💰 We Spent $450K Testing Funnels (Here's What Won)

👀 Exclusive Sneak Peek

This is the first look at something we won’t be releasing publicly for another 3-6 months. 

We think it’s archaic SaaS companies deploy $10k-$500k on ads without ever testing their ads or landing pages to see which drives the best results. 

We’re building something that will help cut wasted spend and drive far better performance. Stay tuned. 

Onto the main article, insights from today’s 4-min read:

• ⚡ 97% of site visits don’t convert, here’s how to fix it 

• 🔥 What we learnt from spending $450k testing funnels 

• 🔥 Why annual pricing upfront kills conversions

🚀 Growth Hack of the Week

What does Clay’s Pricing Look Like? 

Let’s run through Clay’s buying process to highlight an issue thousands of SaaS companies face. 

I’m interested in checking out their product, visit their homepage, like what I see and so decide to check out their pricing page.

The ‘Pro’ plan is $10 per month. Seems fair. But then I notice the toggle is set to annual. 

I’ve never used the product, why on earth would I commit to an annual plan?

So I switch to monthly and the price jumps to $20 per month!

They showed me $10 per month so now my mind is anchored to that price point. 

Even if $20 per month is great value for their product, and cheap compared to other alternatives my mind perceives it as a bad deal. 

And so I go searching for another service. Or just hold off for a day to think about it. But life happens, more important things crop up, and Clay was never thought about again. 

Why does this happen?

I fully get why Clay has designed their pricing in this way. Hell, I’d bet more than 40% of the people reading this newsletter have similar pricing.

The marketing & product teams get in a room and say “if we artificially increase the price of the monthly we can make the annual plan seem like way better value and cut churn!” 

Everyone enthusiastically agrees and that’s the last it’s spoken of. 

They’re not wrong. If you can get users onto an annual plan, churn WILL decrease dramatically. 

Here’s the data I show my consulting clients:

But as I said, most aren’t ready to commit to an annual plan based on just a quick glance at your website. 

You wouldn’t ask someone to marry you on your first date, why is this any different?

So how do we boost conversions?

Fun fact we spent $450k of a client’s ad spend to test out 5 different funnels to figure out the best approach. Let me lay it out for you for free:

Conversion from a website visitor to a paid PLG product is super low, typically 1-3%. 

Your first priority shouldn’t be trying to get them committing to paying, monthly or annual, it should be to capture the lead in a lower commitment way. 

That can be in one of three ways, ranked in descending order:

✅ A Freemium Product (best): free for a certain amount of usage (e.g. Grammarly) 

✅ A Free Trial 

✅ A Lead Magnet: for if your product is more sales led

The results? Companies with a freemium product typically see around 30% cheaper customer acquisition costs than companies that don’t. 

Freemium means a user has an easy, low commitment way to get started. 

Then they can graduate to a monthly plan. 

Then once they know they like the product, and have habits built up, this is where it becomes so important to convert customers to annual to minimise churn. 

Quick tip: we tested this a bunch and saw the best time to ask for users to switch to annual was after 2-3 months instead of 30 days or 180 days. Remind them of the annual discount with popups, headers at the top of the product, and emails. 

We built this to help segment users and identify the next action they should take. 

That’s all for today, hope you enjoyed!