In addition to being intangible, Software as a Service (SaaS) products are being updated by the provider frequently. Also, potential buyers perform elaborate research by analyzing the information gathered from diverse online sources. Leading businesses these days promote their cloud-based software solutions by sending quality and targeted content to leads throughout the buying cycle.
In addition to answering questions asked by leads, the targeted content influences their purchase decision gradually during the decision-making process. Leading cloud service providers these days deliver the right content to the lead at the right time through multiple SaaS marketing channels. Also, they drive customer acquisition and retention by launching various SaaS marketing campaigns.
Hence, entrepreneurs, managers, and other decision-makers need to measure the performance of their marketing campaigns and activities using a slew of SaaS marketing metrics. The widely used SaaS marketing metrics can be divided into three broad categories – acquisition metrics, funnel metrics, and monetization metrics.Read more: Critical SaaS Marketing Metrics to Track
- Acquisition metrics help decision-makers to identify and compare the channels through which leads find the SaaS product and become subscribers. Marketers use a slew of acquisition metrics to monitor and understand the activities of website visitors before they become leads or contacts.
- The decision-makers use funnel metrics to assess lead nurturing activities and monitor the lead’s journey in various stages in the sales funnel. These SaaS marketing metrics help marketers to influence leads by delivering informative, personalized, and targeted content about the SaaS product.
- Monetization metrics help decision-makers to measure customer lifetime value and decide how to sustain profitable growth by increasing customer lifetime value consistently. Many entrepreneurs use monetization metrics to measure ROI on SaaS marketing expenditure and differentiate marketing efforts based on ROI.
Decision-makers can measure the performance of SaaS marketing campaigns and activities only by combining the appropriate acquisition, funnel, and monetization metrics. The combination of varying metrics helps them boost SaaS marketing campaigns by taking informed decisions by analyzing real-time data collected from various channels.
Identifying 21 Crucial SaaS Marketing Metrics for Entrepreneurs and Marketers
Here are the most important acquisition metrics, funnel metrics, and monetization metrics for SaaS marketers.
Crucial Acquisition Metrics for SaaS Marketers
1) Website Visitors/Website Traffic
The success and performance of SaaS marketing campaigns directly depend on the number of website visitors or the size of website traffic. A SaaS provider can generate more leads and increase the conversion rate only more and more people visit the website. This acquisition metric helps an entrepreneur know how many visitors or how much traffic the website gets over a certain period. Most entrepreneurs use the metric to measure an increase or decrease in monthly website traffic.
2) Source/Medium of Website Traffic
As mentioned earlier, marketers these days divert traffic to the SaaS product website through various marketing channels – organic search, paid search, social media, emails, and website referral. But the number of website visitors varies across the source or medium of website traffic. Marketers can make informed decisions only by knowing the amount of traffic diverted to the website by each source. This acquisition metric helps them to compare various web traffic sources based on the amount of traffic driven by it.
3) Time on the Website
Most SaaS marketing campaigns influence the target audience by posting and sending relevant and informative content. SaaS marketers must know if the content is effective in driving lead generation and lead conversion by keeping the readers engaged. This acquisition metric helps marketers to assess the effectiveness of the content based on the amount of time visitors spend on the website. Visitors spend more time on the website when the content keeps them engaged by providing actionable and insightful information.
4) Bounce Rate
This SaaS marketing metric helps marketers to calculate the percentage of visitors that leave the website or bounce back to the referral website without taking any action – clicking on a link, filling in forms, or visiting other web pages. No business can run successful SaaS marketing campaigns without reducing the bounce rate. Marketers have to implement specific strategies to maintain a low bounce rate. They also need to revamp the landing page to ensure that every visitor gets the expected value.
5) Behavior Flow
This acquisition metric helps SaaS marketers to understand the behavior of website visitors based on the way they interact with the website. Widely used web analytics services like Google Analytics helps marketers to calculate this SaaS marketing metric by generating behavior flow reports.
