Top SaaS Marketing Metrics that You Should Be Tracking

While it is true that revenue is the most important metric for assessing the overall effectiveness of an SaaS marketing campaign, it is not the only data point you should be monitoring. There are several other analytics metrics that must be on your radar. These key performance indicators (KPIs) can provide valuable insights into the effectiveness of your advertising efforts.

Below, Insights ABM has outlined the five SaaS marketing that you should be tracking. By paying closer attention to these metrics, you can get the most out of your next marketing campaign!

1. Conversion Rates of Free Trials

Free trials have long been a staple of the SaaS industry. When you are attempting to sell software as a service, giving prospective clients the opportunity to try out the tech can be a great tactic. However, it is important to make sure that this marketing effort is panning out and leading to conversions. 

For example, let’s say that you are averaging about 1,000 free trials per month. After the trial ends, 300 of the users are signing up for paid services, which means you have a 30% conversion rate. Understanding this metric can help you to predict future growth and scale your operations accordingly. 

2. Churn Rate

Churn rate refers to the number of clients that discontinue using your services. This rate is annualized and expressed as a percentage. For most SaaS organizations, the average churn rate is approximately 5%. A churn rate of 3% or less is considered to be good.

Churn is another great tool for predicting long-term growth. If your churn rate is higher than 5%, then it is time to reevaluate your product line-up, pricing, or both. Make sure that your SaaS is adding value to your customers’ lives.

3. LTV

The LTV or customer lifetime value refers to the total revenue generated from your average customer over their “lifespan.” In order to calculate this figure, you will need to know your AOV, gross margin, and average customer lifespan. 

New businesses that have only been in operation for a short time will have difficulty calculating LTV. Generally, we only recommend using this metric if you have generated sales revenue for at least three years.

4. AOV

AOV or average order value is another important metric that every SaaS firm should be tracking. By tracking your AOV, you can improve upon your pricing strategy. In addition, AOV is one of the metrics used to determine the LTV.

In order to calculate AOV, you must divide your total revenue generated by the number of orders or subscriptions you get. If you find that your average order value is too low, there are several ways to enhance it, like offering coupons, upselling, or providing volume-based discounts.

5. CAC

Customer acquisition cost or CAC refers to the average expenditure needed to acquire new clients. 

Calculating CAC involves dividing your total acquisition expenses by the number of customers acquired during a specified time period. 

You can compare the CAC of different advertising strategies to determine which methods are most effective for marketing your SaaS products.

SaaS Digital Marketing Services

While you might be a master of software, successfully marketing your innovative tech is a different challenge entirely. If you truly want to grow your brand and improve your client acquisition rate, then you need to take advantage of professional SaaS digital marketing services.

Insights ABM is a collective of some of the most creative minds in the marketing industry. We provide our clients with custom digital marketing strategies that produce results. We understand the unique hurdles of advertising SaaS and know how to create content that will resonate with your core audience. Contact us today and let’s get started on beating your goals!