7 Essential Marketing KPIs for SaaS Companies in 2017
The industry of Software-as-a-Service (SaaS) knows no boundaries of growth in today’s marketplace. Companies are leveraging their competitiveness and decision making standards with its help. Even the penurious segments of this industry are expecting a compound annual growth rate of 19.7% by 2019. Not only this, an escalation of more than 25% is expected in SaaS deployment as compared to traditional software deployment rates by 2020.
Even the penurious segments of this industry are expecting a compound annual growth rate of 19.7% by 2019. Not only this, an escalation of more than 25% is expected in SaaS deployment as compared to traditional software deployment rates by 2020.
Benefitting HRM, CRM, procurement solutions and collaboration softwares, SaaS enhances seamless integration and initiates time and space conservation. But with its usefulness and growth comes the potential risk of market saturation. With the positive aspects, 14% of startup failures was also indicated due to competition and inability to market or trade the products.
In order to ensure that you rise above all challenges by the marketing sector, following are seven distinct aspects with respect to Key Performance Indicators, which must be considered while marketing your SaaS product:
The Saas Marketing Metrics That Matter
1. Distinguish Qualified Marketing Traffic from Customers
Any website is designed and maintained solely for the traffic. Be it educational or graphic content, the traffic is whom the website works for. Engaging unique visitors is a challenging yet routine task, but the SaaS industry has to be looked in a different manner.
Usually, most of the SaaS websites have a portal of ‘Log In or Sign Up’ for a cloud-based mechanism and solution. New visitors are taken in by comforting them to sign up and influenced to revisit by logging in. Boosting app users this way increases the drive of overall traffic but in turn may lead to capturing false data. A boosted website traffic is a result of sheer efforts, but unqualified leads may turn to a bane.
The visitor database is needed to be filtered to distinguish the qualified and potential visitors from those who’re already your customers. This will build grounds for actionable traffic KPIs and tracking accurate traffic growth.
- Identify visitors is event tracking. It is the frequency with which a visitor reaches the login screen or clicks the navigation links, or
- Segregate leads by using in-app analytics to identify log-ins and usage per month.
2. Sales Cycle Leads
Leads are the potential customers which share the interests the organization aims. They reach you after rigorous research and are more likely to get converted.
Leads are classified into MQLs and SQLs according to their lifecycle stages. While Marketing Qualified Leads (MQLs) are ardent prospects as considered by the marketing team, who’ve utilized your content multiple times or keep returning for more from your website. Sales Qualified Leads (SQLs) are apt for direct follow-ups, as reported by the sales team since they’ve moved ahead with basic research to the evaluation of vendors.
Making such distinction helps in nurturing leads according to what they desire. The marketers get direction to the kind of content with the right context. Measure your leads monthly.
3. Business Churn
A business is termed as successful when it keeps the customers content after converting them. Continuing to maintain and nurture them is important not only to serve them but also to empower them as promoters. By providing specific yet influential insights on day-to-day tracks, churning can protect your business from major differences.
Usually, SaaS organizations follow annual subscriptions. But while tracking churn quarterly or monthly, identify the buyer personas of not only the customers but also of the industries. Create transparency and boost visibility within the organization with discussions on departmental, sales, marketing and customer success.
4. Lead to Customer Rate
Lead to customer ratio indicates how many leads get converted into paying customers. It reflects your performance as a marketer and helps in strategizing your lead nurturing and sales process methods.
Divide the total no. of calculated customers with the total no. of leads. Multiplying the remainder by 100 gives the sharp percentage of lead conversion. For instance: 30 customers from 300 leads gives 10% of lead-to-customer rate.
5. Customer Lifetime Value (CLV) Ratio
Customer lifetime value, as the name suggests, refers to an average calculation of how much the converted leads invest in your product in their lifetime as your customer. It measures the part of net profit which specific customers contribute to, and also anticipates future relationships.
Step 1: Lifetime Rate of a Customer can be evaluated by dividing the digit 1 by your business Churn Rate. For instance, if the churn rate is calculated to be 5% (0.05), your CLR is 500 (1/0.05).
Step 2: Total Revenue Per Account (TRPA) needs to be calculated by dividing the average revenue earned by the total number of converted customers. Consider your revenue to be ₹5,00,000. Divide it by 500 customers and your Average revenue per account would be ₹1,000 (₹500,000/500 = ₹1,000).
Step 3: The customer lifetime value will be found out by multiplying customer lifetime by average revenue per account, here LTV would be
₹1000 * 500 =₹500,000.
6. Customer Acquisition Cost (CAC)
CAC is a metric that computes the amount of money invested in gaining a customer, including investments of approaching as well as converting them. It evaluates the worth a customer holds. Customer acquisition is the most fundamental goal of any enterprise. With the help of CAC, strategic planning and budgeting can be initiated for profitable goal setting.
Dividing total sales and marketing expenditure with the number of new customers attained in a specified period of time calculates customer acquisition cost of that time duration. Like, spending ₹7,00,000 for getting 700 new customers on board in a month gives the CAC of ₹1,000.
7. CLV to CAC Ratio
Specially beneficial for subscription-based companies, CLV: CAC ratio shows the relationship between the lifetime value of a customer with the amount spent to attain that customer. This metric can innovate your marketing schemes, helping you manage a record of the kind of content and programs that turn successful and more profitable.
Simply compare the calculated CLV and CAC of your company. An ideal business should have CLV at least three times greater than its CAC.
- Ratio lower than 3:1 (like 1:1) indicates you’re spending more than necessary.
- Ratio higher than the ideal (like 4:1) indicates you’re conserving too low than required.
To conclude, adhering to metrics like these can facilitate improved functioning, pace and strategic marketing techniques since you’ll know your state of finance investments and spaces where you lack.