What are you tracking? An age-old marketing is becoming even more important in the age of data-driven decision making. Budgets are tight, and accountability is key. So when marketing your SaaS software, you need to make sure that the metrics you track can actually help you improve your marketing.
That’s more difficult than it sounds. It’s tempting to fall into ‘vanity metrics’, tracking numbers that make you look good instead of helping you grow subscribers. In the end, though, how many potential users your Facebook campaigns reach matters little if none of those users turn into actual, paying subscribers.
Fortunately, it doesn’t have to be that way. Simply by tracking the most relevant numbers available, you can elevate your promotional efforts. To help in that regard, here are 6 metrics that have the potential to define your SaaS inbound marketing strategy.
1) Trial Users
Seems obvious, right? Think again. Too many SaaS marketers don’t track trial users separately. Instead, they simply pull these audience members into a general lead pool from which nurturing efforts begin to emerge.
In reality, that’s a dangerous decision to make. Trial users, as you might be aware, are much more qualified than ‘regular’ leads who simply wanted to download a whitepaper. By testing the software, they have shown themselves interested enough to become subscribers within a relatively defined time frame.
Of course, you still have to convert trial users to paying subscribers. But that’s not nearly as difficult as it would be for other leads; in fact, average conversion rates hover above 25%, with some marketers routinely hitting 60% benchmarks.
That’s why it’s crucial to track your trial users separately. If a marketing campaign generates them reliably, it’s probably worth investing more into.
2) Qualified Leads Generated
Every marketer these days tracks the leads they generate. But do you track qualified leads? If you’re currently not doing that, it may be time to start.
Research suggests that more than 25% of your incoming leads have no chance of becoming a sales opportunity, while another 50% are not ready to become a subscriber. Of course, you can still move them toward that desirable state with an effective nurturing campaign. But your qualified leads are more valuable initially because you can probably convince them to become subscribers with less resources.
You can even grow more granular, tracking your marketing qualified leads and sales qualified leads separately. Either way, focusing on qualification as an extra signifier of marketing success can help you get a better and more thorough idea of how each of your initiatives is performing.
3) Qualified Lead Conversion Rate
Of course, qualified leads are not (yet) subscribers. To make an impact on your bottom line, they need to take that final step. And tracking your qualified lead conversion rate can help them get there.
Lead to customer conversion rates have become a common metric among marketers across industries. Tracking the conversion rate of your qualified leads separately, however, is not nearly as common. Still, it can be immensely beneficial.
The problem with leads entering your sales funnel is that, as mentioned above, they may not be ready to make a purchase. Qualified leads, on the other hand, should be ready. Tracking this conversion rate allows you to optimize your lead nurturing and close rates over time, growing your subscribers as a result.
4) Monthly and Annual Churn
SaaS business models rely on recurring revenue, which is very different from other types of companies and commerce merchants. It means that closing the deal is far from the end of your efforts; in fact, keeping existing subscribers interested and engaged is just as important.
To track whether you are succeeding in that endeavor, SaaS marketers tend to track churn – the rate at which subscribers ‘jump off’ and end their subscription to your software. A higher churn rate will result in less revenue, while low churn rates can help you maximize your ROI.
When measuring this metric, be sure to benchmark your own rates against industry averages. This article does a great job of explaining acceptable churn rates, both monthly and annually.
5) Customer Acquisition Cost
Customer Acquisition Cost (CAC) seeks to determine just how much it costs for you to gain a new subscriber. It’s the perfect metric to evaluate whether your marketing budget is well-spent, or whether you should explore new channels.
Its calculation is simple: divide your total marketing spend over a given period by the number of subscribers gained in that same period. Now, you can use the metric to evaluate whether your budget actually provides positive ROI, or whether changes are needed.
6) Customer Lifetime Value
Churn is, ultimately, a negative statistic: the lower your rate, the better off you are. Customer Lifetime Value, or CLV, is the exact opposite. As its name suggests, it tracks the lifetime revenue you can expect from an average subscriber before they jump off.
Tracking this metric can be immensely valuable, particularly for your marketing efforts. You can, for example, track and compare the CLV for your individual marketing channels. In the process, you might find out that Facebook generates more leads than LinkedIn, but the total revenue gained through the latter significantly outperforms the former. Re-adjust your priorities, and you will more easily grow your revenue.
Marketing your SaaS solution is not easy. But by focusing on the right metrics, you can streamline the process significantly. Churn, CAC, and CLV give you a more accurate picture of how your digital marketing efforts are actually performing, allowing you to optimize your strategy over time.
And of course, it’s always a good idea to run some marketing ideas past the professionals.