8 Essential Customer Metrics to Help Your SaaS Brand Stand Out
By Scuba Insights
Business is booming for SaaS companies. The market’s total value eclipsed $150 billion in 2021 and keeps growing each year. But, gains aren’t shared evenly across the industry, and brands have to battle their way to the top.
Name recognition goes a long way in the SaaS game—yet growth becomes more difficult as revenue levels increase. According to SaaS Capital’s recent benchmarking study, “a growth rate of 80% for a $3 million SaaS business is below average, while the growth of 80% for a $20 million SaaS business is twice the average.”
To be a top performer, SaaS brands need to find new and unique ways to leverage their data. Research from McKinsey found that top-quartile SaaS companies generate revenue growth 3.5 times faster than the bottom quartile, heavily driven by data-oriented initiatives. Data can be the difference that helps you edge out the competition. But just throwing more money at sales and marketing isn’t enough—you need to be strategic and intentional.
In this article, we'll talk about why a data-informed approach is important and which customer-centric metrics SaaS companies should track to increase their ROI.
Being the best requires some savvy, sassy moves
In a rapidly growing and competitive industry, you need to use every advantage to stay ahead of your peers. For SaaS brands, that means leaning into customer-driven insights. No one knows your customers better than you, and the mountains of data they provide and create are a goldmine for refining your services.
Leveraging user data can help your brand:
- Better understand your customers: Combining behavioral, demographic, and event-driven data yields a rich, vibrant picture of your users. With this information, you can construct more accurate personas and segments to better serve your customers’ needs.
- Accelerate growth: In SaaS, growth isn’t a luxury; it’s a necessity. Using customer journey analytics, you can see how prospects are converting to customers and focus on optimizing your sales, marketing, and onboarding initiatives.
- Elevate CX and improve product performance: Any SaaS brand can deliver features, but CX is the great differentiator. According to research from Emplifi, 61% of customers will pay at least 5% more for a good customer experience. Rapid insights into customer usage help you eliminate friction points and respond to users’ needs quickly.
- Increase profit: Dialing in your user retention with data-driven decisions doesn’t just keep money flowing in. It frees your team up to focus more on growth and optimization, lowering your cost per acquisition, and increasing your bottom line.
If you don’t use it, you could lose
Maximizing your customer data isn't just about gaining a competitive edge. SaaS brands that fail to leverage data and analytics properly—or at all—are navigating a fast-paced digital world with blinders on.
Underutilizing data puts your company at risk of:
- Poor UX: Salesforce research found that 67% of customers have higher standards for a good experience than ever before. If you don’t have clear and granular metrics on how your customers engage your product and where the pain points are, it’s difficult—if not impossible—to enhance your UX.
- Stale insights: Monthly or quarterly reports don’t cut it anymore. You need real-time insights into what your users are doing. Relying on stale data means you’re constantly reacting to old inputs. By the time you fix friction points, your customers have already moved on.
- Increased churn: Your customers have options, and they’re not afraid to use them. A survey by BetterCloud revealed that 43% of companies plan to consolidate redundant SaaS to save money. When customers are deciding who to keep, they’re most likely going to stick with a vendor that’s responsive and constantly striving to meet their needs.
- Decreased ROI: If you’re not analyzing your data in real-time, you’re missing opportunities to optimize. Whether it’s overspending on mediocre marketing campaigns, failing to prevent churn, or not improving CX, your bottom line will suffer.
Customer activity is where the money is
The SaaS world has a lot of data to sift through. Your customers generate billions of digital touchpoints every day which tell a compelling story of how they’re interacting with your service.
There are nearly limitless ways to slice and dice your data, but these eight customer metrics are key indicators for SaaS brands:
1. Customer churn rate
Customer churn rate measures how many users you lost over a given time period, usually a month or a year. The SaaS industry has a modest 3-5% average churn rate, but don’t look at the number in a vacuum. Dig into the users who churn, looking for personas and trends that can help your brand improve user retention.
2. Revenue churn rate
Revenue churn rate is similar to customer churn, how much revenue you lost in a month or year. But it’s valuable to analyze separately, especially when your brand has multiple subscription tiers. For example, if your highest-paying customers churn more than others, it can have an outsized impact on your bottom line.
3. Customer engagement score
The more engaged a customer is, the more likely they'll continue using your service. Customer engagement score is a custom metric that will look slightly different for every company.
