Every SaaS company aims to get maximum returns against their investment, and they use numerous tactics. The company puts in numerous hours to develop a SaaS product, and it would be a shame if you do not get the desired momentum. It is important to find out if you are getting the required traction from the market for the desired growth or not. Effective SaaS marketing metrics would help you do so.
From aggressive marketing to product improvement, there are endless things that a company keeps working on to achieve their required goals. The SaaS marketing metrics help the companies with product improvement, better customer acquisition, and retention.
Digital marketing for SaaS companies is not the same as other types of products or services. You won’t market a software the same way you’re going to promote a t-shirt, a skincare cream or a watch. The major concern is selecting the crucial SaaS marketing metrics from the numerous options. It is nearly impossible to follow and make use of all the available SaaS marketing metrics. Moreover, getting stuck on the wrong SaaS metrics would only result in failure.
And so, one needs to narrow down and fixate only the ones that would impact the company’s growth. Whether you are a start-up or a long-standing player in the market, it is important to divert your focus only on those metrics that would help you monitor and evaluate your business growth.
Crucial SaaS Marketing Metrics
We have handpicked some of the most crucial SaaS marketing metrics that you must track this year:
Churn Rate
Whether your SaaS product assists in building websites or facilitates easy design templates, you need to focus on growth and implement proven customer retention strategies. Successful businesses remain apprised of the changes and take immediate measures to counter the negative impact. You can actually calculate the amount of the business you lost over a specific period with the help of Churn Rate.
Churn Rate SaaS metrics allow you to calculate the customers or businesses lost monthly or quarterly. The company can take immediate action and develop a customer retention strategy based on these metrics.
- If you want to calculate the number of customers lost during a specific period, you can use the Customer Churn Rate Metrics. You can use this data to understand the number of customers affected by any changes you made in the past and strategize accordingly.
- Another metric, the Revenue Churn Rate, allows you to check the amount of revenue lost over a particular period. These metrics also give you a clear idea of how the business’s revenue is affected by the loss of customers.
Annual and Monthly Recurring Revenue
Many SaaS products have a subscription model that helps them generate regular revenue. The Recurring Revenue metrics help you measure the amount of money your customers regularly pay for your SaaS products or services.
It is considered one of the most important metrics since the SaaS business model depends highly on recurring business. Using these metrics would help you check your business growth regularly.
Besides helping you monitor your revenue growth, these metrics can also help you narrow down on the customers that bring maximum revenue for your business. Based on this data, you can devise an incentivizing model that would focus on luring such clients to become your loyal customers.
- The MRR or monthly recurring revenue helps you check the amount of money your customer spends every month on your SaaS product or service.
- The ARR or monthly recurring revenue helps you check the amount of money your customer spends annually on your SaaS product or service.
Do you need help in effectively tracking your SaaS marketing metrics?
CLV / LTV / CLTV (Customer Lifetime Value or Lifetime Value)
CLV or LTV is the average money spent by your customers over time for your SaaS product or service. These metrics help to get a better insight into the company’s growth. Many investors use CLV or LTV to determine the value of your company. If your SaaS business follows a subscription model, then the CLV or LTV would keep increasing at every renewal on account of expansion revenue.
Note: a lot of marketers know about CLV/CLTV but they often neglect CVR marketing. CVR (Customer Value Ratio) is an important metric to track if you want to know how fast you’re closing deals and signing new clients.
CAC or Customer Acquisition Cost
Almost every business needs to invest time, money, and effort to acquire customers. CAC helps determine the cost that a company has to spend for new customer acquisition. For a SaaS business, the success entirely depends on the number of customers, and hence the major focus is on customer acquisition. However, the cost has to justify the final profitability.
By studying the CAC and CLV, it becomes easy to determine whether your business would survive in the long term or not. You would also need to keep track of the number of months you would need to recover your CAC.
Months to Recover CAC
As mentioned in the previous section, the SaaS company’s success depends on the number of customers acquired within a specific time frame. As a part of your marketing strategy, you must include the presentation templates that have this marketing metric integrated for every meeting. However, the cost incurred to attract new customers must also be factored in and then compared with the time taken to recover such cost.
