18 Essential SaaS Marketing Metrics You Should
Track In 2022
Marketing a SaaS product is no joke. There are a lot of marketing strategies at play and many different channels to manage.
With all that’s happening, measuring your marketing performance and understanding your SaaS marketing metrics are key to success. It’s how you find out your strong points and areas of improvement.
But which SaaS marketing metrics should you be tracking?
To help you out, we’ve put together a list of essential SaaS marketing metrics that will help you measure your performance.
1) Unique Visitors
This metric measures the number of unique visitors that come to your website.
Why is this important?
Unique visitors give you an idea of how much reach your marketing efforts have.
The more unique visitors you have, the more people are exposed to your product.
What’s more, tracking your unique visitors for your content pages helps you assess your content distribution and promotion efforts. These may include search engine optimization (SEO), social media marketing, and email marketing.
So how do you track your unique visitors?
You can do it with the help of tools like Google Analytics. The platform assigns a unique user ID per visitor and tracks their activity on your website.
2) Returning Visitors
The great thing about monitoring your website traffic is that you can identify whether or not it’s your visitor’s first time on your site.
Remember that Google Analytics assigns a unique user ID for each website visitor. And when someone with the same user ID visits your website multiple times, you know that it’s a returning visitor.
Monitoring this metric is important because it helps you assess the stickiness of your website.
If you have a lot of returning visitors, that means you must be doing something right with your web pages.
And if you have a significant volume of returning visitors on your content pages, that could indicate that your content is reliable and engaging.
3) Bounce Rate
Bounce rate is the percentage of visitors who leave your website without taking any action, such as clicking or filling out a form.
A high bounce rate could indicate several things that are wrong with your website.
It could mean that your website pages are not relevant to what your visitors are looking for. It could also mean that your web pages aren’t engaging enough to get people to stick around. Or maybe your pages take too long to load.
Whatever the case may be, a high bounce rate is not a good sign. It could even hurt your SEO efforts.
This is why you should always keep an eye on your bounce rate and work on reducing it.
4) Traffic Source
Where is your website traffic coming from?
This is an important question to ask because it helps you understand which marketing channels or strategies are bringing you the most website visitors.
By identifying your top traffic sources, you can focus your efforts on the channels that are working best for you. You can also use this information to create more targeted content for each channel.
For example, if you notice that a lot of your traffic is coming from social media, you can increase your social media activity while working on other sources.
You can track your traffic sources using Google Analytics. With it, you can track up to 7 traffic sources:
- Direct traffic (visitors directly type your website URL into their browsers)
- Organic search (from search engines)
- Paid traffic (from PPC and other paid ads)
- Social media
- Referral (from another website or social media page)
- Others (sources that Google Analytics cannot identify)
5) Customer Engagement
Customer engagement is a broad metric that measures how users interact with your website.
You can track more specific metrics such as the following:
- Pages visited
- Time spent on page
- Pages per session
Tracking these customer engagement metrics helps you understand which pages are most popular with your visitors.
It also helps you assess how engaging your content is. If people are spending a lot of time on your pages, that’s a good sign that they’re finding your content valuable.
You also can track customer engagement using Google Analytics. The platform provides detailed reports on all the metrics mentioned above.
6) Social Media Engagement
Social media marketing is one of the most popular and effective SaaS marketing channels today. This is because it allows you to connect with your target audience where they already are.
You can use social media to build relationships, generate leads, and drive traffic back to your website.
But before you can reap the benefits of social media marketing, you need to track your engagement levels. This metric tells you how often people are interacting with your social media posts.
Social media engagement includes the following interactions with your account and posts:
The more of these engagements you have, the more likely it is that your social media posts will be seen by potential customers.
You can track social media engagement using the native insights tools provided by each platform. For example, Facebook provides detailed insights for each post that you make on the platform.
However, you can also use more advanced social analytics tools like Sprout Social and Hootsuite Insights. These platforms allow you to track engagements in all your social media channels in one place.
7) Marketing Qualified Leads (MQLs)
A marketing qualified lead (MQL) is a potential customer who has shown interest in your SaaS product or brand.
They may be regular website visitors or they may have downloaded one of your free ebooks.
This metric is important because it helps you track the progress of your marketing efforts. It also allows you to assess whether your marketing campaigns are effective in generating leads.
8) Sales Qualified Leads (SQLs)
A sales qualified lead (SQL) is a lead that has already given their contact information so that your sales team can reach out to them.
This is a more valuable metric than MQLs because it means that the lead is already interested in your SaaS product. They are further down the sales funnel and are more likely to convert into paying customers.
There are several ways to generate SQLs, such as through contact forms, free trials, and demo requests.
9) Lead Velocity Rate (LVR)
The lead velocity rate (LVR) measures how fast you are generating qualified leads (MQLs and SQLs) month to month.
