The metrics your SaaS company should be measuring

I’m a HUGE believer in running a metrics driven SaaS business. In fact, I think it’s basically a pre-requisite for running a successful SaaS business these days and the web is filled with great stories of how the most successful SaaS companies (HubSpot, SEOMoz, KISSmetrics, etc.) are maniacal about their metrics and what that has given them.

While it’s all well and good to believe in that, actually implementing these metrics can be much more difficult. It’s a process i’ve been through three times now (each time using KISSmetrics) and I wanted to share with you the metrics that we’ve considered important in the past.

There is a school of thought out there that you should only be tracking a few key metrics, and while I tend to agree with that I have an amendment: track everything you possibly can, but focus only what’s important. The reason I say this is that when it comes time to optimise one of those key metrics, it’s useful to have the other metrics to help you understand how to go about it.

On that note, I present to you guys a large list of metrics you, as a SaaS company, should be tracking. This by all means isn’t a comprehensive list and it definitely should be adapted to the unique attributes of your business, but hopefully it provides a good starting point or reference point for ideas.

Business Intelligence Metrics

Business Intelligence Metrics give you insight into your success against primary business KPI’s (and the sub-metrics that drive those KPI’s). These include:

Revenue

  • Total revenue over specified time period – Revenue earned from customers in the specified time period
  • Average Revenue Per Customer – Average revenue an individual customer generates over the given time period
  • Lifetime value – Predicted lifetime revenue per customer.

Customers

  • Unique Visits – Total Unique Visits to your marketing website over specified time period
  • Total Signups – Total number of people who signed up for an account in the specified time period
  • Average time to signup – Average time between first visit and signup
  • Total Purchasers – Total number of people who became paying customers in the specified time period
  • Activated – Total number of people who activated within the specified time period
  • Time to Purchase – Average time it takes people to go from signup to purchase
  • Time to activation – Total time it takes to go from signup to activation
  • Visitor conversion rate – Percentage of people who visited site then purchased
  • Signup conversion rate – Percentage of people who signed up then purchased
  • Activation conversion rate – Percentage of people who ‘Activated’ then purchased
  • Logins to activation – How many times a user logs in between Signup and Activation
  • Logins to Purchase – Total number of times a user logs in to the application before Purchase.
  • Cancellations – Number of people who became paying customers then cancelled their account
  • Time to cancel – Total time between Purchase and Cancel
  • Churn Rate – % of people who became paying customers then cancelled their account

Funnels

Funnels allow you to track users progress down a pre-defined path (such as the main visit site – signup – activation – purchase funnel), and are brilliant for analysing where and why users may be dropping off and how to fix it. In KISSmetrics, a funnel report looks a bit like this:

07-KM-SaaS-Funnel-Segmented-by-Referrer

I wish I could tell you what funnels you should be tracking, but the fact of the matter is it’s completely different for each business. A couple I do recommend exploring and customising to your business are as follows:

  • Main Customer Acquisition Funnel – As seen in the image above, it is usually defined as Visit Site, Sign Up, Activate and Billed. This is your main customer acquisition funnel and is extremely important to track.
  • Activation Funnel – These are the steps a user takes to become ‘Activated’. This is different for each SaaS company but i thoroughly recommend working out what it is for yours and tracking it intensely. If you don’t know what Activation is, KISSmetrics wrote a great post about it on their blog.

Marketing Intelligence Metrics

Marketing Intelligence metrics give us insight into what the most successful marketing channels are, so we can understand when, where and how to scale our sales & marketing machine.

For each customer acquisition channel you utilise (lSEO, SEM, Guest Posting, Blogging, etc.), you should be tracking the following metrics:

  • Total revenue over specified time period – Revenue earned from customers in the specified time period from the selected customer acquisition channel
  • Unique Visits – Total Unique Visits to our website over specified time period from the selected customer acquisition channel
  • Total Signups – Total number of people who signed up for a free trial in the specified time period from the selected customer acquisition channel
  • Average Time to Signup – Average time between first visit and signup when coming the selected customer acquisition channel
  • Total Paying Customers – Total number of people who became paying customers in the specified time period from the selected customer acquisition channel
  • Time to paying – Average time it takes people to go from signup to paying customer from the selected customer acquisition channel
  • Visitor conversion rate – Percentage of people who visited site then became paying customers when coming from the selected customer acquisition channel
  • Signup conversion rate – Percentage of people who signed up then became paying customers when coming from the selected customer acquisition channel
  • Activated – Total number of people who activated within the specified time period when coming from the selected customer acquisition channel
  • Time to activation – Total time it takes to go from signup to activation when coming from the selected customer acquisition channel
  • Logins to activation – How many times a user logs in between Signup and Activation when coming from the selected customer acquisition channel
  • Logins to paying – Total number of times a user logs in to the application before paying when coming from the selected customer acquisition channel
  • Cancellations – Number of people who became paying customers then cancelled their account when coming from the selected customer acquisition channel
  • Churn Rate – % of people who became paying customers then cancelled their account when coming from the selected customer acquisition channel
  • Deactivations – Number of people who signed up but their accounts became deactivated (represents people who signed up for free trials but they’re account was deactivated as they never became paying customers) when coming from the selected customer acquisition channel
  • Deactivation rate – Percentage of people who signed up for free trial but they’re accounts got deactivated when coming from the selected customer acquisition channel
  • Lifetime value – Predicted lifetime revenue per customer when coming from the selected customer acquisition channel

All in all, if you can get these metrics implemented using a system like KISSmetrics it should provide a very solid foundation for making data-driven decisions across your customer acquisition and retention activities.

If you decide to implement any of these, please leave a comment below and let me know how they go for you!

 

Aaron Beashel
ab@aaronbeashel.com

Just two loves: marketing & surfing. When I’m not in the ocean, you’ll find me helping B2B SaaS companies acquire and retain customers.

2 Comments

  • David Arnoux

    27.11.2013 at 11:34 Reply

    Fantastic read. I find that too many articles concentrate on telling you to limit your metrics. That’s great but it’s refreshing to have a wide list to choose from. I also really enjoy how you’ve constantly incorporated the notion of TIME into the metrics. It’s pretty rare to put this forward. I’d put this post way at the top with David Skok’s bible http://goo.gl/sxoo2

    • Aaron Beashel

      27.11.2013 at 20:07 Reply

      Hi David

      Thanks so much for the comment and i’m stoked to hear you guys got a lot of value out of the post. Appreciate the sharing on Twitter as well.

      I agree there is a lot of focus on limiting your metrics in most material. When I first started putting this list together for my previous company I found I had to visit like 50 different sources to get a comprehensive understanding of everything we should be tracking, so I thought it might be good to put a more comprehensive list that others can use as inspiration.

      I also agree time is such a critical factor. Lincoln Murphy wrote a great article on SaaS CAC efficiency which I think does a good job of showcasing why it is so critical (http://goo.gl/hgDy7K). If you can get the time from visit site – activation down then then your time to CAC payback goes down and your ACV goes up which is always nice.

      This is compounded when you have a viral factor to your product. The quicker you can get people through the viral loop can have a massive effect on how many users you acquire. David Skok (the man is a god!) also wrote an awesome article (http://goo.gl/wjXah) on this that outlines how reducing your viral cycle time from 2 days to 1 day can literally mean the difference between 20,000 users and 2 million users. Worth reading.

      Keep up the good work!

      Aaron

Post a Comment

Let's grow your SaaS company together
I'd love to hear about any available opportunities
Let's talk