You need a North Star for your business. Your North Star is the ultimate goal (generally, for a SaaS company, you’ll be tracking revenue). Once you’ve set your primary goal, you need to decide which SaaS marketing metrics to track.
Let’s face it. It can get very overwhelming to try and track all the marketing metrics. There are dozens you could pick from. The best approach is to prioritize the metrics that matter the most to your business.
This article will take you through the priority SaaS marketing metrics you should track to accurately monitor the performance of your marketing efforts. Let’s get right into it.
1. Net Promoter Score
Net Promoter Score, or NPS, is a key metric used to gauge customer satisfaction and loyalty to a company. The customer states their experience with the business by rating how likely they are to recommend the business to others.
This score helps you gauge how healthy your relationship is with your customers. It will also let you know how engaged your customers are and the quality of your services. Customers referred by other consumers have a 37% higher retention rate. Additionally, word-of-mouth recommendations are responsible for 80% of all B2B and B2C purchases. To get those referrals, you need a high net promoter score.
How to Calculate Net Promoter Score
NPS is fairly easy to calculate. A survey question is sent to the customer to rate the company at various points of their customer journey. This can be after the first use of your service or after using the service for 90 days to a year. The higher the number, the more loyal the customer is to the company.
Ideally, you should give the customers enough time to experience your product before sending out the survey. It’s also advisable to send a second survey down the road just to see if anything has changed.
Send your customers this question:
“On a scale of 1-10, how likely are you to recommend our product or service.”
The answers given by consumers will help you gauge your effectiveness in satisfying their needs. Listed below are the descriptions of what each score indicates:
0-6: These are detractors likely to injure your company’s reputation.
7-8: They have not decided whether or not they would recommend you to others.
9-10: These are promoters and are most likely to promote your brand.
The Net Promoter Score is calculated as follows:
NPS = % of promoters – % of detractors
Net Promoter Score is a general metric and does not provide specific information on why the customers are satisfied or dissatisfied. However, it can be helpful to measure your marketing efforts. It indicates effective product marketing and good customer engagement, which help achieve your revenue goals. Not to mention, referrals from the promoters mean more customers and sales at lower acquisition costs.
2. Brand Awareness
Brand awareness is a vital SaaS marketing metric to measure. People buy from brands they are aware of and have grown to trust.
So keep an eye out for anyone who mentions your brand. Find out what they are saying about you and on which channels you are mentioned most. This serves to give you insight into how you appear to a new potential customer during their research stage.
There are various tools you can use to track brand awareness. One useful tool is Google Alerts, which helps you keep track of your referrals and web mentions.
Track mentions on social media channels. You can make use of social listening tools to keep track of brand mentions online. You can also check whether you’re getting any new backlinks from other websites. This can show you whether more brands are becoming aware of your company and content.
Content is king. Your content marketing efforts and SEO work magic for brand awareness. The screenshot below shows the power of content for B2B companies.
The image below shows the power of content to influence brand awareness for B2C companies.
Therefore, keep your content on point. Write valuable articles often and post them regularly on social media. Then track how your content drives the right types of leads to your site.
How to Measure Brand Awareness
Brand awareness is much trickier to measure compared to other metrics. For starters, you can’t measure it from only one angle or metric. You need to look at several things.
Track the following to measure your brand awareness:
- Branded search volume
- Direct traffic
- Share of voice
- Earned media coverage
- Backlink profile
Lastly, you can run surveys to determine how many people are aware of your brand.
3. MQL to SQL Conversion Rate
A Marketing Qualified Lead or MQL is a prospect who has shown keen interest in your business and the services you provide. MQLs are typically vetted by the marketing team.
On the other hand, an Sales Qualified Lead or SQL is a prospect who has shown interest and a clear intent to purchase your products. So they are sales-ready and have been vetted by your sales team. Your sales team can prioritize sales-qualified leads and engage them directly.
Therefore, the MQL to SQL conversion rate shows you how many of the leads generated and forwaded by your marketing team are actually sales-ready. This metric is super important because it shows the efficiency of your marketing team.
It also shows the alignment between your marketing and sales teams. If the marketing team is generating lots of MQL, but only a few of them are vetted and passed as SQL, there’s a misalignment between your team.