This metric is important because it allows you to assess the efficiency of your marketing and sales efforts.
A high LVR means that your marketing campaigns are effective in generating leads that are interested in your product
To calculate your LVR, first, take the difference between your current number of qualified leads and last month’s number of qualified leads. Then divide the difference by the number of last month’s MQLs and SQLs.
For example, let’s say you started the month with 100 qualified leads. Then at the end of the month, you have a total of 150 MQLs and SQLs combined.
The difference between these two numbers is 50. So your LVR would be 50/100, or 50%.
10) Conversion Rate
The conversion rate is the percentage of people who take a desired action, such as signing up for a free trial or making a purchase.
You can track conversion rates for several different actions and transitions, such as the following:
- Landing page conversion rate
- Visitor-to-lead conversion rate
- MQL to SQL conversion rate
- Lead-to-customer rate
Tracking your conversion rates at different parts of the customer journey will enable you to see which specific parts of your sales and marketing efforts are performing well and which don’t.
“Activation” refers to the moment someone uses your SaaS product and experiences its value for themselves. It is also sometimes called the “a-ha!” moment.
This can be different for each SaaS product. For example, activation for a sales automation solution may be closing at least three deals. Or for social media marketing software, it could be the event of increasing the customer’s number of followers by at least 10%.
Now, most SaaS businesses use free trials or freemium models as marketing tools. So one of the ways for you to know whether or not it is working is to track your activations.
After all, your free users won’t convert into paying customers unless they get a firsthand experience of the benefits that your SaaS product can give them.
12) Monthly Recurring Revenue (MRR) & Annual Recurring Revenue (ARR)
The most straightforward indicator of your SaaS marketing performance is how much money you are making.
And with the SaaS business model, the primary metrics for revenue are the monthly recurring revenue (MRR) and the annual recurring revenue (ARR).
Your MRR is the total amount of money that your customers pay you every month for your SaaS product. While your ARR is simply the recurring revenue that you are making over a year.
13) Churn Rate
“Churn” is arguably the most dreaded word in any SaaS business. It refers to a customer canceling their subscription to your SaaS product.
And the thing about the SaaS business model is that marketing still plays a crucial part in preventing churn.
Sure, you have customer support, customer success, and the quality of your product itself as major factors for customer retention. But your marketing team still share the load when it comes to creating content and connections that help in building relationships with your existing customers.
That being said, there are two types of churn rates that you need to track: customer churn rate and revenue churn rate.
Customer Churn Rate
The customer churn rate is the percentage of customers who cancel their subscriptions in a given period of time.
For example, if you have 100 customers and 10 of them cancel their subscriptions in a month, then your customer churn rate would be 10%.
Revenue Churn Rate
The revenue churn rate is the percentage of recurring revenue that is lost due to customer churn.
To calculate this metric, simply take the total amount of money lost from churning customers and divide it by your total MRR at the beginning of the month.
For example, let’s say you were expecting an MRR of $10,000 from your 100 customers this month. But then 10 of them cancel their subscriptions, resulting in an MRR of $9,000.
This means that you’ve lost a total of $1,000 due to customer churn. So your revenue churn rate would be 10% ($1,000/$10,000).
14) Customer Acquisition Cost (CAC)
The customer acquisition cost (CAC) is the amount of money that you spend in order to acquire one new customer.
To calculate your CAC, simply take your total marketing and sales expenses for a given period of time and divide it by the number of new customers acquired during that same period.
For example, let’s say you spent a total of $100,000 on marketing and sales over the last year and acquired 100 new customers. This means that your CAC would be $100,000/100 = $1000.
The thing about the CAC is that it isn’t really enough to tell you anything conclusive. A high CAC isn’t necessarily bad and a low one isn’t necessarily good.
What really matters is your CAC in relation to how much money you are making as a result of it.
And that brings us to the next few SaaS marketing metrics:
15) Customer Lifetime Value (CLV)
The customer lifetime value (CLV), also called lifetime value (LTV), is the total amount of money that a customer will spend on your SaaS product over the course of their entire relationship with you.
The process of calculating your CLV can vary depending on how long you’ve been in business.
If you’ve had quite a number of customers that have come and gone over several years, you might have enough historical data to find how long your customers tend to stick with you.
But if you don’t have such data, you will need another method to find your CLV.
Let’s go through these two methods in detail.
Calculating Your CLV With Historical Data
Computing your CLV requires two more metrics: your average revenue per user (ARPU) and average customer lifespan.
ARPU is simply the average amount of money that each customer spends on your SaaS product over a period of time. Calculating your CLV will need your annual ARPU.
To calculate this, simply take your total ARR and divide it by the number of customers you have.
