How to Diagnose a Leaky SaaS Funnel

If your SaaS business isn't growing, the problem is likely a "leak" somewhere in your marketing and sales funnel. Before you spend more money on top-of-funnel activities (like ads or content), you must diagnose and fix the leaks.

The most effective way to do this is to work from the bottom of the funnel up.

The Bottom-Up Diagnostic Framework:

Start with your existing customers and work your way backward to the first touchpoint.

Retention & Happiness (The Foundation):
- Question: Are my customers happy and sticking around?
- Problem: High churn rate (e.g., customers leave after 1-2 months).
- Diagnosis: You have a product-market fit or onboarding problem. Your product isn't delivering on its promise, or customers aren't reaching the "aha!" moment where they experience its value. Pouring more users into a leaky bucket like this is a waste of money.
Trial-to-Paid Conversion:
- Question: Are trial users converting to paying customers?
- Problem: Low trial-to-paid conversion rate.
- Diagnosis: You likely have an onboarding or sales process problem. Users are not being successfully guided to the core value of the product during the trial, or your sales process is failing to close interested leads.
Visitor-to-Trial Conversion:
- Question: Are website visitors signing up for a trial?
- Problem: High website traffic but a low number of trial sign-ups.
- Diagnosis: You have a messaging problem. Your value proposition, marketing copy, or positioning is not resonating with your target audience. They don't understand what your product does or why they should care.

Only after you have plugged the leaks at the bottom of the funnel should you focus on pouring more traffic in at the top. Everything at the top is a vanity metric if the bottom of your funnel isn't healthy.

Rule of Thumb Number to Identify Leaky Funnels

The Funnel is leaky if it's not in the following ranges:

Trial Requires a Credit Card
- Visitor to trial 0.5-2%
- Trial to paid 40-60%
Trial Doesn't Require a Credit Card
- Visitor to trial 5-10%
- Trial to paid 10-20%

Tags: #SaaS #marketing #sales #funnel #diagnostics #churn #onboarding #conversion #product-market-fit