Essential SaaS Marketing Metrics For Business Growth

The growth of SaaS start-ups in the country is tremendous. Young individuals with sufficient management experience join prestigious companies as interns to lay the foundation for their business empires. 

However, as with every start-up business, there will be a ‘Roller-coaster ride’- with obstacles and challenges. Despite the knowledge and experience, launching a business in a new domain, like SaaS, can be challenging. 

Every business has its distinct strategy, offering tools for various business models. 

This article takes you through the essential marketing strategies for your SaaS business growth. 

What are SaaS Metrics?

SaaS (Software-as-a-Service)metrics are standards that companies choose to establish balanced growth. Like traditional KPI (Key Performance Indicator), SaaS metrics enable businesses to evaluate the organization’s success and effectively adapt themselves for a robust economic future. 

These subscription-based services are Shopify, Mailchimp, and HubSpot. The unique feature of the industry is the subscription itself. If the product is remarkable, customers stay connected for a long time; that is how metrics do the magic! 

If you are directly involved with the customers, you must know where your product leads. This is done by monitoring. The requirement is clear- the business must bring in more revenue, and to achieve this, the company must at least focus on MRR (Monthly Recurring Revenue) and LTV (LifeTime Value).

What are Efficiency Metrics?

Efficiency metrics are data points used by marketers to assess marketing effectiveness. These metrics help analyze current performance and predict future trends for informed decision-making. 

Measuring efficiency metrics helps assess resource utilization in businesses and companies. 

How Can I Boost My Business with SaaS Marketing Metrics?

Churn Rate

In this metric, you learn the 2 types of churn rates: customer churn and revenue churn. 

First, observe the number of customers who stop using your services every month.

 Next, monitor the monthly revenue that the customers provide, thus adding it to the total revenue. 

Revenue churn measurement is more effective than customer churn calculation when analyzing the steps. This is because the revenue shows the health of the business. 

With customer churn, you can easily find how many customers left your subscription when there are only 100. However, if the number increases, SaaS startups struggle to find or monitor them. 

The churn rate is important because even with about forty thousand losing a few thousand customers will hugely affect the business.

Hence, it would help if you focused on retaining the customers. Once you collect the numbers and details, your goal should be to minimize the churn rate by retaining them. 

Activation Rate

Under this metric, when a customer signs up for your services, you present them with the ‘Aha’ moment when they open the first page. Here, the customer observes and understands the value of your product. 

You need to understand which part of the product delights your customer. The activation metric varies from one product to another, giving you long-term success. This is done by user path mapping or behavioral analytics. 

ARR and MRR 

While Monthly Recurring Revenue (MRR) represents the income brought by the customers into the business every month, ARR provides information about the income brought into the business every year. It is called the “Run Rate” and is determined by multiplying MRR by 12 months. 

ARR is one of the vital metrics as SaaS businesses make recurring revenue. With ARR, businesses can renew their pricing plan for enhanced growth. 

CAC (Customer Acquisition Cost)

The customer acquisition cost of a SaaS company is the most important metric as it represents expenses made by a business on marketing and selling. The calculation involves dividing the total amount spent on sales in a month by the number of clients. 

CAC = Sales & Marketing Cost / Number of customer acquisitions

LTV (LifeTime Value)

As you have explored CAC, let us learn about LTV or Life Time Value. The ultimate formula is:           LTV > (3 x CAC). 

The lifetime value of clients entirely depends on how much the customers like the services of your business. 

LTV = Revenue per client or customer lifespan – Maintenance cost

Unlike other metrics, LTV provides a longer vision of customer engagement strategy. This metric enables you to predict how important a customer would be for your business, and how much revenue it would bring while retaining. 

Expansion Revenue

This is the most powerful metric of all. When a client progresses to an expensive plan from the ordinary one, they get advanced services and boost the revenue.

You can expand the revenue by recommending the client to a more expensive plan. It is easier to earn than getting new customers as it is three times less expensive. 

Choose expansion revenue over acquiring new customers, as it helps your business grow. 

NPS

NPS or the Net Promoter Score represents the value that the customers get from the services you offer. With this metric, your business can assess how delighted or disappointed your customers are with the product or service.

NPS is calculated by asking questions such as “How likely do you recommend our product to a friend?” using a scale of 1 to 10, where 1 is the lowest and 10 is the highest. 

Once you find this metric effective, your business can enhance your services accordingly. The comments enable you to boost the SaaS services in the early stages. 

Conclusion

In present times, you understand anything and everything about your business performance. Various metrics are available to boost your SaaS business growth. You can optimize the latest AI and analytics tools to evaluate your business data and get the degree of your success. However, with these 7 essential SaaS metrics, your game in business just got smarter! 

Author’s Name:- Harikrishna Kundariya.