What is the most soul-crushing task of marketing? According to Think With Google, strategically interpreting data has 61% of marketing decision-makers frustrated.
Tracking company performance can show you where your investment dollars are best spent and where you could use some improvement. But, if you’re not tracking the right metrics, it becomes a game of trial and error.
In our experience at Lean Labs, the best way to keep track of critical data is to start with six key metrics. Tracking these SaaS metrics can not only improve your marketing ROI but also propel your business forward with immense growth. For that reason, our top picks for SaaS metrics are also our six levers of growth.
There are six levers of growth for SaaS companies that you should be tracking to analyze your marketing efforts and improve your growth strategy. By the end of this article, you’ll have a crucial step in your journey to streamline your analytics.
6 SaaS Metrics You Need to Track to Accelerate Growth
Although the days of receiving report cards are over, grading your marketing efforts helps set you up for success. Calculating a “grade” of your current marketing performance gives you a baseline to start your growth journey. In addition, determining a baseline of your metrics allows you to track your ongoing performance, determine ROI, and reprioritize your growth strategy.
Need an example of what tracking SaaS metrics looks like? Here is a sneak peek of our Growth Grader that tracks the six critical levers of growth.Let’s break down the best SaaS metrics to track for growth. We will also explore several real-world examples of tracking your metrics to help grow your lead generation and ROI massively.
Awareness is the first step of any marketing funnel. Building awareness of your product or service is essential in attracting customers to your website. Brand awareness can be tracked through social media, blogs, public relations, video marketing, paid media, and business development. Although brand awareness is considered a good indicator of your business’ reach, it’s also considered a vanity metric when looked at independently.
Brand awareness drives direct and organic traffic to your marketing funnel. The rest of the work is done by your marketing and sales strategies and tactics. Your growth strategies shouldn’t center too heavily on brand awareness, but it is an important metric to track. Even if you have a great audience size, your revenue streams depend on other metrics to see results.
The best way to use brand awareness to your advantage is to develop an effective inbound marketing strategy. Developing an inbound marketing strategy can not only increase your brand awareness but also convert traffic into leads.
Acquisition is where your buyer’s journey truly begins. Acquiring leads requires strategic lead generation and lead conversion strategies which are essential to your sales process.
Metrics and data to track for acquisition include:
- Marketing Qualified Leads (MQLs)
- Lead magnet conversions
- Content analytics
- Heatmap information
- Page bounces
When it comes to SaaS metrics, acquisition metrics tend to be a good indicator of how your website is performing. For example, if you have good brand awareness, but your website analytics show a high bounce rate, the problem may not be your customer service but your on-page experience.
Optimizing your on-page experience may be as simple as changing your call-to-actions or copy, or it might need a total redesign. At Lean Labs, we exclusively recommend using growth-driven design when building your website. Utilizing growth-driven design helps improve on-page experience, acquisition rates, and Sales Qualified Leads (SQLs) metrics. In addition, growth-driven design provides real-user data. Real-time data is a big piece of the puzzle that many SaaS companies are missing, and it has a significant impact on your lead acquisition and conversion.
Measuring your activation performance is essential to get insight into how your overall sales process is working. Activation is the process of leads entering into your sales pipeline. By this point, a lead has taken action on your website and clicked a call-to-action button to submit their information.
In SaaS metrics, the activation stage is where many companies lose potential sales. Therefore, it’s essential to track the following metrics to measure how your activation process is performing:
- Activation rate
- Sales Qualified Leads (SQLs)
- Customer churn rate
- Free-to-paid conversion rate
Collecting and reporting this information is straightforward when using analytics software like Hubspot or Google Analytics. Once you have your current sales process performance data, it’s easier to establish a baseline and see where you need to improve.
Implementing lead nurturing into your marketing and sales processes helps improve your activation metrics. Several common lead nurturing tactics include lead scoring, segmentation, and email marketing. The process of lead nurturing involves answering your leads’ burning questions and building trust in your relationship. Lead nurturing is the key to obtaining a high converting marketing funnel and successfully activating leads.