For example, if your total ARR is $1,000,000 and you have 1,000 customers, then your ARPU would be $1000.
The average customer lifespan is the average amount of time that a customer spends using your SaaS product.
To calculate it, you will need to find the total number of years that all your customers have been with you and divide it by the total number of customers you’ve had.
Needless to say, you can’t possibly get this average for hundreds (or even thousands) of customers by doing manual arithmetic. So you’ll need a spreadsheet, at the very least.
Once you have your ARPU and average customer lifespan, calculating your CLV is a simple matter of multiplication. Just take your ARPU and multiply it by the average customer lifespan.
For example, if your ARPU is $1000 and your average customer lifespan is 4 years, then your CLV would be $4000.
Calculating Your CLV Without Historical Data
If you don’t have any historical data to go on, then you will need an alternate metric to use in lieu of the average customer lifespan.
This is where the customer lifetime comes in.
This metric can help you project how long your customers are expected to stay with you.
To calculate it, simply divide 1 by your monthly customer churn rate.
For example, imagine that you have a customer churn rate of 2%. Divide it by 1, and you get a customer lifetime of (1/0.02) = 50 months, which is around 4 years and 2 months.
Multiply that value with your ARPU of $1000, and you get a CLV of more than $4100.
16) CLV/CAC Ratio
This SaaS marketing metric is simply the ratio of your CLV to your CAC.
It basically tells you how much revenue you generate for each dollar you spend on customer acquisition.
For example, if your CLV is $4000 and your CAC is $1000, then your CLV/CAC ratio would be $4:1. This means that you make $4 for every dollar you spend on acquiring new customers.
The standard CLV/CAC ratio for SaaS businesses is around 3:1.
If you have a CLV/CAC ratio lower than that, it means that you’re not getting enough return on your marketing investment.
In such a case, you might need to increase your average customer lifespan by working on your customer retention efforts. You can also increase your ARPU by leveling up your SaaS upsell strategy.
A CLV/CAC ratio that’s way too high above 3:1 isn’t necessarily a good thing either.
Sure, you’re not losing money. But it can also mean you’re not investing enough in your customer acquisition efforts. In other words, you could be missing out on opportunities to scale your business by acquiring more customers.
17) Net Promoter Score (NPS)
The Net Promoter Score (NPS) is a metric that measures customer satisfaction.
It’s based on a simple question that you send to your customers through a survey: “How likely are you to recommend our product to a friend or colleague?”
Then you can divide your respondents into three groups:
- Promoters (scores 9 and 10): These are happy customers who can help build your brand through positive word-of-mouth. They can also be potential advocates who can help you acquire new customers.
- Passives (scores 7 and 8): These are customers who are satisfied with your product but are not particularly enthusiastic about it. They might switch to a competing product if they find a better deal.
- Detractors (scores 0 to 6): These are unhappy customers who could damage your brand through negative word-of-mouth. They’re also more likely to churn than promoters or passives.
To calculate your NPS, simply take the percentage of Promoters and subtract the percentage of Detractors.
For example, if 60% of your respondents are promoters and 10% are detractors, then your NPS would be 60-10 = 50.
NPS is a valuable metric because it can give you insights into customer satisfaction levels. If your NPS is low, it could be an indication that you need to work on your product or your customer service.
An NPS score below 0 is obviously bad news. It could indicate that you are not meeting your customers’ expectations.
As we mentioned earlier, customer retention is mainly a job for your customer support, customer success, and product development departments. But marketing can also do wonders through sending valuable content and other ways to build relationships with your customers.
A score of 0 to 50 means most of your customers are satisfied, but there is still room for improvement. You still need to convert your passives into promoters while retaining your current promoters.
18) Customer Satisfaction (CSAT) Score
The CSAT score is—well—literally a score for rating customer satisfaction.
It’s based on the question: “How satisfied are you with our product?”
Customers can then rate their answer on a scale of 1 to 5, with 1 being “Very dissatisfied” and 5 being “Very satisfied.”
To calculate your CSAT score, simply take the percentage of the total number of customers who rated you 4 or 5.
These are only the customers who are truly satisfied with your SaaS product.
For example, if 80 out of 100 customers rate you 4 or 5, then your CSAT score would be 80%.
Ideally, your CSAT score should be at least 60%.
Final Thoughts About SaaS Marketing Metrics
SaaS marketing can be a complex beast. There are many different channels and strategies at play. That’s why there are also a lot of metrics that can help you measure your performance.
The 18 SaaS marketing metrics we’ve discussed in this article are just the key ones that you need to track. But you also need to track more specific metrics for each marketing channel and strategy that you are using.
You need to know the KPIs you need to track for your email marketing, content marketing, and all other campaigns you put in motion.
Want more guides to help you grow your SaaS business? Visit our blog here.