An average SaaS design company significantly differs from other types of enterprises. It doesn’t have regular inventory it sells or purchases. Additionally, it has no physical stores or locations where customers buy its products.
However, KPIs (key performance indicators) are a common denominator among all companies. These metrics enable enterprises to make smart decisions on which features to include and how much to invest in marketing. The reason for using KPIs is that all businesses must track their progress to know if their efforts are paying off.
But what KPIs should a SaaS design company prioritize? This post answers this question definitively. Keep reading to learn more.
What Are KPIs and Why Should a SaaS design company Track Them?
Let’s begin by defining KPIs before delving into the essential metrics SaaS firms should focus on. KPIs, or Key Performance Indicators, measure a business’s success or progress toward a goal. Companies that want to succeed can’t overemphasize KPI value. A SaaS company must track its KPIs to:
- Identify key changes.
- Adjust its strategies accordingly.
- Do more with fewer resources.
- Evaluate its marketing strategy’s success.
- Understand how customers interact with its products or services.
The Top 7 KPIs a SaaS Company Must Monitor
Credit: from MoreBusiness
A SaaS agency has many metrics to monitor. Here are the top 7 KPIs every SaaS company should consider.
Some SaaS products don’t offer free trials or self-service options. However, signups are probably the most important metric for self-service SaaS agencies. Marketing goals should drive signups, whether they offer free trials or freemium plans. Ideally, users can learn software independently, use it regularly, and find value to convert into premium, paying customers.
Organic vs. Paid Traffic ROI
Organic traffic metrics include visitors who land on your website from non-paid listings in search results. Inversely, paid traffic metrics include visitors who arrive at your website following pay-per-click (PPC) adverts. Choosing to invest in a given marketing effort depends on your budget and how fast you want to see the results.
- Focus on paid search if you want immediate results and can afford to pay for them.
- If you need gradual and steady results, focusing your time and resources on creating content to drive steady organic traffic over time is the best bet.
Net Promoter Score (NPS)
This score indicates your customers’ loyalty and satisfaction. A SaaS agency can calculate it by asking their customers to answer questions like:
“On a scale from 0 to 10, how likely are you to recommend our firm/product/service?” The answers will have three types of respondents:
- Promoters: score 9 or 10;
- Detractors: answer 0 through 6;
- Passives: score 7 or 8.
You can use this indicator to track various customer segments or individual products within your product portfolio.
Customer Acquisition Cost (CAC)
Acquiring customers is every business’s lifeline. Many startups close down or struggle because they don’t find the cheapest ways to engage buyers. So, understanding the cost of acquiring a new customer is critical to a SaaS agency’s success and scaling.
You can calculate this cost by dividing your total sales and marketing costs by the number of deals you close within a specific period. SaaS companies following an inside channel or field sales model should also include salaries in this equation. Agencies selling products without salespersons can calculate their costs without wages or commissions.
A SaaS company must track the churn rate as well. This rate is the number of clients who cancel their subscriptions each month. This metric is vital because it indicates future income losses. If your churn rate is high, please find out its cause and fix it immediately to avoid more losses.
Customer Lifetime Value (LTV)
You should track your SaaS company’s LTV to remain on course. This value is the total profit you generate from a customer over the lifetime of relating with you. You can calculate it by multiplying ARPU (Average Revenue per User) by average customer tenure. This way, you get a clearer idea of how much income to expect from each client over time.
Lastly, calculate the conversion rate to determine how effectively your marketing efforts drive traffic to your website and convert visitors into customers. This rate is the percentage of people who view a specific page, such as a landing page, and act by signing up for trials or buying products.
Tips for Improving KPIs
Here are some workable tips to help you improve your SaaS KPIs.
- Have a clear strategy
You need a clear strategy for your SaaS agency to define your direction and achieve your goals. The strategy must be flexible enough to accommodate market changes and seize arising opportunities.
- Define clear targets
You must define what success is to your SaaS agency in terms of churn reduction, revenue increase, or customer satisfaction. A clear target definition makes it easier to understand your current progress and the necessary steps for improving performance.
- Track Your KPIs with AI
AI is vital for boosting predictive analytics and other complex KPI-related analyses. AI-powered platforms keep learning from new data and make accurate predictions for future use. You can learn more about your company’s needs, market trends, and customer behavior patterns from AI-enabled insights.
- Have a system that collects and analyzes data
You require a system that collects and analyzes customer data from various sources like recordings, call centers, and website analytics tools. This system helps you understand what your customers want from you and how you can address those expectations.
- Set realistic KPI goals
Lastly, set realistic KPI goals that aren’t too easy or hard for your team to achieve. Setting overly ambitious goals will discourage your team and place it under undue pressure to perform. Inversely, overly easy objectives won’t challenge your team enough to grow.
Every SaaS agency must track its KPIs to know how well it’s progressing. Our discussion explored the top seven KPIs and actionable tips to improve them. Go ahead and implement them to boost your SaaS enterprise’s KPI tracking success.