Optimizing this metric narrows prevents unqualified leads from crowding the marketing funnel.
How to Calculate MQL to SQL Conversion Rate
To calculate the MQL to SQL conversion rate, divide the number of SQL by the number of MQL and then multiply by 100%. The industry MQL to SQL conversion rate average is 13%.
To optimize this metric, your sales and marketing teams must first come up with a unified definition of who a Marketing Qualified Lead is for your company. Some customer actions you can consider to qualify MQLs are:
- The web pages they visited
- The call-to-actions they clicked on
- Content offers they downloaded
- Social media posts they interacted with
- Clicking on an ad to visit your website
- Revisiting your site repeatedly
- Filling out online forms
- Their demography
- Earning level
- Unique pain-points
Allow your marketing and sales teams to chime into the conversation too. Once defined, MQLs help you come up with your buyer persona. Use your buyer persona to inform your marketing campaigns and ensure your marketing teams generate as many MQLs as possible. This boosts efficiency and business growth.
Finally, review your MQL goals and buyer personas quarterly to update and remain relevant over time.
4. Churn Rate
For every subscription-based company, churn is a real killer. It is one of the most critical SaaS marketing metrics to measure. A low customer return rate is concerning and dangerous for your business.
How to Calculate Churn Rate
There are two sub-metrics to measure under the SaaS churn rate metric:
Customer churn rate – How many customers leave your service within a specific time period? This gives you insight into how good your customer retention rate is. It’s calculated as:
Customer Churn Rate = Net customers lost in a given period x 100
Customers at the start of the period
Revenue churn rate – How many high-value customers are leaving your service? A customer that pays $20 monthly is worth four who pay $5 monthly. It’s calculated as:
Revenue Churn Rate = Average revenue lost in a given period x 100
Total revenue at the beginning of the period
Measuring customer and revenue churn rates gives you details about your marketing strategy’s effectiveness. Is it possible you’re promoting your products to the wrong audience who end up churning?
Remember, the aim is to attract and keep current customers to boost the customer lifetime value. At the same time, you want to gain more customers at the lowest customer acquisition cost possible. This is the only way to boost your annual recurring revenue and overall business growth.
5. Number of Active Trials
The higher the number of free trials deployed, the more effective your marketing efforts are. It means that what you are doing up-front is working to build interest in your services.
More interest could mean customers are willing to purchase, and this could translate to more sales. Aim to encourage your free trial users to upgrade to premium or paid packages. That should be a key part of your SaaS marketing plan. A free trial conversion rate of 25% and above is what you should target to achieve.
That being said, we can’t act oblivious to the fact that converting free trial users to paid customers is one of the major challenges in SaaS marketing. Therefore, it’s worth considering the reality of your industry and your current position. Begin from where you are and scale. If you are at 6% now, aim for an 8% conversion rate and grow over time.
Also, if your company relies on your sales team activating trials and product demos, think of automating this sales process. It will free up your team to focus on larger, higher-priority contracts.
6. Lead-to-Customer Rate
Once you have your qualified leads, it’s time to convert them to paying customers. This means you need to keep nurturing your customers down the sales funnel until they take the plunge and make their first purchase.
It’s also known as the sales conversion rate or lead conversion rate. To have a high lead-to-customer rate, sales and marketing teams should work closely. Your SaaS marketing team has to do a crisp job of qualifying the leads. This allows the sales team to have an easy time attempting to convert them into customers.
How to calculate Lead-to-Customer Rate
Here’s how to calculate the lead-to-customer rate:
Lead-to-customer rate is a key SaaS marketing metric, as leads have little value if they do not convert. Tracking how many leads convert shows you how well your lead management process is working. A low score could mean you need to improve your lead capture, optimize lead qualification or boost your speed to lead.
7. Customer Engagement and Health Scores
This metric demonstrates how likely a customer is to stay with you longer. Consider it the early warning signs that a customer will churn. Though used interchangeably, customer engagement and health scores mean two different things.
- Customer engagement score – How involved is the customer base with your product? This can be how much time they spend on your site, how often they visit it in a week, or the features they use while on your platform. The more time they spend with you, the less likely they are to churn.
