What feature to rebuild? Which market to target? Stop the guesswork by tracking these SaaS marketing metrics. 

Here you’ll find:

  • What SaaS marketing metrics are
  • The top SaaS metrics to track 
  • How to track SaaS metrics
  • What to do with your SaaS metrics data

Software-as-a-Service (SaaS) companies are the “IT” factor for companies looking for reasonable rates for quality software. But this doesn’t mean every user you snag will stick around for the long haul. 

Creating a marketing strategy that drives leads to your SaaS platform is only one part of the equation. Keeping users long-term will require consistent analysis of key SaaS marketing metrics. And appropriate action to ensure you’re driving leads, conversions, and retention. 

Not sure which to track in your marketing campaigns? Then continue reading. 

What are SaaS marketing metrics?

Data Center Programmer Using Digital Laptop Computer, Maintenance IT Specialist. Cloud Computing Server Farm System Administrator Working on Cyber Security for Iaas, saas, paas. Closeup Focus on Hands

By tracking SaaS marketing metrics, businesses can make informed decisions about their marketing spend. (Image: Adobe)

SaaS marketing metrics 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.

For example, a SaaS company might use metrics like the number of signups to measure the effectiveness of a new marketing campaign.

If the data shows social media marketing is yielding higher signups than email marketing, then consider dedicating more resources to that channel.

By tracking SaaS marketing metrics, businesses can make informed decisions about their marketing spend and prioritize top-performing campaigns. In the end, it can save money and improve business growth (aka customer acquisition and revenue).

What are the top SaaS marketing metrics to track?

There are dozens of SaaS marketing metrics a company can track, but which should be your key performance indicators (KPIs)? Depends on your business goals. For instance, if you want to increase lead form submissions for a demo, then you’ll track form completions. 

If you’re new to building a marketing campaign for SaaS business, then it’s good to become acquainted with the different types of metrics you can track. 

So here goes the most important metrics to monitor (to avoid wasting time on vanity metrics).

1. Custom acquisition cost (CAC)

Customer acquisition cost (or cost per acquisition, CPA) is the cost of acquiring a customer. Tracking this metric will determine how much you must pay to get a new paying customer for your SaaS platform or tool. 

Why’s this important to track? Because it helps you decide how much to spend on marketing and sales to make it worthwhile. For instance, it wouldn’t make sense to pay $10,000 to get one new customer if that customer will only spend $1,000 with your business over the life of the relationship. 

The way you calculate CAC ratio is by adding up the cost of the marketing and sales activities needed to acquire a customer, then divide it by the number of new customers you got in that time period.

Here’s the formula:

CAC = [Cost of Acquisition (CAC)] / [# of New Customers]

For example, if you spend $5,000 on marketing efforts per month and acquire ten customers monthly, then it costs you $500 to get a new customer. 

2. Customer lifetime value (CLV)

Businessman Wearing Telephone Headset Talking To Caller In Customer Services Department

CLV also determines how much you should spend on marketing campaigns to get a return on investment (ROI). (Image: Adobe)

Customer lifetime value is the average customers spend with your company before leaving. Measuring the value of customers’ lifecycles estimates what you can expect to earn for each new customer you gain. It also determines how much you should spend on marketing campaigns to get a return on investment (ROI). 

The formula to calculate LTV is:

LTV = (Customer Value * Average Customer Lifespan)

For example, if the average lifetime value of a customer is $3,000, then you’d aim to keep your CAC well below that. LTV and CAC work hand-in-hand to guide your marketing spend and efforts. 

3. Marketing qualified lead (MQL)

A marketing-qualified lead is a prospective customer that meets your marketing criteria. For instance, if you build a campaign to attract CEOs of companies with 100 or more employees, then you’ll base your leads on that criteria. If they meet it, they are an MQL. 

Why’s this important to track?

Because it tells you how effective your marketing is in attracting specific types of leads. If you’re getting a lot of unqualified leads, then it’s time to make changes to your SaaS marketing strategy. Maybe it’s the channel you’re using or the messaging that needs shifting. 

