Conversion Rate
Why signup-to-paid conversion is meaningless without cohort context — and the definition we recommend.
What is it?
Conversion rate is the percentage of signups that become paying customers. It is the most-quoted, least-useful metric in SaaS — reported as a single lifetime number, it flatters bad months and punishes good ones, because it mixes cohorts that had fourteen days to convert with cohorts that had fourteen months.
The definition we recommend is cohort-based: conversion is only meaningful as the share of a specific signup cohort that converted within a fixed window. Anything else is an average of incomparable things.
How to calculate?
Take everyone who signed up in a given week or month, then measure what percentage had converted to paid by day 7, 14, 30 and 90. Forty signups in a week with six paid by day 30 is a 15% day-30 conversion rate for that cohort — a number you can compare, cohort against cohort, without the survivorship noise of a blended average.
Compare cohorts to each other, not to a rolling average. Then, and only then, will your conversion rate tell you whether last month's landing-page change actually worked.
Decisions to be made
Fix the definition before anyone quotes the number — each choice changes it materially:
- What counts as the starting event — every signup, or only activated accounts? (Trial starts have their own metric: trial-to-paid conversion.)
- Which conversion window is the headline — day 30 is the common default; pick one and keep it fixed across cohorts.
- Do reactivating customers count as conversions, or only first-time payers?