According to Google Analytics Help,
“The Behavior Flow report visualizes the paths users traveled from one screen, page or event to the next. This report can help you discover what content keeps users engaged with your site. The Behavior Flow report can also help identify potential content or usability issues.”
6) Visitor to Lead Conversion Rate
SaaS businesses embed a slew of options in their product website to convert website visitors into leads. Some businesses request visitors to become newsletter subscribers by sharing their email ids. At the same time, many businesses require website visitors to share their contact information to download digital content like ebooks. That is why; SaaS marketers need to measure the percentage of website visitors that become leads using this acquisition metric.
7) Trial/Demo to Customer Conversion Rate
As the name suggests, this metric measures the percentage of leads who become customers by making payments after using the SaaS product on a trial basis or receiving a demo. A high trial/demo-to-customer conversion rate depicts that the SaaS products meet both needs and expectations of free trial users. On the other hand, a lower percentage makes it essential for the business to optimize the cloud-based software and ensure that marketing messages are aligned to the SaaS product.
Crucial Funnel Metrics for SaaS Marketers
8) Email Subscribers
Many people these days access the website with the sole intention to gather information. They are not interested in buying a SaaS product. But they want to access information shared by the business through newsletters and emails. They share their email ids with the intention to receive informative emails and newsletters. The decision-makers can use this funnel metric to differentiate email subscribers from leads or potential customers.
This SaaS metric helps marketers to identify the website visitors who are interested in the SaaS product offered by the business. In addition to becoming email subscribers, this category of website visitors shows their interest in the SaaS product by filling in the form posted on the website’s product or Contact Us page. Marketers can convert the leads into customers by implementing lead nurturing strategies.
10) Marketing Qualified Leads
SaaS businesses these days distribute informative and promotional content through multiple digital channels. Hence, leads engage with the content through specific communication channels. The SaaS marketing metric helps marketers to understand how leads engage with the content distributed by the business. Also, marketers can use the SaaS marketing metric to identify and differentiate qualified leads based on the pages visited by them and the content downloaded by them.
11) Sales Qualified Leads
As the name suggests, this funnel metric helps marketers to identify the leads who want to buy the SaaS product. The sales qualified leads to convey their intention to buy the SaaS product in a variety of ways – requesting a free trial, booking a product demo, and downloading product information. Marketers should focus on converting these sales-qualified leads into subscribers.
12) Sales Opportunities
The customers do not negotiate with companies offering B2C SaaS products or low-cost B2B SaaS products. But they start conversations and negotiations with the sales team after receiving a quote and before buying a high-value SaaS product. This funnel metric helps SaaS marketers to identify opportunities in the sales funnel to convert sales-qualified leads into customers or subscribers.
Businesses offering premium SaaS products can use this funnel metric to calculate the number or percentage of leads who have subscribed to or signed up for the cloud-based software or service. But businesses offering freemium SaaS products have to use the metric to differentiate customers who have made payments to access premium features from customers who are accessing only complementary features.
14) Conversion Rate
The leads become customers at various stages in the sales funnel. This important SaaS marketing metric helps decision-makers to know the number or percentage of leads converting into customers at every stage in the sales funnel. The information helps marketers to identify the factors that drive conversion at various stages in the sales funnel. Also, they can leverage the actionable information to improve conversion rate in every stage of the sales funnel.
15) Free Trial/Demo Requests
Most SaaS companies these days allow leads to use and evaluate the cloud-based software or service by requesting demos or free trials. Seasoned marketers know that most customers these days try and evaluate multiple SaaS products before making a payment. Hence, they need to check if the free trials and demos are effective as a SaaS marketing strategy to drive sales conversion and sustain revenue growth.
Crucial Monetization Metrics for SaaS Marketers
16) Customer Acquisition Cost (CAC)
SaaS businesses have to spend money on running multiple marketing campaigns. Hence, they calculate the ROI on marketing expenditure based on the cost of generating a lead or the cost of converting a lead. This monetization metric can be calculated for a specific period by dividing the overall marketing expenditure by the number of leads generated/converted.
