What conversion rate can be expected for a typical SaaS application using Google AdWords?

I think what you'll find for most SaaS services, unless (and probably even if) they are truly consumer-scale ... irrespective of precise conversion rates, you'll find that keyword pricing is always maximum possible.  Generally, priced to the point where the direct ROI will be negative or borderline negative if measured only directly.  All good keywords are going to go for many dollars per click.  And there is never enough volume. Why?  You generally have at least a few successful vendors in any space that grow to have marketing budgets in the millions and then tens of millions of dollars per year. First, there just aren't enough searches for "applicant tracking service" or "electronic signature service" or "on-demand human resource management" to fill up that whole budget, even at a maximum bid price.  So in most categories, the marketing budget for Adwords is maxxed out even with a maximum bid price. Second, since the volume is lower, analysis isn't as sophisticated.  This means overbidding.  There just isn't enough volume, and lead conversion takes too long with a SaaS sales cycle, to in many cases do B2C-type keyword bidding. Third, B2B marketers are often OK "losing" money on Adwords.  Because of the first two points -- their maximum absolute budget is rarely hit on Adwords, and they don't measure it as effectively as B2C marketers -- it's fine as long as they generate revenue, even if the ROI is suboptiomal.  It's just one B2B channel.  In B2B, many channels are pretty darn expensive.  That's par for the course and in the end OK as long as every channel isn't pretty darn expensive.

+1 to all of the other answerers on this thread.  In my opinion (and to kind of summarize) a winning formula for adwords is a solid combination of: Highly targeted keyword groups Highly targeted landing pages Highly skilled web analytics person(s) As mentioned, it depends on the keyword selection.  For instance, "Google App Plugins" will most likely have a high volume of clicks but a lower conversion rate since it is way too broad.  For this phrase, you can have a whole slew of Google app plugins from accounting plugins to wireframing plugins, etc. "Google Drive plugins for Salesforce CRM" is much more targeted, so it will most likely have a lower volume of clicks, a potentially higher CPC (depending on competition levels of course) but a much more focused web visitor who is more likely to be looking for your exact solution. However, if your very targeted ad takes the visitor to a very generic products page (or a home page) then your message becomes unfocused and you've complicated the process and added extra steps before they can convert (sign up for a free trial, request more info, purchase, etc.)

Feathers or lead? The answer depends entirely on your context. Anyone that quotes you a specific conversion rate without knowing anything else about your application, industry, audience or keywords is probably trying to sell you a service.   For example, average conversion rates for internet/telecom is considerably higher than say home and garden. The specific adwords and targetting will have a huge impact (If I try to sell bibles by keying off of "sin" and "pornography", I'm going to get a lot of impressions, but probably a pretty low conversion rate.) Your brand and reputation are also going to have an impact. (Even if I'm in the market for a new PC and I click through, I'm not going to provide any information if I land on "Bubba's Discount Firearms, Hookers and Hi-Qwality PC stuff"). Even if you get the conversions, that doesn't mean that you'll be able to turn them into actual revenue. (offer a chance at a free iPad and you'll see what I mean. You'll get tons of conversion, but probably not a high completed sale rate)   There are just too many factors to really provide a meaningful number. You're probably better off turning the question around and asking yourself what conversion rate you need to make it cost effective and seeing if it makes sense to play the game. At the end of the day, what other people and companies experience has almost no bearing on your results. It's how you pull together all of the elements for your specific situation. Start small, assess your results, fine tune your approach and then make your own predictions for how it will scale.

Low 1 digit %, 5% being a good result. Of course it will depend on which category your product belong to. CRM, project management, online back up or email marketing are very competitive and conversion is lower from our experience at http://GetApp.com. If you use vertical marketplace, you can expect the conversion to be higher, 7% on average.

I looked at the data of our B2B marketing attribution product and built a report this past year looking at AdWords contribution to business.I found that for SaaS, AdWords represents about 20% of lead volume on average. Typically, a lead converts to SQL at about 10 - 15% and the SQL converts to customers at 10 - 20%. It of course depends on the specific company.It's important to stay focused though on the outcome of the marketing: revenue. It shouldn't matter what the conversion rates are as long as it's profitable (except for optimizations).If you're interested in all the data from the report, you can skip the form and just access the PDF at http://www.bizible.com/hubfs/H1_2015_B2B_AdWords_Benchmarks_Report_by_Bizible.pdf

It really depends on keyword selection. SaaS adwords are really expensive, so you need to be certain that any click is intended. Avoid broad terms and restrict to strictly the keywords you spot (avoid broad targeting and content network). You can easily see what the users did input in the keywords view of Adwords. Create and curate your bad keywords list to avoid false positive (eg students). When your campaign is correctly setup you can hope a 10-15% conversion rate to active users (but not paying users, that's another part of the funnel).

Why does it matter? You're conversion rate could be 1% or 20% but that's not important. Your revenue is. Any answer here could not tell you what to expect. It comes down to your landing page and the conversion rate optimization tactics you use to increase your conversion rate.

AdWords is similar to direct marketing in that 1% to 2.5% is quite common. If you're lower than 1%, it's going to be difficult to make money. You definitely want to be in the 2% to 2.5% range if you can, and higher than that is even better and gives you something to shoot for.

Could you please share some information if possible. For example are these conversion rates applicable for SaaS services with no free plan? Or better what conversion rates for the PAID plan should one expect for services that offer a free or for services that offer no free plan? Thank you very much in advance, Konstantinos