How can you know whether developers are engaging with your product? And if they aren’t, what can be improved? Fortunately, you can answer these and other similar questions with SaaS marketing metrics.
So, in this article, we’re looking at the metrics you can use to measure the success of your SaaS marketing efforts, as well as why you should track them. 👇
- Trial-to-paid conversion rate
- Monthly Recurring Revenue (MRR)
- Customer Acquisition Cost (CAC)
- Churn rate
- Customer Lifetime Value (CLV)
- Conversion rate
- Customer satisfaction
- Active Users in a Month (MAU)
- Rate of activation
- Net Promoter Score (NPS)
- Top of the funnel leads (TOFU)
- Lead Velocity Rate (LVR)
- Viral coefficient
This list isn’t exhaustive but, if you want to track your SaaS marketing success, it’s a great place to start!
1. Trial-to-paid conversion rate
Trial-to-paid conversion rate is a SaaS marketing metric that measures the percentage of trial users who convert to paying customers. To calculate this rate, you need to divide the number of users who converted from the trial period into paying customers by the total number of users who started the trial period.
For example, if 100 users started the trial period and 20 of them became paying customers, the trial-to-paid conversion rate would be 20%.
By tracking this metric, you can evaluate the effectiveness of your trial strategy and make adjustments to improve your conversion rate. This can include optimizing the onboarding process, improving the user experience, or offering incentives to encourage users to convert to paying customers.
A higher trial-to-paid conversion rate can help increase revenue and reduce customer acquisition costs.
A good trial-to-paid conversion rate depends on various factors, including the industry, product, pricing, and target audience. However, as a general benchmark, a conversion rate of 20% or higher is considered good.
2. Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue is a key metric used by SaaS companies to measure their predictable monthly revenue. MRR represents the amount of revenue that a SaaS company expects to receive each month from customers subscribed to its services.
MRR takes into account the recurring subscription fees that customers pay on a monthly basis, as well as any upgrades or downgrades they make to their subscription plans. It doesn’t include one-time fees or charges.
To calculate MRR, you need to multiply the total number of customers by their average monthly subscription fee. For example, if a SaaS company has 1,000 customers who pay an average monthly subscription fee of $50, the MRR would be $50,000.
It’s important for you to track MRR because it provides a clear picture of your revenue stream, helps you forecast revenue, and allows you to identify trends in your customer base.
Additionally, by monitoring MRR growth over time, you can measure the success of your marketing efforts and identify areas where you need to focus to see a boost in revenue.
3. Customer Acquisition Cost (CAC)
Customer Acquisition Cost is an important metric for companies that offer subscription-based services, including SaaS companies, because it helps them understand the cost of acquiring new customers and evaluate the effectiveness of their marketing strategies.
To calculate CAC, you must divide the total cost of marketing for a given period by the number of new customers acquired during that same period. For example, if you spent $10,000 on marketing in a month and acquired 100 new customers, your CAC would be $100.
The CAC metric can help you evaluate the efficiency of your customer acquisition strategy and make informed decisions about your marketing investments.
A high CAC may indicate that you’re spending too much money to acquire new customers, which could lead to profitability issues. A low CAC may indicate your efforts are effective in acquiring new customers at a reasonable cost.
By tracking SaaS marketing metrics like this one, companies can optimize their strategies to reduce customer acquisition costs and improve the return on investment (ROI) for their marketing initiatives.
4. Churn rate
Churn rate is a metric that measures the percentage of customers who discontinue their subscription to a service or product during a given time period. In short, churn rate helps you understand how many customers you’re losing and why.
To calculate churn rate, you need to divide the number of customers who cancel their subscription during a given period by the total number of customers at the beginning of that same period. For example, if you had 1,000 customers at the beginning of the month and lost 50 customers during the month, the churn rate would be 5%.
A high churn rate can be an indicator of customer dissatisfaction, product issues, or ineffective marketing strategies. It’s important to track churn rate and understand the reasons behind it so you can address any issues and improve customer retention.
Improving customer retention and reducing churn rate can have a significant impact on your revenue and profitability, as it’s generally less expensive to retain existing customers than to acquire new ones.
By monitoring and improving churn rate, you can increase customer satisfaction, reduce customer acquisition costs, and grow your business.
5. Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) is a SaaS marketing metric that measures the total amount of revenue a company can expect to earn from a single customer over the course of their relationship.
It’s fair to say that CLV helps you understand the long-term value of a customer and make informed decisions about customer acquisition and retention.
To calculate CLV, you only have to multiply the average revenue earned per customer by the average customer lifespan. For example, if you earn an average of $50 per month per customer and the average customer stays for 24 months, the CLV would be $1,200.
With CLV, you can evaluate the profitability of your customer base and make informed decisions about your marketing investments. You can also better allocate resources towards customer acquisition and retention efforts that generate the greatest ROI.
6. Conversion rate
Another SaaS marketing metric is conversion rate, which refers to the percentage of website or app visitors who take a desired action, such as signing up for a free trial, creating an account, or buying a subscription.
For instance, if 100 people visit a SaaS platform’s website and 10 of them sign up for a free trial, the conversion rate is 10%.
