As a business owner, it’s important to track the right SaaS marketing metrics in order to make informed decisions about your marketing strategy. This blog post will show you which metrics are most important for your business.
When I started my software as a service (SaaS) company, I was so focused on acquiring new customers that I didn’t pay attention to any other metric besides customer acquisition costs (CAC). But after speaking with more experienced entrepreneurs and marketers, I realized that other equally important metrics help paint a complete picture of our marketing efforts.
Here are the top SaaS marketing metrics every business should be tracking.
The Most Effective SaaS Marketing Metrics
A Key Performance Indicator (KPI) is a metric that measures the success of your marketing strategy. But many companies focus on vanity metrics, such as likes and shares, rather than on true business growth.
A buyer-led growth approach involves changing your current KPIs from vanity metrics to ones that drive business growth.
“What’s measurable can be managed.”
Running an effective marketing campaign for your B2B business is about having the data to back up your decisions and measuring your results.
As a business owner, it’s important to know your marketing KPIs and measures them correctly. This allows you to see what’s working and what isn’t so you can make the necessary changes. Having this information is essential to running a successful business.
You must track your Key Performance Indicators (KPI) as a digital marketer. This lets you know whether or not you’re meeting your goals.
There are a variety of marketing metrics that can be used to measure the success of a SaaS marketing campaign.
By tracking these metrics, you can get a better understanding of what is working well and what needs to be improved.
1. Unique Site Visitors
For a typical business, tracking website visits and page views is a good indicator of how successful your marketing efforts have been.
But more often, we find that when a website sees a large increase in traffic, it’s usually a sign that the website is wasting money on ads, has poorly targeted its visitors, or has a host of other issues.
While website traffic can be a good indicator of your marketing success, it is not the only factor. Other factors like targeted content and advertising budget can also contribute to your growth in traffic.
While measuring your contact and conversion goals is important, these aren’t always the best indicators of business growth.
Your email list is one of your most important marketing tools, but it’s becoming less and less valuable. Our research shows that most emails only result in 1% of sales. You must keep your list updated on how fast people switch jobs and roles.
3. Conversion Rate
Your conversion rate measures how many of your acquired contacts convert into customers. This is usually measured by looking at each phase of the customer life cycle.
The best method to optimize your conversion rate by sales stages is by reducing the number of incoming leads to your team. This can be achieved by improving the quality of inbound traffic, but this may be a problem if your marketing department is measured on the number of new contacts they generate.
4. Cost Per Lead (CPL)
Most marketers focus solely on cost per lead generation, but this can be detrimental. Instead, they should consider focusing on revenue sales.
5. Cost Per Click (CPC)
A lower cost per click (CPC) is great if you want to increase website traffic. However, we’ve found that these metrics don’t always align with real growth and revenue results.
As we continue to improve our advertising for software businesses, reducing cost-per-click (CPC) is associated with broadening the keyword and target audience.
In more blunt terms, the clicks are worthless.
6. Growth Rates
As a business, we always want to grow. This often means that marketing departments focus on growing the business, not just increasing sales. Measuring business growth is important to see how effective your marketing techniques have been.
This shift in marketing will emphasize the importance of the entire marketing funnel and how to develop your marketing teams.
7. Payback Period
Most software businesses focus their marketing efforts on acquiring new customers but neglect the time it takes to get those ads spent back.
We break down our campaigns into three metrics: blended payback period, branded, and non-branded.
We rely very heavily upon both brand and blended as key indicators of success. When you focus on only one metric, such as social media, you can make decisions that are not in your best interest.
8. Customer Acquisition Cost (CAC)
When analyzing your company’s customer acquisition costs (CAC), it is important to consider the difference between branded and non-branded paid-to-advertise and blended CAC. This will give you a better understanding of your marketing efficiency.
9. Customer Lifetime Value (CLV)
CLV is the average amount you can expect to earn from a customer over their lifetime of being your customer. This can help you make important sales and marketing decisions about your business.
When calculating Customer Lifetime Value (CLV), it’s important to remember that this number can be deceptive, especially if your product has high up-selling and down-selling potential.
Customer lifetime value is important to know for your company so that you have a baseline of what they are worth.
10. LTV to CAC ratio
This is one of the most important metrics for analyzing campaign profitability. However, it should be analyzed in its full context, as customers with large expansions often aren’t factored into CAC: LTV. This should also be broken out by brand and non-brand.
As with calculating your marketing ROI, this should also be broken out by brand vs. non-brand and by paid search.
11. Natural Growth Rate
The natural growth rate measures how well your marketing is doing. If it’s working, you should see your rate accelerate, especially if your SaaS product is on the lower end of ACV.
You may want to reevaluate your marketing strategies if you’re spending more on ads but not seeing a proportionate rise in your natural growth rates. Monitor both your paid and organic growth rates to ensure that you’re effectively using your marketing dollars.
12. Pipeline Velocity
Pipeline velocity is a key metric for assessing revenue growth. By looking at how much revenue is moving through the pipeline and how fast it moves, businesses can know whether they are on track to accelerate growth.
13. Win Rate
Marketers driving more qualified opportunities will typically see a lift in their sales close rates. This is due to the quality of incoming opportunities that they receive.
14. Sales Cycle Length
Keeping an eye on the length of your sales cycle is a great way to measure the effectiveness of your marketing strategies. If the average length of your pipeline is decreasing, this means that your marketing teams are doing a better and better job of moving your prospects through the sales process.
15. Average MRR
Most software companies monitor their monthly recurring revenue (MRR) closely. At my company, we closely monitor ours to identify areas of improvement as we scale.
Most SaaS companies have a goal of increasing their average MRR over time.
It Takes More Than Just the Metrics
Changing your marketing KPIs will change how your marketers work, but getting your marketing teams to change their behavior can be challenging.
You won’t see the desired results if you don’t change the way you behave when you update these marketing KPIs. What’s more, it could hurt performance.
This is why it’s so important that you assess how changing these key performance metrics will impact your team. Only when everyone on your team is on the same page can you work towards the same goals.
Your marketing should look drastically different over time when you update your metrics. That’s the goal.
If you do not see the results you want from your marketing activities, it’s time to try something new.
If you’re not tracking the right SaaS marketing metrics, you could be making decisions that hurt your business in the long run. By understanding which metrics are most important for your business, you can make informed decisions about your SaaS marketing strategy that will help you grow your company.