It is essential to nurture and build trust with your lead so when it’s time to make a purchase decision; you are their first thought. Building trust can be done by utilizing a content marketing strategy that provides helpful information and positions your SaaS company as a solutions provider.
Without revenue, everything we've covered up to this point is a vanity metric. Revenue performance brings all of the levers of growth together and puts it all in context.
Revenue performance shows the value of marketing and sales teams being aligned. Once your marketing and sales teams have aligned processes and implement the levers of growth, then your revenue will be positively impacted. Conversely, when this doesn't happen, your company will end up with many traffic, leads, and MQLs that don’t convert.
Essential questions to ask yourself when tracking revenue include:
- How is the YTD revenue performing against this year’s goals?
- How is the performance from quarter to quarter?
- How is revenue from this year compared to last?
- Do we have an internal system to track where revenue originated from?
Tracking revenue origins and performance gives you insight into which marketing channels to invest in. Examples of possible revenue sources include:
- Sales team generated revenue
- Website conversion revenue
- Marketplace revenue
- Client referrals
- Social media sales.
Improving revenue performance requires baseline data you can track against over time. Furthermore, your baseline revenue data can help you make projections of where you should be in the future based on your minimum and reach growth rate goals.
How long do your clients stay on with you and why? The answer to this question can be complex, depending on your industry and clients. For example, if you have a low retention rate, your company might have a product designed for short-term use, or there may be an underlying problem. However, the real problem with low retention is when a pattern starts to emerge.
There are several metrics you can use to determine retention performance. Calculating retention can be done by determining your:
- User retention rate
- Loyal customer rate
- MRR retention rate
- MRR churn rate
- Customer lifetime value
Once you have your retention metrics calculated, it’s essential to put these metrics into context. Determining the source of the drop-off in retention is vital in building a more sustainably profitable SaaS business. Problem areas for retention include customer service, poor internal/client communication, workflow issues, technical issues, and more. Tracking your retention metrics is the essential first step in improving your client experience and creating a viable retention strategy.
Mark Zuckerberg famously coined the phrase, “A trusted referral is the holy grail of advertising.” Obtaining referrals from your client base helps maintain your pipeline and measure your clients’ brand loyalty.
Accurately tracking your referral rates starts with tracking your lead origins. Having a Customer Relationship Management system that differentiates referred clients from others is the first step in determining your referral rates correctly. Measure referral data starts by calculating your churn rate, referral rates, net base promotion score, share rates, and other metrics.
Improving your referral metrics also requires an analysis of your retention rate and previous client feedback. Poor referral rates might indicate poor industry reputation, customer service issues, or poor product/service quality. Fixing referral issues starts internally with patching up any workflows or customer service issues before moving onto referral programs. When your client’s satisfaction rates are high, referral programs are a significant next step to boost referral rates. Through discounts, earned rewards, and giveaways, you can incentivizing clients to review or recommend your company.
Identify & Eliminate Bottlenecks With The Growth Grader
Your SaaS company deserves the best growth strategies. That’s why we recommend analyzing your performance with the six levers of growth. Each lever of growth work interdependently and significantly affects the profitability of your SaaS business.
Acquisition leads to activation, but acquisition can help you determine your awareness efforts need to be improved. Activation informs revenue, but if you're not activating anyone because of poor lead quality, you might need to address acquisition and awareness. Now that you know the SaaS metrics that impact your growth, the next step is to measure your current performance and implement strategies for improving each metric over time.
Our free Growth Grader tool is the perfect start to learn more about your company’s levers of growth and SaaS metrics. Included with the download of our Growth Grader, you get bonus tutorial videos and an explanation of our metric methodology.Looking for more tools than just the Growth Grader? Check out our Growth Marketing Strategy Kit that includes the Growth Grader and many other tools to track your growth, increase lead generation, and improve your content marketing strategy.