Key Metrics and KPIs To Measure for SaaS Marketing Success

Digital marketing helps software-as-a-service (SaaS) companies reach customers, generate leads, and promote their goods. Successful SaaS marketing increases income, customers, and exposure. But how do we know whether a marketing campaign has been successful? Monitoring and analysis are a vital part of SaaS marketing, making successes clearer and results more measurable.

An expert SaaS marketing agency uses key performance indicators (KPIs) and metrics to measure the  success of their campaigns. This introductory guide highlights the following points:

• Differences between KPIs and critical metrics
• Categories to measure SaaS marketing success
• Methods to track KPIs and Metrics

Find out how these key metrics and KPIs apply to your SaaS company and learn the latest on SaaS marketing successes and challenges. Let’s go!

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Understand the Difference Between KPIs and Metrics

The terms KPI and metrics are often used interchangeably. However, these are two different concepts.  KPIs are data points that directly measure the success or failure of business and marketing goals and provide actionable insights. Examples of KPIs are profit and revenue.

Metrics provide context for the success or failure of a campaign, such as SEO for SaaS. Examples of metrics are email open rates, unsubscribe rates, and clickthrough rates. While all KPIs are metrics, not all metrics are KPIs. For instance, in a conversion rate optimization (CRO) campaign, the conversion rate is a KPI aligned with the goal, while the open rate is a metric.

KPIs vary depending on the specific level of operation. They can be company-wide or sales-focused and reveal insights for achieving objectives. Optimization-focused KPIs might include daily active users (DAUs) and time spent in the software to increase engagement. Other metrics, such as renewals and upgrades, gauge the impact of these optimization efforts using retention as a success indicator.

Comparing metrics and KPIs to benchmarks—points of reference from external sources—is critical for determining success. Benchmarks provide a valuable frame of reference, offering insights into industry norms and competitors' performance. By using benchmarks, organizations can set realistic goals, identify areas for improvement, and ensure performance aligns with industry standards.

Why do companies track metrics and KPIs? The most common answer is to make a profit or find a better strategy. But making money is just one part of SaaS marketing. Factors such as user experience are part of creating a well-rounded and efficient marketing campaign.

Categories for Measurement

After discerning the differences between KPIs and metrics, marketers can narrow their focus within different categories for measuring SaaS marketing. Categorization enables marketing teams to track, analyze, and optimize various facets of SaaS marketing, from customer acquisition and revenue generation to user engagement and support, ensuring their campaigns are focused on success. Here are the seven main categories:

   1. SaaS Marketing

Below are crucial marketing metrics used to track the marketing performance of software companies:

• Customer acquisition cost (CAC) – the cost incurred to acquire a new customer, including marketing and sales expenses.
• Customer lifetime value (CLTV or LTV) – the total revenue expected from customers over their entire relationship with the company
• Churn rate – the percentage of customers who cancel or stop using the service within a specific period.
• Customer satisfaction (CSAT) – customer ratings collected through surveys or feedback forms.
• Trial-to-paid conversion rate – the percentage of trial users who become paying customers, reflecting the effectiveness of your trial offering.
• Website and app analytics – metrics related to website and app traffic, user behavior, and conversion rates that help optimize user experience and conversion paths.

   2. Revenue

KPIs and metrics that demonstrate the profitability of a SaaS marketing strategy or campaign are:

• Monthly recurring revenue (MRR) – predictable monthly revenue generated from subscription-based services, a fundamental revenue metric for SaaS companies.
• Annual recurring revenue (ARR) –  revenue measured annually provides a broader view of revenue stability and growth..
• Customer lifetime value (CLTV or LTV) – the total revenue expected from customers over their entire relationship with the company, indicating long-term revenue potential.
• Customer acquisition cost (CAC) – the cost of acquiring a new customer.
• Gross margin – a percentage of revenue that represents the profit after accounting for the cost of goods or service delivery.

These revenue-focused KPIs and metrics assess the SaaS company’s financial health and growth potential.

   3. Expenses

Expense metrics and KPIs are vital expenses considering marketing, service delivery, and other factors. CAC is part of the expenses category, along with these other metrics:

• Marketing expense ratio – The percentage of total revenue allocated to marketing expenses, indicating the efficiency of marketing spending.
• Sales and marketing expense ratio – The percentage of total revenue allocated to sales and marketing expenses, offering insights into overall acquisition costs.
• Cost per click (CPC) – The cost for each click generated through pay-per-click (PPC) advertising campaigns.
• Cost per acquisition (CPA) – The cost of acquiring a new customer, calculated by dividing total acquisition costs by the number of new customers.
• Return on advertising spend (ROAS) – Measures the revenue generated from advertising campaigns compared to the cost of those campaigns.
• Customer support expense ratio – The percentage of total revenue allocated to customer support and service expenses.
• Content production costs – The total cost of creating content assets such as blog posts, videos, or infographics.
• Email marketing costs – The total expenses of email marketing campaigns, including software subscriptions and creative production.

These KPIs and metrics related to expenses help SaaS marketing teams assess the efficiency and allocation of their budget. These enable cost-effective strategies and resource management.

Other measurement categories include:

• Customer support – These metrics gauge the effectiveness of customer satisfaction strategies and are critical in marketing and sales.
• Engagement – This is also essential in marketing and sales. Engagement tracks usage metrics that predict recurring revenue.
• Retention –Retention rates reveal how many customers remain loyal and will continue to purchase products..
• Conversion goals –These are critical management and sales KPIs and metrics that are useful in evaluating SaaS conversions.

Use Different Methods to Track KPIs and Metrics

Tracking your KPIs and metrics has never been easier. There are many solutions out there to provide exactly the kind of metrics you want to track. Some of the more popular solutions are listed below: 

• SaaS analytics. You can use a specialized analytics platform designed for software products, giving you the flexibility to create customized metrics, dashboards, and reports. Popular analytics tools for SaaS marketing include Google Analytics, Salesforce, and HubSpot.
• Goal tracking. SaaS marketers use software to define KPIs, goals, and metrics for measuring campaign performance. A few highly rated software and tools are Asana, Trello, and Jira.
• Feature management. SaaS companies monitor software features, including new feature rollouts, testing, and adoption. Various feature management tools are available online, and LaunchDarkly, Split, and Unleash are among the favorites of software developers.
• Subscription management. Software subscription is the lifeblood of SaaS companies. They use specialized platforms such as Stripe, Pabbly, and Chargebee to manage subscriptions and retentions, and to test different SaaS pricing models.
• Email marketing. These tools automate and make email marketing more efficient throughout the entire SaaS customer journey. Marketers use software and tools such as Mailchimp, HubSpot, and Brevo.
• Customer Service. SaaS marketers understand that excellent customer service can boost search engine ranking. Efficient customer service management software and tools such as Zendesk, HubSpot Service Hub, and Jira Service Management  help provide clients with excellent customer and technical support.

Summing Up

Tracking KPIs and metrics with these marketing tools can make decision-making easier and less time-consuming. SaaS companies need regular monitoring of their KPIs and metrics to ensure they are working towards the same marketing objectives and goals.

Digital Authority Partners is an expert SaaS marketing agency that keeps your company at the top of the search results lists and customers at the bottom of the sales funnel. Find out more about how experienced marketing can benefit your SaaS company. Contact Digital Authority Partners (DAP) today.