First, make a list of key actions that indicate a user is happy, such as logging in daily, reaching usage milestones within a certain time period, or how often they contact support. Then, assign values to those actions based on their relative importance, and calculate a weighted score. Over time, you can refine the calculation to capture the essence of your ideal satisfied user.
4. Customer lifetime value
Customer lifetime value (CLV) is the average amount a user spends with your company before leaving. There are several ways to calculate it, but the simplest is to multiply your average annual revenue per customer by their average lifetime in years. The higher the number, the more ROI you're seeing for getting a customer in the door.
5. Customer acquisition cost
Sales and marketing are one of the biggest costs for SaaS brands—up to 50% of revenue, even for established brands—so putting them to good use is critical. Customer acquisition cost measures how much you’re spending, on average, to win a new customer. Combined with CLV, customer acquisition cost is a key indicator of how sustainable your model is and where you need to optimize your spending.
6. Net promoter score
Net promoter score (NPS) is a simple metric that tells a big story. It measures customer loyalty by asking how likely a customer is to recommend your service to others on a scale of 1 to 10. Monitoring your NPS is a good way to gauge how satisfied your customers are. And at a more granular level, you can look closely at users who wouldn't recommend your service and investigate why you're missing the mark.
7. Activation rate
Once a user signs up for your service, you want them to start using it and deriving value. Activation rate is a reflection of the gap between signups and actual usage.
First, determine what point in the customer journey shows that a user has found value in your product. Then, determine what percentage of your users reach that point. Digging into analytics for the group that fails to activate can help you optimize your onboarding process.
8. Customer feature engagement
To continue improving and refining your service, you need to understand how customers use it. Feature engagement isolates key aspects of your platform and shows you what percentage of users are actively engaging with them. From there, you can delve into the root causes behind underutilized features. Are they hard to access? Do they not provide clear value? Or are they simply solutions looking for a problem?
Some of these metrics might seem complex, tough to calculate, or highly customized. And they are. But fear not, there are plenty of, ahem, SaaS tools out there that make tracking and analysis of customer-based metrics tenable.
3 SaaS companies that could benefit from tracking these metrics
To help you imagine these metrics at work “in the wild,” here are three examples of how actual SaaS companies could leverage their customer data:
An active and engaged user base is essential for a dating app like Bumble. Measuring churn is important, but having a nuanced view of the causes is their best chance to mitigate it. For example, if users are leaving the platform around the holidays, Bumble can offer promotions to entice new members or upgrades. Or if new users are signing up but not sending messages to potential matches, activation rate metrics will raise a red flag about pain points in the customer journey.
As a marketplace for independent creators, Etsy has to keep both vendors and customers happy. Relying on NPS can offer a broad view of user satisfaction, while feature engagement statistics could reveal additional critical insights.
For example, if customers search for items repeatedly without looking at specific offerings, where’s the disconnect? Is the search not finding appropriate results? Or are they attracting users who are window shopping? With those insights, Etsy can optimize its search and product promotion algorithms to increase sales.
There are multiple online review sites that help customers with the daunting task of selecting new software. To stand out, Capterra needs to make sure they’re providing customers with relevant insights in a way that aids the decision-making process.
For example, customer churn rate might be higher than expected after users engage with the search bar feature. It's possible users might be searching brands instead of particular products, and getting zero results–either because the search bar isn’t programmed to pull brands or brands that are not already in Capterra’s system. By pinpointing this point of friction, Capterra could reduce its customer churn rate. It’s exactly what ExpertVoice did with Scuba Analytics.
Get comprehensive, real-time customer insights with Scuba
Your brand has mountains of customer data, and you know which metrics matter most. But compiling and analyzing all your disparate data can be an arduous process.
Enter Scuba Analytics. Scuba’s customer intelligence platform takes the grunt work out of the equation, letting you focus on your company and your customers. Scuba’s comprehensive analytics platform enables you to:
- Configure real-time analytics KPI dashboards to monitor the stats that are essential to your brand.
- Seamlessly ingest all of your company's data streams for constant access to fresh data.
- Easily perform complex queries without support from IT or data scientists.
- Leverage detailed customer journey visualizations for a 360-degree view of your users' behavior.
- Set up alerts and indicators to rapidly respond to problems and pain points as soon as they crop up.
- Eliminate organizational silos and democratize data access with a comprehensive self-service toolset.
Ready to learn more about how Scuba can help your SaaS brand thrive? Request a demo today or talk to a Scuba expert.
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