set up reliable tracking, focus on refining your approach with these expert-backed strategies.

Riccardo Ocleppo points out a common pitfall:

"One common mistake I've seen businesses make when analyzing customer acquisition data is focusing solely on the number of acquired customers without scrutinizing the quality or potential LTV of these customers. Consequently, they might attract one-time customers, leading to high churn rates. We combat this by using analytics to forecast the LTV of each user segment, and then, we prioritize the ones with the highest long-term profitability."

Brooke Webber emphasizes the importance of qualitative data:

"Too many brands focus heavily on quantitative over qualitative data because it's simple and impressive. But unless you're using qualitative data to understand why the numbers are changing, you miss understanding how to lean into strengths and eliminate weaknesses."

Get data-driven insights with our conversion rate calculator.

Walmart provides a great example of data-driven personalization. By tailoring shopping experiences, they achieved:

• 30% increase in new sign-ups
• 20% higher conversion rate
• Significant boost in online sales

To refine your strategy, monitor these key metrics:

• Customer Acquisition Cost (CAC)
• Customer Lifetime Value (CLV)
• Return on Ad Spend (ROAS)
• Shopping Cart Abandonment Rate
• Average Time to Conversion

With the average shopping cart abandonment rate hitting 70% in 2024, it’s crucial to identify and fix bottlenecks in your conversion funnel.

The Best Customer Acquisition Funnels for a SaaS Startup

Conclusion

Focus your acquisition strategies on meeting conversion goals to achieve steady growth. With customer acquisition costs increasing by 50%, it's crucial to prioritize effective channels that bring in high-quality leads and improve conversion rates.

Content marketing is a highly efficient option - it produces over three times more leads than outbound methods while being 62% cheaper. Plus, SEO-driven leads have an average conversion rate of 14.6%, far outpacing the 1.7% close rate of traditional outbound marketing.

Referral programs are another powerful tool for growth. For example, Dropbox's referral program, which rewarded users with 500MB of bonus storage, boosted sign-ups by 60%, led to over 2.8 million invites in just one month, and slashed acquisition costs to zero. This shows how combining acquisition and conversion strategies can fuel success.

Some actionable strategies include:

• Create educational content to engage and convert users
• Invest in strong SEO practices for consistent, organic traffic
• Launch referral programs to build trust and loyalty
• Use email marketing, which offers an impressive $38 return for every $1 spent

Related reading

• How to Build the Best Marketing Toolkit
• Social media toolkit: Creating one for your organization
• What Is A Brand Toolkit and How You Can Create One?
• What Is Strategy Consulting? (And when to hire a consultant to do it for you)
• Digital Marketing Services

Useful tools & services

• All Services

Frequently Asked Questions

What are the most important SaaS metrics to track?

The most critical SaaS metrics are: 1) Monthly Recurring Revenue (MRR), 2) Customer Acquisition Cost (CAC), 3) Customer Lifetime Value (LTV), 4) Churn Rate, 5) Net Revenue Retention (NRR), 6) Customer Activation Rate, and 7) Trial-to-Paid Conversion Rate. These metrics together provide a complete picture of your SaaS business health and growth trajectory.

What is a good SaaS churn rate?

A good monthly churn rate for SaaS companies is below 5% for B2C and below 2% for B2B/enterprise. Annual churn rates should be under 10% for B2B SaaS. However, the target varies by business model - early-stage startups may have higher churn while optimizing product-market fit, while established companies should aim for under 5% annual churn.

How do you calculate customer lifetime value (LTV)?

Calculate LTV by dividing Average Revenue Per Account (ARPA) by your churn rate. For example: $100 monthly ARPA / 5% monthly churn = $2,000 LTV. Alternatively, use: (Monthly ARPA × Gross Margin %) / Monthly Churn Rate. A healthy SaaS business should have an LTV:CAC ratio of at least 3:1, meaning customer lifetime value is 3x your acquisition cost.

What is customer activation in SaaS?

Customer activation is the moment when a new user experiences the core value of your product for the first time - the 'aha moment.' This might be creating their first project, inviting team members, or completing a key workflow. Activation is a leading indicator of retention: users who activate are far more likely to become paying customers and stay long-term.