Months to recover CAC metrics help calculate the number of months it would take to recover the cost of customer acquisition. For a start-up, it might reflect that more months would be needed to recover the cost. Therefore, you can easily make provision for the required cash flow for such months so that your business works without any hiccups.
CAC to LTV
This metric is pretty interesting and helpful since it helps the companies decide if their investments towards customer acquisition are fruitful or not. Therefore, you can easily check if such a business would sustain for long or not.
The impact of your sales and marketing campaigns is reflected in the metrics so that you can make important decisions based on them. Decisions such as spending more money on solidifying digital presence, campaigns, or changing the campaign tactic can be easily taken based on CAC to LTV metrics.
NPS or Net Promoter Score
Every business needs to use such metrics to understand the perception of their existing customers. NPS helps you get a quantitative or qualitative measure of your customer satisfaction and loyalty. It would show how likely they are to recommend your business to others.
Once the ranking is done, such reviews put by your customers help determine the direction of the company’s progress. When you observe a drop in customer satisfaction, you can adopt various growth strategies such as creating a customer feedback loop to get the customer’s feedback on what went wrong and then taking steps to improve the customer experience.
Active Users Metrics
As a SaaS company, you must have exact figures of the number of active users for your product or services. You must be able to know their weekly and daily engagement on your platform.
Understanding their usage for your products would help you improve your products and have a direct impact on customer satisfaction. You can get a clear idea if you can attract the right type of audience to your platform or if you need to make any changes to the UI to create a better experience.
Now is the time to track your SaaS marketing metrics the smart way.
Number of Active Trials
For those SaaS companies that are on self-deployment freemium products. With the help of these metrics, you can determine if the number of active trails is increasing or decreasing over a period. It would depict the popularity of your product or services and help you determine the next course of action.
If your number of active trails is regularly growing, you can understand that your SaaS product is on the right path to a growing audience. However, if the numbers reduce, you need to plan for major changes in your product or services to create higher demand.
As of now, assuming your SaaS model is just depending on an outreach group to enact preliminaries or give item demos. Why not automate it? Companies should keep at least one marketing tool. For example, marketing automation for WooCommerce can simplify using multiple channels for email or SMS automation. It’s a more adaptable process and will save your team time to deal with bigger projects.
ARPA = Average Revenue per Account
This SaaS marketing metric helps us determine the revenue generated by every user (on average) per month. There is a direct relation of ARPA to ARR and MRR. The higher your ARPA, the higher would be your ARR and MRR.
A higher ARPA reflects that the SaaS company is profitable on qualitative grounds. However, it does help you determine the sustainability of the business and therefore is an important SaaS marketing metric.
Final Words on 10 Crucial SaaS Marketing Metrics That You Must Track
SaaS platforms are different from regular software applications and, therefore, the KPIs you want to focus on are also different. Irrespective of the fact, whether you are a start-up or long-time player in this domain, understanding the importance of SaaS marketing Metrics is very important. You need to understand various aspects of your business, and these metrics help make your life easier by presenting clear figures.
Major decisions such as making changes in your marketing tactics, increasing or decreasing the expenditure on customer acquisition, determining the company’s valuation, the company’s sustainability, etc., can become simpler with the help of these crucial SaaS marketing metrics.
Tracking these SaaS marketing metrics this year would surely turn around things for you and direct your business into the proper direction of growth and progress. Make use of these metrics and take the crucial decision for your company’s success.
Growth Hackers is one of the leading SaaS marketing agencies helping businesses from all over the world grow. There is no fluff with Growth Hackers. We help entrepreneurs and business owners in tracking their SaaS marketing metrics, driving targeted traffic, generating qualified leads, optimizing their conversion rate gathering and analyzing data analytics, acquiring and retaining users and increasing sales. We go further than brand awareness and exposure. We make sure that the strategies we implement move the needle so your business grow, strive and succeed. If you too want your business to reach new heights, contact Growth Hackers today so we can discuss about your brand and create a custom growth plan for you. You’re just one click away to skyrocket your business.