17) Customer Lifetime Value (CLV)
SaaS businesses can sustain profitable growth only by reducing customer acquisition costs and increasing customer lifetime value (CLV). Marketers determine the lifetime value of a SaaS customer based on the value of her relationship with the company or business. The lifetime value of individual customers differs. But marketers can calculate CLV accurately only after calculating the average revenue per customer and the customer churn rate.
18) Customer Lifetime Value to Customer Acquisition Cost Ratio (CLV: CAC)
This important SaaS marketing metric helps decision-makers to compare the cost incurred to acquire a customer to the lifetime value of the customer. Entrepreneurs use this single metric to measure and compare the performance of SaaS marketing campaigns based on two important metrics – CAC and CLV. The metrics help them to differentiate high-performing marketing campaigns from poor-performing marketing campaigns. At the same time, marketers can track this metric to identify the marketing campaigns that need to be finetuned or optimized.
19) Customer Churn Rate
Often customers cancel subscriptions and switch SaaS providers due to a variety of reasons. The entrepreneurs can retain customers and drive revenue growth only by tracking the percentage of customers who cancel their subscription to particular SaaS products over a specific period – month, quarter, or year. Entrepreneurs and marketers can boost lead generation and conversion activities consistently only by keeping the customer churn rate low.
20) Revenue Churn Rate
The monthly recurring revenue (MRR) of a SaaS provider reduces each time a customer cancels or downgrades her subscription plan. Entrepreneurs can increase recurring revenue by making informed decisions only by keeping the revenue churn rate. Also, they need to divide revenue churn into multiple categories based on specific reasons – cancellation, downgrades, bankruptcy, and competition. But marketers often consider revenue churn rates due to cancellations and downgrades.
21) Net Promotion Score
Many marketers these days use the net promotion score (NPS) as an additional SaaS marketing metric to measure customer satisfaction rate. They calculate NPS by asking customers a simple question – how likely will you recommend our SaaS product to others? A large percentage of customers are likely to recommend the SaaS product to others if the NPS stands between 9 and 10. On the other hand, marketers have to find answers to the question – of why customers do not recommend the SaaS product to others – if the NPS is between 0 and 6.
Every cloud service provider these days promotes SaaS products by launching multiple digital marketing campaigns and through multiple marketing channels. Hence, the decision-makers can measure and boost marketing activities only by combining three different types of SaaS marketing metrics. However, it is always important for entrepreneurs, managers, and marketers to combine the right metrics to measure all important aspects of SaaS marketing campaigns.
Most businesses these days drive lead generation and lead conversion by running multiple digital marketing campaigns. Digital marketing campaigns like social media ads and pay-per-click ads help enterprises to generate more leads in the short run by increasing traffic to their websites. At the same time, a business can generate more leads and increase conversion rate in the long run by running search engine optimization (SEO) and content marketing campaigns.
According to Amazon Advertising,
“Marketing metrics are a quantifiable way to track performance and are an important marketing measurement tool for gauging a campaign’s effectiveness.
The most appropriate marketing metrics vary greatly from one campaign to the next, but in general, they measure the effects of your campaign on audience actions.”
The CEOs need to measure the performance of every digital marketing campaign as well as assess the impact of the campaign on preset business goals. They need to measure the performance of short-term and long-term marketing campaigns using different metrics. At the same time, they must use the right marketing metrics for CEOs to understand how a specific marketing campaign performs and what measures must be taken to boost the performance of the marketing campaign.Read more: 9 Marketing Metrics for CEOs
Identifying 9 of the Crucial Marketing Metrics for CEOs
1) Marketing Originated Customer Percentage
Every customer acquired by a business is not influenced by digital marketing campaigns. A CEO can measure the effectiveness of marketing campaigns only by knowing the percentage of customers acquired through lead-generation activities. She can measure the important metric by dividing the number of customers acquired through lead generation campaigns by the total number of customers. Some CEOs replace the number of customers with the amount of revenue to measure the contribution of marketing campaigns more accurately.
