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What Are the Most Important B2B SaaS Metrics to Track?

B2B SaaS Metrics

B2B SaaS companies are growing fast. Gartner predicts that by 2022, enterprises will spend a whopping $482 billion on public cloud services from $396 billion the previous year. So if you’re a SaaS startup, you need to be smart about how you measure and grow your SaaS business. Too often, SaaS startups focus on vanity metrics that look good on paper, but don’t actually move the needle for their business.

Instead, you should focus on key growth and customer engagement metrics for B2B SaaS companies. These metrics will help you understand how your business is performing and whether you’re on track to reach your goals.

Some of the most important B2B SaaS metrics which we will cover below include monthly recurring revenue (MRR), customer churn rate, customer lifetime value (CLV), and gross margin. By tracking these SaaS marketing metrics, you can make sure that your business is healthy and growing.

 

The Need to Track B2B SaaS Metrics

 

Tracking your metrics is critical to your success. Metrics (or KPIs) can provide insights into how your SaaS company is performing. This information can help guide future decision-making and help your company achieve its goals.

Additionally, investors and potential investors will want to see this data before they decide to invest in your SaaS company.

Finally, this data can also help current and potential customers understand what your SaaS  company is doing well and where it could use improvement.

 

Commonly Tracked B2B SaaS Metrics

 

There are a variety of key SaaS metrics that can provide valuable insights into the health and success of a company. Some of these metrics include the following:

 

1. Monthly active users

 

Monthly active users (MAUs) measure the number of unique users that engage with a product or service in a given month.

The MAU metric is typically calculated by counting the total number of unique users who interacted with the product or service in a given month, regardless of how many times they interacted. For example, if a user signs up for a subscription on January 1st and then unsubscribes on February 2nd, they would still be counted as an active user in January.

The MAU metric is especially important for subscription-based businesses because it can help them determine whether they’re growing their customer base and retaining existing customers. The problem with the MAU metric is that it doesn’t take into account how often a customer interacts with their product or service.

For example, if a user downloads a free app in December and then unsubscribes from the service in January, they would be counted as an active user for both months. This makes it difficult to determine which customers are getting value from your product or service.

 

2. Monthly recurring revenue

 

Monthly recurring revenue (MRR) is the amount of revenue a SaaS company generates on a monthly basis from subscriptions. It’s important to track the net MRR because it indicates the health of a SaaS company’s recurring revenue stream.

A high MRR means that a SaaS company is successful at converting customers into long-term subscribers.

Conversely, low MRR could indicate that a company is struggling to retain subscribers or find new ones. There are several factors that can affect MRR, including churn rate and customer lifetime value (CLV) which we will discuss further below.

 

3. Churn rate

 

Churn rate is a metric that measures how many customers or users leave a company or service over a given period of time. It is used to calculate the percentage of users who discontinue their use of a product or service during a specific time frame. .

There are several factors that can contribute to churn rate, including poor customer service, high customer acquisition cost, lack of features, high prices, and difficult-to-use products. Churn rate can also be affected by external factors such as economic conditions and competition.

Churn rate is found by dividing the number of active users in a period by the total number of periods in which they were active. Businesses use churn rate to determine the percentage of their user base that has left during a given period.

Here are a few uses of churn rate:

  • It is one of the main factors that determine customer satisfaction and loyalty to a company. Customers who are loyal are more likely to pay for features and services, which in turn helps businesses increase revenue.
  • It is used to determine the profitability of a business. A high churn rate can be detrimental to a business, because it indicates that the user base is not valuable and therefore customers are not willing to pay for additional features and services.
  • It is also used for marketing purposes. Marketing departments use annual churn rate to determine which customers should be targeted for different marketing campaigns.

4. Customer lifetime value

 

CLV is the predicted revenue stream that a customer will generate over the course of their relationship with your SaaS company. It’s calculated by multiplying the average customer lifespan by the average customer lifetime value.

CLV is important to track because it can help you determine whether or not a potential customer is worth acquiring. By evaluating CLV, you can make sure that you’re not spending more on acquiring a customer than they’re likely to generate in revenue over their lifetime.

It’s also helpful to track CLV when setting pricing and determining how much effort to put into retaining customers. For example, if you know that a customer’s CLV is $100 over the course of their relationship with your company, it’s important to give them value that offsets the cost of acquiring them.

Finally, it’s critical to track CLV because it can help you prioritize your marketing efforts and determine how much time and money you should spend on different kinds of customers. By knowing how much it costs to acquire and retain a customer, you’ll have a better idea of what is getting in the way of your business’s growth.