4. Sales qualified lead (SQL)

A sales-qualified lead is a prospect who’s ready to buy your product. You successfully attracted the lead to your business via your marketing efforts, and now they’re booking a demo with your sales team.

These leads are sales qualified because they’re the most likely to turn into customers. This is critical to track because it determines if your campaigns attract people that’ll add to your business’s bottom line. 

If not, then you’re wasting money on people who will likely never convert. 

Note that an MQL is something you may want to track with SQLs because the former will ensure you’re tracking the right people who could one day convert, and the second will identify leads who are likely to convert now or sometime soon. 

Sometimes, you don’t know who your SQLs are, so by tracking MQLs, you can monitor who’s becoming leads and identify who out of the different groups are converting the most (your SQLs). 

This is something ConversionIQ, HawkSEM’s proprietary software does well. It analyzes your leads to identify who’s converting the most and what content or channel they’re coming from.

Then you can use that information to optimize your campaigns to target the SQLs, increasing your return on investment. 

5. Unique visitors

Unique visitors are a great way to monitor traffic to your website within a time frame (e.g., month, quarter, year). Total traffic shows everyone, including repeat visitors, and won’t depict how many people are new. 

So by tracking unique visits, you can see that 100K monthly visits are coming from 10K people. Why is this important? Because it prevents inflating your numbers and expectations. If only a few people (10k) are hiking up your number of site visits (100K), then you may believe your marketing campaigns are getting more attention than they are. 

Note: a lot of visits from the same people is a good sign that you’re capturing attention and possibly getting people to consider purchasing your product (if they haven’t already). 

6. Activations

Activation is when a new customer uses your product for the first time. 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 bad for business because it decreases your customer’s lifetime value. 

If you notice 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). 

7. Lead to customer rate

Lead to customer rate is the average number of prospects that become customers. For instance, if you have 100 leads per month and 20 converts into customers, then the lead-to-customer rate is 20%. The higher your lead-to-customer rate, the better. 

The formula to calculate lead-to-customer rate is:

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

Lead Velocity Rate (LVR) measures the speed of getting new leads to your sales team. 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).

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.

Here’s the formula:

LVR = (Number of qualified leads in the current month – Number of qualified leads last month) ÷ Number of qualified leads last month x 100

So if this month you generated 750 MQLs and 500 MQLs last month, then it’d look like this:

750 – 500 = -250 MQLs

250 / 750 = .50

.50 x 100 = 50% lead velocity rate

In other words, your leads are increasing by 50% month-over-month (MoM). Keeping an eye on this will determine if your campaigns are increasing, maintaining, or decreasing in effectiveness.

9. Freemium conversion rate

A freemium conversion rate is when a customer converts from your free product to your paid product. It shows your marketing campaign’s target audience is on point. These individuals may need your product, but aren’t sure it’s the right fit, so they sign up for a free trial. 

Then once they see it’s just as your marketing campaign portrays, they switch to a premium plan. 

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 (e.g., focusing on the wrong pain points). 

This may be the case if you have more people canceling after the freemium than crossing over to a paid plan.

10. Customer churn rate

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.

If you have a high customer churn rate, it may be time to look at what’s causing it. Maybe it’s an issue with onboarding, or there’s a feature missing your customers’ needs. 

By tracking customer churn, you can identify when there’s an issue and then use surveys or tools like Hotjar to find ways to improve.

11. Revenue churn

Revenue churn is the percentage of lost revenue due to customers canceling their subscriptions. Sounds a lot like customer churn, but there’s a difference. Customer churn focuses on how many people leave, while revenue churn focuses on how much money the company is losing from churn. 

Man walking out of a business office to signify customer churn rate for SaaS businesses

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. (Image: Adobe)

For example, if you have a multi-tier product, then you’ll have some customers worth more than others. A customer paying $150 per month is worth more than three customers paying $30 per month. However, 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 that are leaving, which hurts your revenue more. 

So 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).

12. Customer engagement 

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. 

It can also be an indicator to remove a low-usage feature from your platform to free up development resources.

