B2B SaaS stands for business-to-business Software-as-a-Service.
B2B SaaS solutions are frequently subscribed to and paid for on a recurrent basis, generally monthly or yearly. It refers to cloud-based software.
This software is used for CRM which is customer relationship management, accounting, increasing productivity, and other duties as well.
According to statistics, 78 % of businesses would be solely dependent on B2B SaaS by the year 2022.
The term “key performance indicator” refers to a metric that measures how well something is working. These are the key business indicators that will tell you all you need to know about how your company is doing.
A significant quantity of data, typically with far more indicators than your company needs to follow daily will be provided by Analytics systems.
You may make better use of your data by concentrating on the KPIs for your sector.
Here are the top B2B SaaS KPIs:
Churn Rate
Churn is known as the number of users who unsubscribes from your service. Calculating the percentage of un-subscribers in a particular period is referred to as the Churn rate.
Usually, Churn Rate is calculated every month. Calculating churn rates can be challenging. As a result, we recommend utilizing software to check that the calculations are valid. You can use analytics software like Amplitude, Stripe, Profitwell to measure the Churn rate of different billing or accounting system.
The more intimately involved your consumers are with your product and recognize the value it provides, the less likely to unsubscribe it.
That’s why product engagement is inextricably tied to churn rate. And also product management is so important in influencing it.
Related: B2B SaaS Content Marketing Strategy Guide
ARR / MRR
MRR stands for Monthly Recurring Revenue. Monthly recurring income is at the heart of the business model for subscription-based firms like SaaS companies, telecom operators, and banks.
MRR is one of the most significant KPIs they track. Monthly Recurring Revenue aims vary widely by sector, but they should represent a company’s stage in its cycles, as well as its growth ambitions and deadlines.
MRR is the total monthly income that your SaaS firm bills.
You should be able to get this information directly from your billing system.
The amount of money you generate through subscriptions and other recurring income sources every year is your annual recurring revenue (ARR).ARR is usually calculated as 12xMRR.
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Revenue Churn
Revenue churn is one of the important metrics. Only the Churn rate doesn’t measure the entire picture in most SaaS firms because the company might have had different products and different price ranges during the subscription.
The churn rate will not be accurate when you have multiple products with a different price range. Revenue churn compensates for this by calculating the revenue lost as a result of churn.
If the revenue churn rate is more than your actual revenue, then you should change your business strategy. And this is a clear indication that you need to identify and address the source of churn as soon as possible.
Related: Native Advertising For B2B SaaS Businesses
Customer Life Time Value (LTV)
Customer lifetime value (LTV or CLTV) is another crucial KPI to monitor.
The amount of income a client will bring in from the moment they subscribe for your service until they cancel it is known as their lifetime value (LTV). For SaaS firms, the average lifetime value of a client is a critical measure.
This metric might be deceiving, especially if your company’s product has significant upsell and cross-selling possibilities.
Customer Acquisition Cost (CAC)
Customer acquisition cost is defined as the money you spend on marketing divided by the new customer you bring in which is the amount of money you’ll have to spend on marketing and other sales-related activities to make a sale.
This is the same for all transactions on your site, so organic traffic that costs little or nothing helps to reduce the CAC. Organic CAC consistently outperforms inorganic CAC. This is due to two factors.
1. An investment in organic channels will take longer to pay off, but it will result in long-term lead creation that does not need a continual infusion of cash.
2. Organic CAC is more reliant on talent and imagination.
Related: Best B2B SaaS Content Marketing Tools
CAC:LTV Ratio
The lifetime value to customer acquisition cost ratio might help you figure out how much you should pay to get a new client. Measuring this ratio will reveal if you’re overspending per client or missing out on chances because you’re not spending enough.
This measure calculates the cost of gaining a new client to the customer’s lifetime value. This metric may be improved by lowering churn and increasing upsell performance to raise a user’s Lifetime value and lowering acquisition expenses by optimizing your ad spending, sales funnels, and organic site traffic.
CAC is usually never greater than LTV, but it can be near enough. The general rule of the industry is to aim for a three-fold increase in lifetime value above the acquisition cost.
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Monthly Unique Visitors
The amount of unique persons that visited your website in a particular month is referred to as monthly unique visitors. It’s critical to comprehend the concept of a unique visitor.
