It’s not a secret why metrics are important in making sure you get the best results for your SaaS business.
It’s not a secret why metrics are important in making sure you get the best results for your SaaS business.
At the same time, if your metrics are aligned to your company objectives and it’s being tracked accordingly, then you’re utilizing the results to your advantage, giving more room for excellence and will create a sure digital market impact.
If you seek improvement in your marketing strategies, having the right metrics can help you streamline what is important to your business. Of course, the metrics you measure must touch on every aspect that your business prioritizes. Measuring and tracking these metrics in areas that require support will sharpen the quality of your output and increase the efficiency that your business needs.
So, you must first determine what your priorities are as a company and never forget that you’re selling a service. The level of customer support and convenience your clients are expecting of you is on a whole different bandwidth. Positive client feedback, end-user reviews, and the totality of customer experience all contribute to how you can keep your customer retention numbers up and going.
We’ve come up with a list of important metrics to help you measure the effectiveness of your SaaS marketing strategies:
- Leads. Or the number of those who are curious about you.
- Activation. Or the number of leads who see your product as a need and start paying for it.
- Recurring Revenue. Or the average monthly repeat payments for your SaaS product.
- Churn Rate. Or the number of lost or inactive users who do not subscribe anymore.
- CAC. Or how much you are willing to spend to for changing the heart of a person from an interested onlooker to a buying customer.
- CLV or LTV. The total average monetary value that your customer brings in.
- Unique Visitors. Or the ones checking out your SaaS website.
Here are these crucial metrics as we discuss them one by one:
1. Leads, Leads, Leads
Are these leads quality and qualified?
Leads are the top driver of your sales. But it’s necessary that you realize what kinds of leads are shooting straight into your pipeline. Do these leads have chances of converting into faithful customers? In analyzing these data and customizing your content to match your leads’ needs, conversions have higher chances of happening.
Definitely, this is a broad term, but we can break it down in the context of its stages:
Leads
We’d like to call them “pre-clients”. They’re the ones who have subscribed to your mailing list or newsletters. Mostly because they’re looking for options to provide a solution for their needs. They may or may not be interested in your product or in what you’re marketing but they’re here to gauge what can benefit them.
Marketing Qualified Leads or MQLs
These are leads that have opened up further in their interactions within your site. They have made continuous actions and engagements with your business such as making downloads of important service guides, making constant inquiries, and have made numerous website visits.
Sales Qualified Leads or SQLs
They have pretty much qualified themselves to be endorsed to the sales team for follow-up and possibly close a deal with them. These leads have also provided sufficient information about themselves that the marketing and sales team can work with to make sure that they make the conversion from being merely a lead to a customer.
Customers
Conversion has been successful. These clients have started paying you.
2. Activation
Is my acquisition strategy effective enough to activate leads into paying customers?
While it is essential to measure your acquisition numbers with your leads, it is equally important to determine the percentage of these users who have built engagement with your service.
We determine activation by the actions your users have completed that have shifted the way they see the value of your product or service as beneficial to them. For example, the first time a user has completed designing an invite using Canva and shared it on Facebook, a client completing a transaction over Shopify successfully, and the like.
An increased activation rate means an increase in effectiveness and efficiency. Of course, determining the percentage of activated users versus acquired users can help you optimize your marketing strategy better.
3. Revenue (Monthly Recurring Revenue)
Do I have a steady MRR baseline to be able to create optimum financial health for my business performance?
And because payment happens during activation, this creates an impact on the revenue side. Technically, when we talk about revenue here, it refers to the average contract value (ACV) that your customer pays you every month. Monetization occurs when the users end up paying for the subscription. And as long as you keep up the good work of improving your product value, you’re sure to retain these customers.
Tracking monthly subscription fees, upgrades and downgrades your clients have made, accounting for lost revenue, and discounts they’ve acquired, all amounts to keeping your MRR in check. This then can be used as a baseline for your Annual Recurring Revenue so you can forecast better and help you gain ground on your annual charges.
4. Customer Churn Rate
Am I optimizing these numbers so I can directly reduce and control my customer churn rate?
To put it in simple terms, “Churn” refers to the number of subscribers or clients you’re losing within a certain period. That’s why it is an important metric to measure because it’s crucial to keep track of your company’s growth or the other way around- its decline. This is basically your attrition rate.
Obviously, your churn rate has a direct impact on the financial health of your business.
Now, “churned users” are those who are no longer active, so when these numbers go up, then it would bring about a negative impact on your service. Putting a radar on your churn rate and monitoring this effectively can help you hone your strategies to reduce the chances of losing customers.
5. Customer Acquisition Cost (CAC)
Am I taking this metric seriously to enhance customer value and improve customer relations?
For every great startup in general, you need to have customers to keep your business going. It’s a no-brainer that customers are key for you to make your business successful.
This is where the Customer Acquisition Cost comes into play. It refers to the cost your service or business incurs to convert an end-user into a paying customer. Your total spending on your marketing- ads, what you pay your marketing team, production and inventory costs, etc.
So how do we measure this? By dividing your total spending on marketing by the number of customers you’ve acquired within the timeframe your money was used.
Your CAC stats is like a filter for your business model. Looking into this can help you hit the right spot in your marketing strategies. It mostly reflects what matters to your customers most. And from this, you can make room for improvements on how you can market better.
6. Customer Lifetime Value (CLV or LTV)
Are you providing a runway for your customers to ensure their retention for the long haul?
Your Customer Lifetime Value or your LTV is the total revenue on average that your customer generates within the period they use your service. This gives you a long-term insight into strategies that can boost your customer engagement.
As they say, customer retention is a great indicator that you have solidified your product value. Your customers then have an ongoing value on them. It’s not just what they can spend on your service today, but rather for the long haul. This reduces your churn rate and thus, brings in a higher LTV, which in turn increases your profits.
In reality and best practice, your Customer Lifetime Value must be higher than your Customer Acquisition Cost to keep your business profitable– three times higher that is.
7. Unique Visitors
Is your data showing an upward trend for this metric?
An increase in unique visitors to your website is the simplest indicator that your SaaS marketing is giving you positive results. It is the number of individual visits to your SaaS website during a specific time. You can easily see this when you use Google Analytics. An upward trend for this metric usually means that your marketing campaign at the top of the funnel is doing well.
If you see this in your metrics, what you need to do is find out which channel is sending you the most number of unique visitors. Is it organic traffic? Social media? Or your paid channels? You would want to focus and improve your marketing efforts to that channel first.
Your turn…
To increase the effectiveness of your SaaS Marketing, make sure that you take a good look at your metrics. Track, monitor, analyze, and optimize them to ensure that your marketing efforts are goal-focused. The way you handle your marketing strategies and how you utilize the data you get from monitoring your metrics must be aligned with your business goals.
Choosing the right kinds of metrics for your business can strengthen your objectives and give you a clear-cut pathway to success.
