9 SaaS Marketing Metrics That Lead to Conversions

Written on
May 1, 2020
by
Darac Moua
in
SaaS Marketing
SimpleTiger also recommends downloading this free SaaS SEO guide.
Download PDF

Which SaaS Marketing Metrics Make the Most Impact?

SaaS marketing metrics come in dozens of forms. Which measurements matter the most for converting leads into customers and revenue? Tracking data for its own sake can lead to getting overwhelmed by “vanity metrics” that make you feel like you’re getting results, but don’t provide any practical information. Let’s look at nine revenue-related SaaS marketing metrics that you can track using Google Analytics and other tools.

Qualified Marketing Traffic

High traffic volume can make it seem like your website is performing well, but not all traffic is qualified traffic. Some visitors arrive on your site without taking any actions that lead toward becoming a buyer. Others are return visitors who have already purchased from you. To assess the value of your traffic, you need to be able to distinguish qualified new leads from other website visitors.

customer traffic.jpg

You can use several methods to isolate qualified marketing traffic. By using the Google Analytics destination goal feature, you can track new qualified leads by inviting visitors to fill out a sign-up form, and then counting visits to the corresponding thank-you page. For more detailed information, you can share information from your web form with your customer relationship management (CRM) tool, categorize qualified leads in your CRM database, and then export the results periodically to Google Analytics. When you use this method, you can enter additional information about leads into your CRM database, such as how each lead scored in your lead scoring system or how much each lead purchased.

To screen our returning visitors, you can use event tracking to track visitors who click on your log-in link. You can also use in-app analytics to count monthly log-ins.

Traffic Source

In addition to knowing how much qualified traffic you’re receiving, you need to know where your traffic is coming from. This helps you know how well your SEO for SaaS strategy is working and whether your keyword research is targeting the best search terms.

Google Analytics divides your traffic sources into several main categories:

  • Direct visitors reach your site by directly entering your URL into their web browser.
  • Search visitors arrive on your site through search engines. You can segment this type of traffic by search terms and other categories.
  • Referral visitors arrive on your site by clicking on links on other websites, social media, or other digital sources. You can segment this type of traffic by referral source and add additional categories.

Most direct visitors are repeat visitors. You can generate more search visitors through strategic content marketing. You can generate more referral traffic by link building.

Conversion Rate

For traffic to translate into profit, it needs to generate buying behaviors after visitors land on your website. To assess whether your website is doing this effectively, you need to track how well your traffic is converting into buying-related behaviors.

In a SaaS context, you can segment conversion rate into various types of actions:

  • Sign-ups for your app
  • Activation of your app
  • Active use of your app, including both freemium and paid versions
  • Paid use of your app
  • Renewal of subscriptions to your app
  • Upsell and cross-sell activity, such as upgrading to a higher-tier product

Tracking these actions separately can lend you deeper insight into what your conversion rate means and where you need to make changes to improve your results and increase your revenue.

Bounce Rate

Bounce rate is the flip side of conversion rate. It tells you how often and how quickly visitors click away from your site without taking any buying-related actions.

High bounce rates can indicate several types of problems with your site:

  • You may be attracting unqualified traffic.
  • You may be directing visitors to the wrong pages on your site.
  • Your site design may be frustrating users.
  • Your site may have technical problems.

If your site has a high bounce rate, a technical optimization analysis may be able to help you identify the source of the problem and correct it.

Customer Lifetime Value

customer lifetime value.jpg

To relate your traffic and conversion rates to your revenue, you need to know how much value each converted lead is generating. One important metric for measuring this is the customer lifetime value (CLV). This tells you how much on average a customer spends over the duration of their relationship with you.

To calculate CLV:

  1. Calculate average purchase value by dividing your total revenue over a given time frame by the number of purchases during that interval.
  2. Calculate the purchase frequency rate, which is the number of purchases your customers made during a given time frame by the number of unique customers who made those purchases.
  3. Multiply average purchase value by purchase frequency rate to determine average customer value.
  4. Calculate average customer lifespan by averaging the number of years a customer continues to purchase from you.
  5. Multiply average customer value by average customer lifespan to obtain CLV

Tracking CLV lets you predict how much revenue your company can expect to generate per converted lead.

Customer Churn Rate

You can think of the churn rate as opposed to the conversion rate. It tells you how fast you’re losing customers. The difference between your customer acquisition rate and your churn rate tells you how many new leads you need to acquire in order to maintain your current revenue level.

To calculate churn rate, take the number of customers you lost over a given time frame. Divide by the number of customers you had at the beginning of that time frame. The result is your churn rate.

Revenue Churn Rate

Because not every customer brings in the same amount of revenue, it can be helpful to distinguish customer churn rate from revenue churn rate. Revenue churn tells how much revenue you’re losing as a result of customer churn.

To calculate revenue churn rate, take the amount of revenue you lost over a given time frame, such as the amount of revenue you lost from recurring monthly subscriptions that failed to renew, adjusted for any revenue you gained from upgrades. Divide by the amount of revenue you were generating at the beginning of that time frame. The result is your revenue churn rate.

Customer Engagement Score

Your customers are more likely to churn when they’re not actively engaged with your company. You can predict how likely customers are to churn by using a scoring system to track customer engagement. You can then launch specialized marketing campaigns to reactivate customers who are at high risk of churn.

To track customer engagement, define actions that reflect high customer engagement, such as downloading your app, logging into your web portal or upgrading to a premium product. Assign each action a numerical score. Use your CRM tool to track how often customers perform each type of action, and export the data to Google Analytics. You can average the data for your entire customer base or segment by customer categories or individual customers.

Cost Per Acquisition

Most of the metrics above give you information relevant to the revenue generated by your marketing activity. But for a complete picture, you also need to know how much your marketing activity is costing you. Cost per acquisition (CPA) tells you how much you’re spending to acquire each new lead or customer. This lets you measure the return on investment you’re getting from your marketing activity.

To calculate CPA, take the cost of your marketing over a given time frame and divide it by the number of new customers generated from your marketing. You can calculate this for your marketing as a whole, or you can segment it by individual marketing campaign or channel. This type of segmentation can let you know which marketing methods are working well for you and where you should invest your budget.

Manage Your SaaS Marketing Metrics to Maximize Your Revenue

Tracking your SaaS marketing metrics is not an end in itself, but a means to improve your numbers. Once you have a baseline to build on, you can start taking steps to improve your marketing and sales funnel, such as doing SEO for SaaS and doing technical optimization of your landing pages. To start improving your results today, schedule a discovery call to get in touch with our team of SaaS SEO experts and discuss how you can generate more traffic, conversions and sales.

Simply effective marketing.