People that visit the site many times are only counted once for calculating unique visitors. This amount of unique visitors might come from organic traffic or intentional marketing efforts, but the objective should be to keep it growing. This metric will not give much information on its own, but it’s a fair representation of your viewer’s size and a good indicator of the influence of your entire marketing activities.
Conversion Rate
The purchasing rate of a product or service is referred to as a conversion rate. It’s a must-have KPI for every digital company that wants to track orders and improve them based on user feedback. To put in other words the amount of eligible leads that go on to buy a product is your conversion rate.
You can estimate how much money you’ll get from leads if you know your conversion rate and how many leads have come in recently based on the lead velocity rate. Let’s assume a SaaS company has 2000 daily visitors and only 40 of those convert. The SaaS firm will then have a conversion rate of 2%.
Related: Top B2B Ecommerce Marketing Stats
Lead Velocity Rate
This metric compares the number of qualified leads you have in a month to the number of qualified leads you had the month before. A good lead velocity rate indicates that you gained leads during the month. Though your revenue metrics represent past data, the lead velocity rate might assist you in forecasting future revenue.
The main benefit of measuring LVR is that it provides a real-time measure of growth. To increase the lead velocity rates, check if you are behind on leads for the month. If yes, you should take immediate steps to generate more high-quality leads before the end of the month.
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Customer Satisfaction Score
Determination of how happy a customer is with a specific contact or overall experience is called Customer Satisfaction Score (CSAT). It’s an essential tool for providing excellent customer service; the purpose of this guide is to clear the air.
CSAT is one of the three most often used loyalty measures which is the voice of the Customer (VoC) program Net Promoter Score (NPS) and Customer Effort Score (CES).
Customer satisfaction does not always imply loyalty or revenue development.
However, when satisfaction is correctly assessed, it becomes part of a larger system that leads to long-term client retention. While contentment is only one part of a good Customer strategy, it is a critical component. You can create a feedback form with the help of the best form creators and put it on the websites or send it with delivery to get valuable feedback from your customers.
CSAT will show to be an invaluable customer loyalty indicator if the appropriate goals and tactics are in place.
Net Promoter Score
Net Promoter Score is one of the most usually applied statistics for determining customer happiness and commitment.
The Net Promoter Score, or NPS, is a metric that evaluates customer satisfaction and forecasts business development. This tried-and-true statistic revolutionized the corporate world and is now the gold standard for customer experience management strategies all around the world.
The most important thing to remember when calculating your NPS is that you don’t just aggregate the scores from all user responses.
NPS is an excellent overall indicator of how your customers perceive your organization and your product, and it’s one of the simplest standards to compare among industry rivals.
Related: Ultimate Guide to B2B Content Marketing Strategy
Response Time
The lead response time is a metric that is sometimes neglected. It can be difficult to link directly to income, and as a result, most marketing departments overlook it.
Lead Response Time is a metric that measures how quickly your staff reacts to inbound inquiries from people who could be a good fit for your company.
B2B firms that respond promptly to leads close more sales and expand faster than those who do not. You might be thinking if lead response time is that critical. Even if you have a successful business but there is greater competition than ever before.
Industries are being revolutionized, and most companies are faced with a plethora of options when it comes to selecting a new product or service. Improving your response would bring phenomenal changes to your business.
Related: Top B2B Marketing Stats
Resolution Time
The time it takes to answer a customer’s inquiry or settle an issue. Your customer will not be pleased unless and until their problem is fixed and the ticket is closed.
You may use resolution time to assess how well your employees are at promptly addressing client concerns. When combined, this and the preceding measure will provide you with information on potential improvements to your support infrastructure.
Related: Biggest B2B Marketing Challenges
Conclusion:
By now, we hope you’ve gained a better grasp of what SaaS metrics to track in your company. I have put up a list of the most important ones, as well as those that most SaaS firms use daily, so you can become familiar with them. Building a framework for handling metrics is a fantastic approach to simplify how you handle them.
Almost every piece of eCommerce software today has reporting and analytics capabilities.
Recognize the purpose of your company. What kind of company do you run? What are your methods for making a profit? What is your company’s mission statement?
Measure your company’s revenue from the previous year to get a sense of the indicators that are relevant to you.
Finally, tell me what KPIs you track for your SaaS firm daily. If you believe we’ve overlooked something, please let me know in the comments area.