2) Conversion Rates
This marketing metric helps a CEO to understand what percentage of website visitors convert into customers. But the way conversion rate is calculated varies across businesses and industries. For instance, an e-commerce business can calculate the conversion rate in terms of the percentage of customers who place orders. On the other hand, a lead generation business will calculate the marketing metric based on the number of website visitors who place an order or make an inquiry. Hence, the conversion rate will vary across e-commerce and lead-generation businesses.
3) Cost per Lead per Channel
Every business these days connect with potential customers and generate leads through multiple communication channels. That is why; CEOs need to know the average customer acquisition cost across communication channels. The metrics help CEOs to identify the digital marketing campaigns or communication channels that generate more leads than others. Also, they can identify the channels that generate warm leads. Hence, CEOs can increase marketing ROI consistently by investing more in more impactful lead-generating channels.
4) Return on Ad Spend
Unlike return on investment (ROI), return on ad spend (ROAS) does not measure the profitability or efficiency of specific investments. Instead, this marketing metric helps CEOs to know the amount of revenue earned for the amount invested in marketing. A CEO can calculate the metric simply by dividing the sales revenue by the cost per sale. She can use ROAS to figure to ensure that the marketing and advertisement expenditures incurred by the business are delivering higher ROI in terms of revenue.
5) Traffic Channel Growth
A business these days divert traffic to its website from multiple channels – direct, organic, paid, referrals, email, and social media. The number of visitors diverted to the website from a specific channel varies from time to time. CEOs need to track if the number of website visitors from each of these core channels has been increasing or declining. This marketing metric helps CEOs to identify if certain marketing campaigns need to be optimized to drive the growth of low-growth channels.
6) Marketing Percentage of Customer Acquisition Cost (M%-CAC)
This marketing metric is calculated by expressing the marketing portion of the customer acquisition cost (M-CAC) in the form of a percentage. CEOs use the metric to compare sales and marketing expenditure using the overall customer acquisition cost (CAC) as the base. M%-CAC helps CEOs to know if the business is spending more on marketing campaigns than sales activities, marketing campaigns reduce overall sales costs by generating warmer leads, and the sales team is converting leads into customers efficiently.
7) Customer Lifetime Value
Customer lifetime value (CLV) complements another important marketing metric for CEOs – customer acquisition cost. The lifetime value of individual customers differs. Also, the customer lifetime value differs across businesses and industries. But the marketing metric is calculated simply by calculating three figures – average order value, number of orders in a year, and the average retention time in a year. CEOs can sustain profitable business growth only by increasing customer lifetime value consistently. Many organizations these days increase CLV by implementing customer retention programs.
8) Website’s Search Visibility
As highlighted by several studies, the average click-through rate (CTR) declines as the position or ranking of a website decrease on search engine results pages (SERPs). As a long-term and organic digital marketing strategy, search engine optimization (SEO) helps businesses to increase conversion rates and reduce customer acquisition costs. But a CEO can measure the performance of SEO campaigns only based on the website’s search engine ranking. Most CEOs monitor the performance of the website by checking its search engine ranking regularly.
9) Perceived value
In addition to driving sales conversion, customer referral helps businesses to reduce customer acquisition costs. CEOs can use perceived value as a key marketing metric to know if existing customers will promote or recommend the business to their friends, family, and coworker spontaneously. Also, they can know what measures must be implemented to boost customer satisfaction and get more customer referrals. CEOs can easily measure perceived value based on the widely used market research value – net promoter score (NPS).
CEOs can measure and optimize the performance of a digital marketing campaign only by using the right marketing metrics. But marketing metrics for CEOs must vary across marketing campaigns. The CEO must combine the right metrics to accomplish the business goals by finetuning the short-term and long-term marketing campaigns at the right time.