It’s important to track this metric because it directly impacts revenue and growth. Improving the conversion rate can lead to a boost in the number of users, subscriptions, and ultimately, revenue.
7. Customer satisfaction
Customer satisfaction is all about how happy and satisfied people are with your product (and how well it meets the needs of developers’ expectations and needs).
Customer satisfaction in SaaS marketing is typically measured through surveys or other feedback mechanisms that allow customers to share their opinions and experiences with the product or service.
SaaS companies use customer satisfaction data to identify areas for improvement and to prioritize product development initiatives.
Maintaining high levels of customer satisfaction is important as it leads to increased customer retention and advocacy. Satisfied customers are more likely to renew their subscriptions and recommend the product or service to others, which can ultimately drive growth and revenue.
8. Active Users in a Month (MAU)
This metric measures the number of unique users who engage with a SaaS product in a given month.
Monthly Active Users, or MAU, helps you to gauge the overall adoption and engagement of your product, and it’s often used with other SaaS marketing metrics, such as Daily Active Users (DAU) and MRR to offer a complete picture of the health and performance of your product.
By tracking MAU over time, you can spot patterns and trends and use that data to inform product development and marketing strategies – with the end goal of driving user growth and retention.
9. Rate of activation
The rate of activation refers to the percentage of users who have signed up for the service and have actually started using it.
This metric is important because it helps you understand how effective your onboarding process is and how engaged your users are with the product. A high rate of activation indicates people are finding value in the product and are likely to continue using it, while a low rate may indicate that there are barriers to adoption or that the product is not meeting users' needs.
SaaS companies often use a variety of strategies to increase activation rates, such as offering free trials, providing tutorials and educational materials, and optimizing the user experience to make it easy and intuitive to get started with the product.
This allows developers to get a ‘aha!’ moment and grasp the value of your product.
10. Net Promoter Score (NPS)
If you want to measure both customer satisfaction and loyalty, then the Net Promoter Score is exactly what you’re looking for. It’s calculated based on the answer to a single question: “How likely are you to recommend our product to a friend or colleague?”
People are asked to rate their likelihood on a scale of 0 to 10, with 0 being ‘not at all likely’ and 10 being ‘extremely likely’.
Based on their responses, customers get put into three different groups:
- Promoters (score 9-10): people who are enthusiastic about your product and likely to recommend it to others.
- Passives (score 7-8): customers who are satisfied but not particularly enthusiastic or loyal.
- Detractors (score 0-6): people who are unhappy with the product and may even spread negative word-of-mouth about it.
Once you have this, you subtract the percentage of detractors from the percentage of promoters, and the resulting score can range from -100 (if everyone’s a detractor) to +100 (if everyone’s a promoter).
NPS can also identify areas for improvement, as a low score indicates issues with the product, customer support, or other elements of the developer experience.
11. Top of the funnel leads (TOFU)
It might share an acronym with a delicious food, but TOFU is all about potential customers who are at the beginning of the buying journey and just starting to explore solutions to their problems. These top of the funnel leads may be aware of their issues, but haven’t identified a potential solution yet.
TOFU leads are typically generated through marketing efforts such as content marketing, social media advertising, and search engine optimization (SEO). The goal of these marketing efforts is to attract potential customers to your website or landing page and provide them with valuable information that addresses their pain points and helps them understand the benefits of the SaaS product.
Once a TOFU lead has expressed interest in your SaaS product, they can be moved further down the funnel through targeted marketing and sales efforts such as email campaigns, webinars, and demos. The ultimate goal is to convert these leads into paying customers.
12. Lead Velocity Rate (LVR)
When coming up with this list of SaaS marketing metrics, we couldn’t leave out Lead Velocity Rate, which measures the rate of growth in new leads over a specific period of time, usually a month or quarter.
To calculate LVR, you subtract the number of leads in the previous period from the number of leads in the current period, then divide by the number of leads in the previous period and multiply by 100 to convert it into a percentage:
(Current period – previous period) / previous period) x 100 = LVR percentage
LVR is important because it provides insight into the effectiveness of your lead generation efforts! A high LVR shows you’re successfully attracting new potential customers and growing your customer base, while a low LVR can indicate issues with your marketing or sales strategies.
13. Viral coefficient
This is a metric used to measure the rate at which a product is being shared or referred by its users to new potential customers. It’s a way of quantifying how well a SaaS product is able to grow through word-of-mouth and social sharing.
There’s a formula to this:
Average number of referrals per user x Conversion rate of referrals into users = Viral coefficient
For instance, if your product had an average of 10 users, each user referred 2 new users, and the conversion rate of those referrals was 25%, the viral coefficient would be 2 x 0.25 = 0.5. This means that your product would generate 0.5 new users through viral marketing.
To increase the viral coefficient, you can implement referral programs, encourage users to share the product on social media, or create features that incentivize people to share.
And here you are, a list of SaaS marketing metrics that can help you understand whether people are engaging with your product or satisfied with the service you’re providing – there are many more you can consider, depending on what you’re looking to measure, but these are a great starting point!
For more information on key metrics you should keep an eye on, check out these articles: