15 SaaS Marketing Metrics You Need to Track (+ Formulas)

SaaS marketing metrics are the quantifiable measurements used to track the performance of a SaaS business’s marketing efforts. These metrics provide insight into how effective a company’s campaigns are and can inform future decisions about where to allocate resources.

The software-as-a-service (SaaS) world is brimming with potential metrics to track. But the goal isn’t just to gather numbers; it’s to:

• Drive actionable insights
• Bolster product improvement
• Improve acquisition
• Gain higher retention

…And ultimately increase your bottom line.

That’s why we’ve turned to the seasoned experts at HawkSEM, who bring years of experience navigating the SaaS landscape.

They’ve pinpointed the key metrics that are more than just numbers on a dashboard. These are the vital tools that drive sustained business growth.

Top SaaS marketing metrics to track

The most important metrics for SaaS marketers to track include:

1. Customer acquisition cost (CAC)
2. Customer lifetime value (CLV)
3. Marketing qualified lead (MQL)
4. Sales qualified lead (SQL)
5. Unique visitors
6. Activations
7. Lead-to-customer rate
8. Lead velocity rate
9. Freemium conversion rate
10. Customer churn rate
11. Revenue churn
12. Customer engagement
13. Net promoter score (NPS)
14. Annual recurring revenue (ARR)
15. Monthly recurring revenue (MRR)

1. Customer acquisition cost (CAC)

Customer acquisition cost (or cost per acquisition, CPA) is the total cost of acquiring a new customer, including both marketing and sales expenses.

Tracking CAC helps you understand how efficiently your SaaS business is converting spend into paying customers.

Why is it important to track?

CAC helps you determine how much you can afford to spend on marketing and sales while remaining profitable.

For example, it wouldn’t make sense to spend $10,000 to acquire a customer who will only generate $1,000 in revenue over their lifetime — making CAC a critical benchmark when evaluating customer lifetime value (LTV).

The formula

CAC is calculated by dividing total marketing and sales costs by the number of new customers acquired during a given time period:

CAC = Total Marketing and Sales Costs ÷ Number of New Customers

For example, if you spend $5,000 on marketing and sales in a month and acquire 10 new customers, your CAC is $500.

2. Customer lifetime value (CLV)

Definition

Customer Lifetime Value (CLV) represents the total revenue you can expect from a single customer throughout their relationship with your company.

It’s a critical metric that measures each customer’s financial value and helps assess how much can be spent to acquire similar customers.

Why is it important to track?

Tracking CLV helps you determine the long-term value generated by each customer, guiding how much you should invest in marketing and sales efforts.

A strong understanding of CLV enables you to make informed decisions about resource allocation to maximize ROI.

For instance, knowing that a customer’s lifetime value is significantly higher than the cost to acquire them justifies current marketing spending and helps plan future investments.

The formula

To calculate CLV, multiply the average revenue per customer by their average lifespan with your service:

CLV = Customer Value × Average Customer Lifespan

This metric, especially when compared to Customer Acquisition Cost (CAC), guides you to ensure that marketing investments are profitable. Aim to keep CAC well below CLV to ensure a healthy profit margin.

3. Marketing qualified lead (MQL)

Definition

A Marketing Qualified Lead is a prospective customer who meets specific criteria set by your marketing team, based on both fit and engagement.

For example, a CEO at a 100+ employee company who has engaged with your content or requested more information would qualify as an MQL.

Why is this important to track?

Tracking MQLs shows how effective your marketing efforts are at attracting and qualifying the right types of leads. If you’re generating a high volume of high-quality leads, then it’s time to make changes to your SaaS marketing strategy.

How MQLs are identified

MQLs are identified using predefined qualification criteria rather than a fixed formula.

First, define what qualifies a lead based on your strategic goals, such as industry, company size, or job title. Then, track engagement signals, like content downloads, webinar registrations, or high engagement scores — these indicate purchase intent.

4. Sales qualified lead (SQL)

Definition

A sales-qualified lead is a prospect who’s ready to buy your product. These leads are sales-qualified because they’re the most likely to turn into customers.

Why is it important to track?

It’s important to track SQLs because it helps gauge the effectiveness of your marketing in converting initial interest into potential sales.

This metric is vital for understanding which parts of your sales funnel are successfully driving leads to make purchasing decisions, directly impacting your business’s bottom line.

If your campaigns are not converting leads into SQLs, you might be investing in strategies that attract leads who are unlikely to convert, thus wasting resources.

How SQLs are identified

SQLs are identified when MQLs show clear buying intent, such as requesting pricing or booking a sales call.

5. Unique visitors

Definition

Unique visitors represent the number of distinct individuals who visit your website during a specific time period (such as a month, quarter, or year).

Unlike total traffic or sessions, which include repeat visits, unique visitors help you understand how many different people your site is reaching.

For example, if your website receives 100,000 visits in a month from 10,000 unique visitors, it means each visitor returned to your site an average of 10 times.

Why is it important to track?

Tracking unique visitors helps prevent inflating your expectations.

Understanding unique visitors ensures you know how many different people your marketing is actually reaching.

At the same time, repeat visits can indicate strong engagement and interest in your product or service.

How to measure unique visitors

You can track unique visitors using Google Analytics:

1. Log in to your Google Analytics account
2. Navigate to the Audience section
3. Select Overview to view the report
4. Look at the metric labeled Users, which represents unique visitors

6. Activations

Definition

Activation occurs when a new customer takes their first meaningful action in your SaaS product, signaling that they’ve started using it successfully.

Believe it or not, some subscription-based customers make a purchase but never use the SaaS tool and end up canceling their plan.

This is harmful for business because it decreases the lifetime value (LTV) of a customer and can indicate issues with onboarding or user experience.

Why is it important to track?

If you notice that only a few people are activating, it may be time to enhance your customer support.

For instance, you can build an email campaign targeting new subscribers to ensure they understand how to use and get the most value from your platform (and hopefully stick around longer).

The formula

To calculate the activation rate, divide the number of activated users by the total number of registered users, then multiply the result by 100 to convert it into a percentage:

Activation Rate = (Number of Activated Users ÷ Total Number of Registered Users) × 100

7. Lead-to-customer rate

Definition

Lead-to-customer rate is the average number of prospects that become customers.

For instance, if you have 100 leads per month and 20 convert into customers, then the lead-to-customer rate is 20%. The higher your lead-to-customer rate, the better.

Why is it important to track?

Lead-to-customer rate directly reflects the efficiency and effectiveness of your sales funnel.

A higher rate indicates a more effective conversion process, suggesting that your marketing efforts are well-targeted and that your sales team is successfully closing deals.

However, a low lead-to-customer rate can highlight areas in your funnel that may need improvement, such as lead qualification, sales tactics, or even the initial customer engagement strategies.

The formula

To calculate the lead-to-customer rate, divide the number of customers by the number of leads.

Lead-to-Customer Rate = [Number of Customers] ÷ [Number of Leads]

Tracking this is ideal if your marketing campaign focuses on lead generation efforts, and you need to determine how effective and profitable the strategy is.

8. Lead velocity rate

Definition

Lead velocity rate (LVR) measures the growth rate of getting new qualified leads month over month, showing how quickly new leads are entering your sales pipeline.

After all, 100 new leads sound great, but not if it takes ten months to get them (especially if your SaaS rates are on the low end and need a lot of users to keep your business afloat).

Why is it important to track?

Tracking the lead velocity rate (LVR) helps you to measure the growth and momentum of your lead generation over time.

A positive LVR indicates an increasing number of qualified leads each month, signaling effective marketing efforts and potential future revenue growth — whereas a stagnant or declining LVR highlights the need to reevaluate your marketing strategies, ensuring that your business remains competitive and responsive to market demands.

The formula

You calculate this by subtracting last month’s MQLs from this month’s MQLs and dividing the difference by last month’s MQLs. Then multiply by 100 to get the percentage.

LVR = (Current Month MQLs − Last Month MQLs) ÷ Last Month MQLs x 100

9. Freemium conversion rate

Definition

A freemium conversion rate measures the percentage of users who upgrade from a free product or trial to a paid plan.

This metric indicates how effectively your product and marketing convince users that the premium offering is worth paying for.

Many users start with a free plan because they’re interested but unsure if the product meets their needs.

When they see that the value aligns with your marketing promises, they convert to a paid subscription, boosting revenue and validating your targeting strategy.

Why is it important to track?

If you’re using free trials to generate MQLs, tracking freemium conversion rates is critical to ensure you’re not wasting time and money on the wrong audience or using the wrong messaging (or focusing on the wrong pain points).

This may be the case if more people cancel after the freemium than switch to a paid plan.

The formula

To calculate the freemium conversion rate:

• Count the number of customers who upgrade from a free trial or freemium plan to a paid plan within a specific time period.
• Divide this number by the total number of users on the free tier during the same period.
• Multiply the result by 100 to get the percentage:

Freemium Conversion Rate = (Number of Customers Who Converted to Paid ÷ Total Number of Free Tier Users ) × 100

10. Customer churn rate

Definition

Customer churn rate is the percentage of customers who cancel their subscription to your product.

This metric is important to track because it tells you how well you retain customers and if they’re getting value from your product.

Why is it important to track?

A high churn rate signals that something in your business may not be meeting customer needs — such as onboarding issues, product shortcomings, or lack of engagement.

Monitoring churn allows you to identify problem areas and take action to retain more customers, ultimately protecting revenue and lifetime value (LTV).

The formula

There are a few different ways to calculate customer churn rate, but here is one of the simplest and most effective.

• Determine the number of customers at the start and end of the period.
• Calculate the midpoint number of customers by averaging the start and end totals:

Midpoint Customer Count = (Customers at Start + Customers at End ÷ 2)

• Count the number of customers who have churned during the period.
• Divide the number of churned customers by the midpoint customer count:

Customer Churn Rate = (Number of Churned Customers / Midpoint Customer Count) × 100

11. Revenue churn

Definition

Revenue churn is the percentage of lost revenue due to customers canceling their subscriptions. It sounds a lot like customer churn, but there’s a difference:

Customer churn focuses on how many people leave, while revenue churn focuses on the amount of money the company is losing from churn.

For example, if you have a multi-tier product, a customer paying $150 per month is worth more than three customers paying $30 per month.

If you only see a few people churning per month, you may think it’s no big deal. Yet, it’s your top-tier customers who are leaving, which hurts your revenue more.

Why is it important to track?

By calculating revenue churn, you get a complete picture of how many customers are leaving and the value they bring to (or take from) your business.

Then, you can take this information and look into why your top customers are leaving and how to keep them engaged (or refocus on another target audience if they’re not the right fit).

The formula

Here are the steps to take to calculate your revenue churn:

• Determine the total revenue lost from existing customers during a specific period. This includes cancellations and downgrades.
• Identify the total revenue at the beginning of that period.
• Divide the revenue lost by the total starting revenue.

Revenue Churn = (Revenue Lost from Existing Customers ÷ Total Revenue at the Start of Period) × 100

12. Customer engagement

Definition

Customer engagement represents how much a subscriber uses your SaaS product. The more they use it, the more engaged they are.

You can use this metric to identify features that are the most popular to focus on making improvements in that area to keep users engaged.

Why is it important to track?

Customer engagement is often a leading indicator for retention, upsells, and long-term growth. This metric can also help identify low-usage features from your platform to free up development resources.

The formula

Calculating customer engagement can vary widely depending on the specific needs and nature of your SaaS product or service. Here’s a general approach to get started:

• Choose relevant engagement metrics based on your product or service. For daily-use products, the frequency of logins might be crucial, whereas for others, the number of interactions per session might be more indicative of engagement.
• Define the parameters for each metric chosen. For example, define what constitutes an ‘active use’ or a ‘session.’
• Collect data over a defined period. Depending on your product’s expected usage patterns, this could be daily, weekly, or monthly.
• Calculate the average for each metric. For instance:

Frequency of Use = (Total Logins during the Period ÷ Number of Unique Users during the Period)

Interactions per Session = (Total Interactions ÷ Total Sessions)

13. Net promoter score (NPS)

Definition

A Net Promoter Score (NPS) gauges customer satisfaction. It’s a survey that asks customers how likely they are to recommend your product to others.

The higher the score, the more likely a customer will recommend it to others.

Why is it important to track?

NPS is important to track because it helps determine how satisfied your customers are and identify where improvements can be made to increase satisfaction and loyalty.

The formula

To create your NPS survey, you’ll need a tool like SurveyMonkey to gather and analyze the data. Then, ask a series of questions that’ll get to the root of how your customers feel about your product.

Example questions in an NPS survey may include:

• How likely are you to recommend our product to a friend or colleague?
• Did you find X features useful?
• How frequently do you use our product?

