Power is definitely a factor. But other than that, other factors might come into play. Here's what I am guessing.
- Power (obviously)
- Magical knowledge
- Magical exploits (ie. if you have saved many lives or led a great journey)
- Deeds that benefited mankind (for instance, Warrod has used his magic to stop the desertification)
- How well known you are, etc.
But the ranking among the Wizard Saints is also not important. For instance, Jura is currently the 5th Wizard Saint and there is no way he is more powerful than Makarov.
And yes, Natsu defeated Jellal. But you have to consider that Jellal was:
A) weakened by the fact he had recently recovered his full power because he had been using a thought projection for years and
B) Natsu was in Dragon Force as well as fueled by Etherion.
In reality, Jellal is among the most powerful of Wizard Saints, for he was a member of the 10 Wizard Saints at a fraction of his power because it took most of his power to simply maintain the thought projection. He was also a prodigy as a child, to the point that as a child he blew up a small mountain with a wave of his hand while using self-destruction magic.
All in all, power is a major factor.
Also, with the recent exploits of Natsu (the avatar fight specifically Ikusa Tsunagi fight) should land him on the wizard saints.