As a SaaS marketer, you're likely already tracking the basics: website traffic, conversion rates, and customer acquisition costs. But to truly optimize your marketing efforts and make data-driven decisions, it's important to go beyond the basics and track more advanced SaaS marketing metrics.
Here are some key metrics to consider:
CLTV measures the total revenue a customer will generate for your SaaS business over the course of their relationship with you. This metric is important because it helps you understand the long-term value of your customers and can help you make decisions around customer acquisition costs and retention efforts.
To calculate CLTV, simply multiply the average revenue per customer by the average customer lifespan.
CAC measures the total cost of acquiring a new customer, including marketing and sales expenses. This metric is important because it helps you understand the ROI of your marketing efforts and can help you make decisions around budget allocation.
To calculate CAC, simply divide your total marketing and sales expenses by the number of new customers acquired over a given time period.
Churn rate measures the percentage of customers who cancel their subscription over a given time period. This metric is important because it helps you understand the health of your customer base and can help you make decisions around retention efforts.
To calculate churn rate, divide the number of customers who cancelled their subscription over a given time period by the total number of customers at the beginning of that period.
NPS measures how likely your customers are to recommend your product or service to others. This metric is important because it helps you understand customer satisfaction and can help you make decisions around customer experience and product development.
To calculate NPS, simply ask your customers how likely they are to recommend your product or service on a scale of 0-10. Then, subtract the percentage of detractors (0-6) from the percentage of promoters (9-10).
Revenue growth rate measures the percentage increase in revenue over a given time period. This metric is important because it helps you understand the overall health of your business and can help you make decisions around budget allocation and growth strategies.
To calculate revenue growth rate, subtract the revenue from the beginning of the time period from the revenue at the end of the time period, then divide that number by the revenue at the beginning of the time period.
By tracking these advanced SaaS marketing metrics, you can make more informed and data-driven decisions to optimize your marketing efforts and grow your business.
MRR provides a predictable revenue stream that your SaaS business can rely on every month. It's crucial because it gives an insight into your revenue consistency and growth over time.
To calculate MRR, add up all the recurring revenue your customers contribute in a given month.
ARPA provides insight into the revenue generated per account on average in a given time period. This metric is useful in understanding the revenue potential of each customer and can guide pricing and upselling strategies.
To calculate ARPA, divide your total revenue in a given period by the number of accounts during that same period.
LVR measures the growth of your qualified leads from month to month. It's a predictive metric that provides insight into your future sales, helping with sales forecasting and planning.
To calculate LVR, subtract the number of qualified leads you had last month from the number you have this month.
CRC quantifies the total cost of activities and efforts made to retain existing customers. This is important to balance against Customer Acquisition Cost (CAC), ensuring you're not spending more on acquiring new customers than retaining the old ones.
To calculate CRC, add up all costs spent on customer retention activities and divide by the number of customers retained.
CES provides a numerical expression of customer interaction and engagement with your product. It helps in understanding customer usage patterns and can guide customer success efforts and feature development.
To calculate CES, you may need to define what actions constitute engagement for your product, then track and tally these actions taken by each user.
Once you have a clear understanding of these key metrics, you can use them to optimize your marketing strategy. Here are some ways to do so:
By tracking and utilizing the right SaaS marketing metrics, you can optimize your strategy to maximize your ROI. Remember to focus on key metrics such as CAC, CLV, churn rate, and conversion rate, and use them to identify areas for improvement, set goals and benchmarks, and test and iterate your marketing campaigns. With the right metrics and a data-driven approach, you can achieve success and drive growth for your SaaS company.