In the competitive terrain of the Software as a Service (SaaS) industry, customer success is paramount. It is not just about acquiring customers; it is about retaining them, ensuring they find value in your product, and ultimately turning them into loyal advocates. To achieve this, tracking key SaaS marketing metrics is crucial. 

These metrics offer insights into customer behaviour, satisfaction levels, and the effectiveness of your marketing efforts. 

Here are eight essential SaaS marketing metrics you need to track for customer success:

 

• Customer Acquisition Cost (CAC) –

CAC measures the total cost of acquiring a new customer, including marketing, sales, and onboarding costs. Tracking this metric will let you know how much cost you require to get customers for your SaaS tool or platform. 

This metric is vital because it helps you understand how efficiently you are using your resources to acquire customers. Ideally, you want a low CAC relative to the Lifetime Value (LTV) of a customer.

You can calculate the customer acquisition cost by adding the cost of marketing and sales and then dividing it by the number of new customers you got in that period. 

The formula is:- 

CAC = [ Cost of acquisition]/ [ Number of new customters]

 

• Lead-to-Customer Rate –

The lead-to-customer rate is the average proportion of prospects that convert into customers. 

It is calculated by dividing the number of customers by the number of leads. 

For example, if 10 out of 100 leads become customers, the lead-to-customer rate is 10%. 

 

The formula to calculate Lead to customer rate: 

Lead to customer rate = [Number of customers]/[Number of leads]

Monitoring this metric is crucial for evaluating the effectiveness and profitability of lead-generation efforts in marketing campaigns.

 

• Customer Lifetime Value (LTV) –

LTV represents the total revenue a customer is expected to generate throughout their relationship with your company. It estimates what you can expect to earn for each new customer you gain. 

It’s an essential metric because it guides decisions on how much you can spend to acquire a customer (CAC). A higher LTV allows you to allocate more resources towards customer acquisition. 

The formula to calculate Customer lifetime value is:- 

Customer lifetime value (LTV) = (Customer Value * Average Customer Lifespan)

 

• Churn Rate –

The churn rate is the percentage of customers who cancel their subscriptions during a specific period. It helps you track how much business you have lost during this specific period. With this data, you can find out what kind of customers love your product and how much they love it. Also with this, you can minimize the mistake of customer onboarding.

It’s a critical metric because it directly impacts your revenue and growth. Keeping the churn rate low ensures a steady and sustainable customer base.

As an application development company, this data helps you to identify your target audience and to know whether your customers love your product or not. Additionally, it will give you the data of lost customers.

Churn Rate Formula: 

(Number of customers you lost in month/number of customers at the start of the month) x 100

 

• Customer Retention Rate –

This metric measures the percentage of customers you retain over a specific period. It measures the percentage of existing customers your business retained over a given period. 

High customer retention is a strong indicator of customer satisfaction and the value they find in your product. It’s generally less expensive to retain existing customers than to acquire new ones.

The formula to calculate the customer retention rate is: 

The customer at the end of the period – New customers during the period 

Total Customers at the start of the period 

 

• Net Promoter Score (NPS) –

NPS is a measure of customer satisfaction and loyalty. It depends on the customer feedback. 

Ask customers how likely they are to recommend your product or service to others. This metric provides valuable feedback and insights into your customer’s overall experience.

Ask a single question for customer feedback on a 10-point scale and determine Net Promoter Score (NPS):

• Detractors are those who score 0 to 6.
• While those giving a score of 7 or 8 are labelled as “passives.”
• Respondents selecting 9 or 10 are identified as “promoters.”

Net Promoter Score (NPS) is the difference between the percentage of promoters and the percentage of detractors. 

NPS = % Promotors – % Detractors 

 

• Customer Engagement and Usage Metrics –

Customer engagement in a SaaS product indicates the level of subscriber usage. Higher usage signifies greater engagement. This metric helps pinpoint popular features for improvement, ensuring sustained user engagement. Conversely, it can signal the need to remove low-usage features, reallocating development resources effectively.

Understanding how customers engage with your product is crucial for identifying areas of improvement and demonstrating value. Track metrics like feature adoption, active usage, and time spent within your app. This information can guide product development and customer support efforts. 

Web application development services can be used to measure the success of a product. Additionally, customer feedback can be used to further refine a product. Finally, customer feedback can be used to identify potential new features.

 

• Customer Effort Score (CES) –

Customer Effort Score (CES) is a recently popularized customer success metric. It stems from the premise that higher customer effort, or difficulty in using a service or product, reduces customer retention likelihood.

CES measures the ease with which customers can accomplish their goals using your product. It provides insights into the user experience and can help identify friction points that need to be addressed for better customer success.

 

Conclusion

Tracking these SaaS marketing metrics provides a comprehensive view of your customer success efforts. It allows you to identify areas of improvement, optimise your marketing strategies, and ultimately drive growth. 

Digital marketing services can leverage this data to develop tailored strategies based on user behaviour and trends. Stark Digital Media Pvt Ltd is a digital marketing company which can help you study these marketing metrics and develop tailored marketing strategies according to your business.

Check our blog to learn the – top 6 best marketing strategies to grow your business organically. 

We also provide web design services, web and mobile app development services etc. 

Remember, customer success is an ongoing journey, and these metrics are your compass in navigating that path. By consistently monitoring and analyzing these metrics, you will be better equipped to create a thriving and loyal customer base for your SaaS business.