Pro tip: Assign values to customer actions that matter to your business. For example, trials launched (10 points), customer upgrades and renewals (20 points), and frequency of product use (5 points). Then use these values to measure customer engagement.
- Customer health score – How likely is the customer to grow, stay consistent, or churn? Customer success teams use this score to know who is a satisfied customer and who isn’t. They can uncover success and failure patterns using this score.
The scoring system differs from company to company. However, aim for a score above 70%.
Power users are those who are avid users of your product or service. You can consider upselling to your power users. If they are enjoying the package they are using now, they will most likely enjoy the additional features of the premium version.
Formulate a plan to quickly remedy the issues of low-health customers. Help them achieve their desired goal quicker so that they do not churn. You’ll need to dig deep to understand why the health score is low. Is it possible the onboarding experience was not educative enough, so they don’t know how to use your product?
Want to see a lower customer churn rate? Keep your customer engagement and health score high, and the churn rate will significantly reduce.
8. Track Unique Visitors
This is sometimes considered a vanity metric, but we beg to differ. Unique visitors can indicate the reach of your website and how much your top of the funnel resonates with your target audience.
By definition, unique visitors are the individuals who visit your site within a specified period of time. If someone visits your site twice, they will be counted as a unique visitor only once. That’s what makes unique visitors a different metric from the standard organic traffic.
How to Measure Unique Visitors
This SaaS marketing metric can easily be measured using Google Analytics. The platform keeps track of the number of unique visitors to your site. It also tracks the channels they came in from and the pages they visited on your site. Moreover, it shows the time spent on your site.
The screenshot above is from the Google Analytics demo account. It demonstrates the results you will receive if you use the software.
Track unique visitors to see how effective your lead-generation efforts are. This helps you strategize how to engage leads further and nudge them down the sales funnel.
9. Monthly Recurring Revenue
This is a financial metric that indicates the total amount of revenue your company expects monthly from the customers’ active subscriptions.
It is vital since it shows the number of qualified sales per month. It’s also an indicator of the stability of your company. Tracking MRR allows the sales team to make projections with confidence and plan for short-term and long-term growth.
This crucial metric also helps you see the size of accounts sales reps close. It acts as a motivation to your sales team when they can close big business.
How to Calculate Monthly Recurring Revenue
Monthly recurring revenue is calculated as follows:
MRR = Average revenue per user x Number of active users
To get the average revenue per user, calculate:
Put the right accounting systems in place to effectively track your company’s MRR. Finally, modify your sales approach as you go, making the necessary changes to close and retain higher-value MRR.
Alongside monthly revenue, you must track your annual recurring revenue (ARR). MRR can show your day-to-day and monthly predicted performance, but ARR presents a bigger picture. It shows your expected performance for the coming year, assuming no changes happen to your user base. It’s also one of the vital metrics investors and founders keep an eye on.
SaaS Marketing Metrics FAQ
SaaS metrics are metrics that help businesses track their growth rates and progress by providing benchmarks to measure performance. These metrics enable companies to evaluate their success, make future plans, and tweak strategies as necessary. The right metrics will help you stay on top of your game and make data-driven decisions to achieve your business goals.
Some of the most important SaaS marketing metrics include Net Promoter Score, churn rate, lead-to-customer rate, and monthly recurring revenue. Read the article to discover the other critical metrics you should be tracking.
SaaS marketing metrics can be overwhelming to keep track of. However, it helps when you can prioritize the metrics that matter most to your business.
Start by measuring brand awareness to see how effective your marketing efforts are in reaching potential customers. Get your marketing team to gain Market Qualified Leads and hand them over to the sales team for conversion.
Keep an eye on customer engagement and health score since this is an early sign of churn rate. Get more customers to use your free trial, track your lead-to-customer rate, and the number of unique visitors to your site. All these add to the likelihood of leads converting to paying customers.
Finally, track your monthly recurring income and ensure your paying clients are satisfied and willing to recommend you. With these metrics in place, your SaaS business is on a sure path to success.
Nico is the founder of Crunch Marketing, a SaaS marketing agency. He works with enterprise SaaS clients like Writer, Right Inbox, and Surfer SEO, helping them scale lead generation globally across EMEA, APAC, and other regions.