Data Analytics

7 Must-Have Metrics for Every SaaS Marketer to Drive Growth

In this blog we will talk about 7 must-have metrics for every SaaS marketer to drive growth and to help you evaluate the performance of marketing campaigns
DataChannel Research
5 min to read

In the fiercely competitive market, success does not come easy, regardless of your business niche. SaaS companies are no exception, but only with a little added pressure to sustain growth and retain customers for a longer time. (That’s even worse, right).

There is never an easier way for a technology company to sustain consistent growth, with customers always having the option to cancel their subscriptions. If customers are unhappy, they will simply move to the greener side of the grass, leaving you with a high churn ratio that is not at all good for your business's sustainability.

That is why it becomes crucial for you to create strategies that ensure positive outcomes. Every decision you make today will drive your future performance, and your future performance will define your business sustainability. The process of making the right decisions is not based on guesswork but on the KPIs you track.

Data never lies, and so do the metrics based on the data. By shifting your focus to customer success metrics, you can prioritize your actions and make decisions that favor your business's success.

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Why is it important for SaaS marketers to have an understanding of key metrics?

Once you access all the critical business information, you must create metrics that give you a vivid picture of where your business stands. This way, you will get to know whether your company is progressing, stagnant, or facing a downfall.

By getting a sneak peek of your company’s future, you can plan out your actions and move in a direction where growth happens.

Saas

In the competitive business world, you will never run out of data to track. From data and with the right tool comes metrics that provide you with the status of different business processes. This way, you learn what is working and what is not.

Here’s come another challenge, which is to figure out which metrics to track. Focusing on the wrong metrics can delay business progress, and at worst, can cost its sustainability.

Here we are listing down 7 must-have metrics for every SaaS marketer to drive growth to help you face the challenge.

7 Key Metrics that every SaaS company should track

  • Customer Acquisition Cost (CAC): CAC represents the measurement of the total amount you spend on sales & marketing, along with other costs incurred to acquire a new customer. It is an essential metric that helps you find the lifetime value you gain from each new customer. You can dig out the information by taking into account the total amount spent on sales & marketing (including the salaries and all the related expenses) in a given month and dividing it by the number of customers acquired in the same time frame.
  • Monthly recurring revenue (MRR): MRR is the measurement of the total revenue you generate from customers in a month. When you multiply the value by 12, you get your annual recurring value (ARV). You can boost your MRR by using tools like ProfitWell to calculate all your SaaS metrics in real time. Recurring revenue is what helps your business survive. As long as you deliver value through your service, you can make your customers keep paying you every month.
  • Activation rate: One of the most important SaaS metrics is the activation rate. It represents the in-app user experience that acts as a driving force for your business growth. The rate differs from product to product, depending on how useful the customers find your product. It can be worked out by combining the user journey, interviews, and behavioral analytics to discover product actions that correlate to your business success.
  • Churn: Measuring churn is a critical priority for SaaS marketers as the industry suffers from high levels of customer churn and revenue churn. Customer churn measures the number of customers or accounts, leaving your service every month in relation to the overall customer count. On the other hand, revenue churn measures the amount of revenue paid by customers leaving your service each month in relation to the overall revenue.  
  • Customer lifetime value (CLV): It represents the cumulative revenue generated by a customer over their lifetime on the account. The longer the customer uses your services, the higher will be their lifetime value. Customer lifetime value is a crucial SaaS metric as it provides you with a long-term perspective on customer engagement strategies and helps you anticipate how valuable customers will be for your business’s success.
  • Expansion revenue: To shield yourself from the inevitable effects of churn, you can focus on expansion revenue. It covers the revenue generated when an existing customer upgrades to a more expansive plan. The revenue will help you tackle the effects of your churn rate. You can easily generate expansion revenue by encouraging customers to shift to more powerful versions of your product. Making customers upgrade is way simpler than acquiring new customers.
  • Net Promoter Score (NPS): The metric is the measurement of how much value customers are gaining from your products and services. It allows you to find out why your customers are unsatisfied with your products, and you can use their feedback to improve your products. The NPS metric holds a key role in the initial days of your business as it helps you determine whether your product is customer-ready or not.
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Wrapping up

SaaS metrics are key performance indicators that provide you with a robust platform to evaluate the performance of your marketing campaigns and how much they contribute to your business growth. Some of the metrics are easy to calculate, while others are a little complex and demand customization as per your specific marketing strategies. With the ever-evolving SaaS industry and rising level of competition, using the mentioned metrics will help you measure your growth and gain a competitive edge.

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