Once you have your survey data, calculate the average score to see if your product is well-loved or not.

You’ll categorize responses into three areas (the highest score is 10):

• Promoters: Scores 9-10 are considered your avid customers who are likely to promote your product to others.
• Passives: Scores 7-8 are likely satisfied but aren’t enthusiastic about your product and are less likely to promote it to others.
• Detractors: Scores 0-6 are likely unhappy with your product, which can cause reputational damage.

The goal is to quickly identify customers who are dissatisfied with your product and understand the reasons behind their dissatisfaction.

This allows you to address issues promptly, improve the customer experience, and protect your brand reputation.

14. Annual recurring revenue (ARR)

Definition

Annual recurring revenue is the amount of revenue your business generates from recurring customers each year.

Tracking this helps you to understand your overall business performance and growth rate, and forecast future revenue. This is ideal if you have annual contracts or plans with customers.

Why is it important to track?

ARR provides a clear and consistent measure of the predictable revenue generated from subscriptions over a year.

This metric is essential for assessing a business’s health and scalability. It allows management and investors to gauge financial stability, plan for future growth, and make informed strategic decisions.

The formula

ARR is calculated by taking the total recurring revenue generated from all active subscriptions and normalizing it to a one-year period.

ARR = [Total contract revenue] ÷ [Number of years of the contract]

Example:

• Customer contract: $10,000 over 5 years
• ARR contribution: $10,000 ÷ 5 = $2,000 per year

15. Monthly recurring revenue (MRR)

Definition

Monthly recurring revenue is the amount of revenue your business generates from customers each month.

It gives you a quick view of the financial health of your company (or lack thereof). You calculate MRR by dividing the annual recurring revenue by twelve.

Why is it important to track?

Tracking MRR helps determine the overall health of your SaaS business. Looking at weekly numbers is too soon to identify churn and engagement, and annual may be too long to spot issues to correct before it’s too late (e.g., a sudden uptick in churn due to a software bug).

The formula

MRR = (Number of Customers x Average Revenue per Customers per Month)

How do you track marketing metrics?

You track marketing metrics by using analytics tools (like Google Analytics, a CRM, and ad platform dashboards) to monitor key data points on a consistent schedule.

Then, compare that data against your business goals or benchmarks, and use those insights to adjust and improve your campaigns.

Another option: leverage the knowledge and tools of a B2B SaaS digital marketing agency. (Image: Adobe)

“Stats drawn directly from the Google Ads dashboard and Google Analytics are common,” says digital marketing expert Steven Dang.

“But it’s important for SaaS companies to configure their CRMs to track leads through the entire sales lifecycle and look at the impact/contribution from different marketing channels.”

What to do with your SaaS marketing data

Once you have the data from your metrics, take action on the insights. Use this moment to identify areas of improvement, such as modifying a feature that receives frequent complaints.

For instance, if you see that customer acquisition is low, focus on improving marketing efforts to bring in more customers.

If customer retention rates are low, look into customer service and product improvements to keep customers engaged.

Here are several tips from our expert, Dang:

• Follow a lead all the way from origination to sale whenever possible.
• Keep track of repeat sales or lifetime value if you have recurring or sticky revenue streams.
• Score or rate your leads if possible, and note any traits or factors that add to or detract from their quality.

Metrics aren’t just for building gorgeous charts — they’re meant to be actionable. So, be sure to pull insights from your data and use them to guide your next steps.

Why is tracking SaaS marketing metrics important?

Tracking SaaS marketing metrics is important because it helps businesses optimize acquisition, retention, and revenue by providing insights into customer behavior and lifetime value (LTV).

Unlike B2B or B2C product marketing, subscription-based services rely on both acquiring and retaining customers over time, making metrics like CLV, churn, upsell revenue, and engagement essential to track.

The takeaway

Whether you’re a startup or an established SaaS giant, monitoring these metrics is key to optimizing your marketing efforts and growing your customer base.

But identifying and tracking your key performance indicators (KPIs) is just one piece of the puzzle.

If you need help getting your SaaS marketing strategy off the ground, consider partnering with an experienced team like HawkSEM.

From content marketing and social media marketing to PPC and SEO, we create data-driven campaigns that drive measurable growth.

Ready to maximize the ROI of your marketing efforts? Reach out today.

This article has been updated and was originally published in March 2023.