The goal is to find out how many days per week or month a customer logs in to your product. How many hours they spend on your platform each visit. And which features they engage with the most. Then use the information to guide future product decisions.

13. Net promoter score (NPS)

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. This is a great metric to measure because you can determine how satisfied your customers are and identify where improvements can be made to increase satisfaction and loyalty.

To create your NPS survey, you’ll need a tool like Survey Monkey to gather and analyze the data. Then asks 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?
  • How useful do you find X feature?
  • 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 (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 to be satisfied, but aren’t enthusiastic about your product and are less likely to promote it to others. 
  • Detractors: Scores 0-6 are likely to be unhappy with your product and likely to say negative things about your product, causing reputational damage. 

The goal is to quickly find detractors, and why they aren’t satisfied with your product, so you can fix it before your reputation suffers. 

14. Annual recurring revenue (ARR)

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. 

You can calculate ARR by adding the annual revenue you get from all of your customers and multiplying by the number of years they’ll remain a customer. For example, if you have a five-year contract with a customer that’s worth $10,000, you’d divide $10K by five years, totaling $2K in annual recurring revenue. 

Here’s the formula:

ARR =  [Total contract revenue] / [Number of years]. 

Likely, you have annual revenue goals to meet and will need to use ARR to calculate whether you’re on track to meeting them. 

For instance, if your goal is to reach $300K by the end of the year, then you know you need to earn at least $25K per month. If you run the numbers for a quarter and see it’s below that, then you can make adjustments to your marketing and project spending to focus on areas that can boost revenue. 

Your NPS survey could come in handy here!

15. Monthly recurring revenue (MRR)

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.

Here’s the formula:

MRR = (Number of customers x Average Revenue per User)

For example, if you have plans that are $199/mo and have 1,000 customers, then you’d multiply $199 by 10k, which gives you an MRR of $199K. 

Or if you have a mix of plans, you’ll need to calculate the average by adding the total and dividing it by the number of users. So if you have 1,000 people on a $199/mo plan and 500 people on the $299/mo plan, then you’d multiply each plan by its number of users, add the totals together, and divide the sum by the total number of users for both plans. 

Here’s how it’d look:

$199 x 1,000 users = $199K 

$299 x 500 users= $149.5K

$199K + $149.5K = $348.5K

$348.5K / 1500 users = $232 recurring monthly revenue 

Tracking MRR is ideal to keep a close eye on how your SaaS business is doing. 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). 

How do you track SaaS marketing metrics?

Tracking these metrics is relatively easy when you have the right tools and help. For example, you have Google Analytics, Mixpanel, and Heap to track user engagement and total revenue. Or if you use customer relationship management (CRM) software like Salesforce or Hubspot, you can monitor customer acquisition, retention, and churn rates.

hand indicate metric tracking spreadsheet on the screen with pen .

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 Steven Dang, VP of Growth and Strategy at HawkSEM. “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.”

Another option: leverage the knowledge and tools of a B2B SaaS digital marketing agency. HawkSEM works with SaaS companies, helping them to identify pitfalls, spot opportunities, and reach goals. We use  ConversionIQ to track key metrics, identify your ideal customer base, and where they’re coming from. 

With this information, our marketing team can build better campaigns that drive impressive results for your SaaS business. 

What should you do with the marketing metrics 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 gets 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 make note of traits, characteristics, or factors that add to or detract from the quality of a lead.

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. 

The takeaway

Monitoring the health of a SaaS business requires digging into the data to see what’s happening under the hood. But you need to track the right KPIs, or you’ll risk overlooking flaws in your product and marketing strategy. 

It all begins with building a marketing strategy that aligns with your business goals. From here, you can identify the best marketing metrics to track for your campaigns. 

If you need help building, executing, and monitoring your next SaaS marketing strategy, reach out to the SaaSy experts at HawkSEM today.

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Saphia Lanier

Saphia Lanier

Saphia Lanier is a content writer and strategist with 16+ years' experience working with B2B SaaS companies and marketing agencies. She uses an engaging journalistic style to craft thought leadership and educational content about digital marketing, technology, and entrepreneurship.