 

5. Average revenue per user (ARPU)

 

ARPU is a metric that tells you how much money each of your customers is spending on your product. It’s important to track ARPU because it can give you a sense of whether your product is growing or shrinking in terms of revenue.

If ARPU starts to decline, it may be a sign that you need to start working on ways to increase sales or find new customers. Conversely, if ARPU is increasing, it means that your product is becoming more popular and you may be able to start thinking about ways to expand your business.

There are a few different ways to calculate ARPU. The most common way is to simply divide total revenue by the number of active users. Imagine you have a product that retails for $100 and your users spend an average of $50 per month. How would you calculate the ARPU of your product? Well, it’s pretty simple. If you divide $100 by the number of users, you get an ARPU of $4. This means that for every active user, the company makes a little over $4 in revenue.

 

6. Gross margin

 

In business, gross margin is a calculation of how much profit a company makes on each dollar of revenue. Gross margin is calculated by subtracting the cost of goods sold from total revenue, then dividing that number by total revenue.

For example, if a company has $100,000 in revenue and $60,000 in costs of goods sold, its gross margin would be 40 percent ($40,000/$100,000).

Gross margin is an important metric for SaaS businesses because it shows how efficiently a company is converting its sales into profits. A high gross margin means the company is making healthy profits on each sale, while a low gross margin means it is taking a loss on each sale.

Gross margin can be used to judge the competitiveness of a B2B SaaS company’s products and to benchmark its performance against its competitors. It can also be used to judge the profitability of a B2B SaaS company. A high gross margin means the company is making healthy profits on each sale, while a low gross margin means it is taking a loss on each sale.

 

Tools to Help Track B2B SaaS Metrics

 

In order to track the success of your B2B SaaS, you need to first identify what product metrics are important to you. Once you have that list, there are a number of tools that can help you track those metrics. Among the most popular ones are as follows:

 

Google Analytics

 

Google Analytics can help businesses track the following:

  • How many people are visiting their website and what pages they are viewing? This information can help businesses determine which of their offerings are most popular and which ones need improvement.
  • How many people are signing up for trials or subscribing to services? Knowing this information can help businesses determine how successful their marketing campaigns are and where they should focus their efforts in the future.
  • How much revenue is being generated from each source? Determining this information can help businesses understand which marketing channels are most effective and invest more money into those efforts.

 

Mixpanel

 

Mixpanel is a powerful analytics tool that can help businesses track and measure key customer success metrics for their SaaS products. With Mixpanel, businesses can see how users are interacting with their product, identify areas where users are struggling or dropping off, and measure the impact of changes to the product.

Mixpanel provides insights into how different user segments are using the product, allowing businesses to fine-tune their marketing and sales efforts. Overall, Mixpanel is an invaluable tool for B2B SaaS companies looking to track and improve their key metrics.

 

Kissmetrics

 

Kissmetrics helps businesses to track and analyze customer behavior. It provides a comprehensive suite of tools designed to provide deep insights into customer activities. With Kissmetrics, businesses can leverage data-driven decisions to achieve their growth objectives.

Kissmetrics enables companies to gain insight into how customers interact with their online properties, including websites and e-commerce stores. This information can be used to optimize user experience and maximize conversions through targeted campaigns.

Additionally, Kissmetrics provides robust tracking capabilities that enable businesses to segment customers based on past behaviors or sources of traffic. This allows them to personalize content for each user in order to drive engagement and increase ROI from existing campaigns.

 

Amplitude

 

With its user engagement tracking tools, Amplitude can help you measure how engaged your users are with your product, and how likely they are to convert into paying customers.

Amplitude’s cohort analysis features can help you measure how your product is performing over time and identify trends in user behavior. This information can help you make informed decisions about which features to prioritize and how to optimize your sales process.

 

ChartMogul

 

ChartMogul collects data from a company’s subscription-based services and then presenting that data in charts and graphs.This information can help businesses understand how their products are being used, identify areas for improvement, and make better business decisions.

 

Cyfe

 

With Cyfe, you can monitor your company’s performance in near real-time, and identify any potential issues before they become a bigger problem.

Cyfe offers a variety of widgets and charts that you can use to customize your reports. This allows you to track the metrics that are most important to your business.

 

Final Thoughts

 

There are many different B2B SaaS metrics to track, but the most important ones are those that relate to revenue, customer churn, and customer lifetime value. By tracking these metrics, businesses can identify areas where they need to make improvements and better understand their customers’ needs. If you need more tips on growing your B2B SaaS business, check out our blog.

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Ken Moo
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