No doubt that marketing is one of the most important functions of any SaaS business.
After all, marketing is responsible for bringing in new customers and driving revenue growth.
That said, many CMOs overlook key marketing metrics that can have a big impact on success.
In this post, we'll take a look at 7 of them.
We'll also cover how these metrics tie into the marketing strategy and how they align with your overall business goals.
Whether you're an experienced CMO trying to brush up on your knowledge, or you're relatively new, this list will help you stay on the right track and measure your progress accurately.
Which Metrics Should Marketers Pay Attention To?
Back in the day, businesses were less complex and marketer roles were simpler.
As technology became more advanced, so did marketing initiatives and responsibilities.
Today, marketers are expected to do much more than push out ads or send emails.
They need to know which marketing tactics are working, optimize their efforts accordingly, and ensure the company is continually growing revenue.
The metrics they track are changing too, becoming more advanced and complex.
Marketing metrics are so important that some companies have gone as far as hiring an entire team to monitor these numbers closely.
If you're part of a team that tracks these metrics, then you might be tempted to just go with the flow and continue using the same old metrics.
But there's a lot you can learn by taking a look at what your competitors are doing and choosing the metrics that will work best for your SaaS company.
Let's explore some of the most crucial:
1. Attribution Metrics
Attribution is the process of tracking and assigning credit for every sale you make. It helps you analyze which marketing channels are driving the most traffic, sales, and revenue.
Attribution metrics help you decide which marketing channels to increase and prioritize. For example, if you see that most of your sales come from organic search, you'll know to focus more on SEO and content marketing.
Instead of simply tracking website visits or clicks, CMOs should track each channel that led to a conversion event. This will allow them to create more focused, personalized marketing messages for future campaigns.
Monitoring attribution is especially important in multi-channel environments where a customer might go through a variety of touchpoints before making a purchase.
Here are some attribution metrics to measure:
- Direct channel revenue attribution: Measured by calculating the revenue attributed to each direct channel (i.e., organic, referral, direct).
- Cross-channel revenue attribution: Measures revenue generated through a combination of channels.
- Channel marketing mix: Determines which channel is performing better based on cost, reach, and volume.
2. Cohort Analysis Metrics
Cohort analysis measures progress by dividing customers into different groups based on behavior, events, or lifecycle stage.
Marketers can then compare these groups to see which cohorts are most successful (i.e., engagement level, user retention, or number of paid users).
Knowing which cohorts are performing the best makes it easier to create strategies to improve their numbers.
Marketers can either improve cohorts that do poorly, or take successful groups and make them even more successful.
Let's look at some cohort analysis metrics:
- New user retention rate: Measures how many new users return after a certain amount of time.
- New user churn rate: Measures how many users from a specific cohort cancel their subscription to your service.
- Customer acquisition cost: Measures the marketing costs for acquiring a new customer from a specific cohort.
- Customer lifetime value: Measures the revenue a customer will bring in over their entire relationship with a company.
3. Growth Metrics
Growth metrics measure how fast your company is expanding. They also reveal improvement opportunities.
A strong understanding of these metrics can help marketers and business owners:
- Validate and improve marketing efforts: Since growth metrics measure how fast your company is growing, they reveal the effectiveness of your marketing.
- Prioritize new features: Growth metrics help marketers understand which features are most valuable to users. This allows them to focus on developing those features first.
- Monitor competition: These metrics let marketers see how their company stacks up against competitors in key areas like total users and revenue.
Growth metrics help marketers make those decisions by revealing:
- Monthly Active Users (MAU): Measures how many people are using your product in a certain period.
- Net Acquisitions (NMR): Measures the number of new users in the same period.
- Gross Churn Rate: Measures how many users are leaving during the same period.
- Monthly Recurring Revenue (MRR): Measures how much revenue your company is bringing in each month.
- Average Revenue Per User (ARPU): Measures how much money each user is spending in a certain period.
And many others.
The point is, understanding these metrics will give you insight into how your users are interacting with your product. Every metric is valuable in its own way, but it's up to you to determine how it can best help your business.
4. Viral and Stickiness Metrics
Viral and stickiness metrics measure how likely a customer will recommend your product to their friends after using it.
If your product is good at encouraging referrals, you will experience fast and sustainable growth.
Many successful software companies have a high percentage of their users coming from referrals. This often creates a snowball effect where successful user numbers encourage even more new signups.
For instance, Dropbox encourages new users to get 500MB of free storage when they sign up and refer friends.
This increases viral coefficient and adds more active users, which only encourages more users to sign up.
Viral and stickiness metrics can help you determine which features encourage referrals and how to improve them.
Viral and stickiness metrics measure these behaviors by:
- Monthly Viral Coefficient (MVC)*: Measures the percentage of users that became new users through a referral in the same period.
- Virality: Measures how many leads come from referrals.
- Daily Active Users (DAU): Measures how many people are using your product daily.
- Net Promoter Score (NPS): Measures the likelihood of a user to recommend your product to their friend.
5. Pricing Metrics
Pricing metrics measure how people interact with your pricing options.
They also reveal the effectiveness of your marketing message and help you determine whether people understand your product.
To be fair, tracking this data isn't that simple.
You need to mix heat mapping, form analytics, and goal conversions to determine how people interact with the price page.
For example, imagine you want to determine whether people click on the cheapest package and how many of them convert.
After installing heat mapping software, you can create a form with a pricing page and measure the number of clicks on each button.
This data will allow you to see where people are clicking and how many of them convert.
This will help you find correlation between pricing page elements and conversions.
6. Product Metrics
Many CMOs believe they should focus on marketing metrics, but they often ignore product metrics.
Product metrics measure how well your product is performing. Thus, these metrics can reveal problems that prevent your customers from seeing value in your product.
You can use product metrics to discover problems that aren't revealed by any other marketing data.
For instance, if you discover that your average user session length is low, you can check if people are completing the actions you want them to do.
You might also find that users spend most of their time using a specific product feature. You can leverage this information to fine tune your messaging and highlight that product feature more in your marketing.
You can measure product satisfaction, too. Product metrics can show you how happy your users are with your product, which will help you identify problems early on.
Besides, you can use product metrics to measure customer acquisition costs, providing you with invaluable insight into your marketing efficiency.
Some helpful product metrics include:
- Product usage: Measures how much time people spend using your product.
- Most-used features: Measures the product features people use more often.
- Key product touchpoints: Monitors specific interactions users have with your product.
- Peak concurrent users: Measures the amount of users simultaneously using your product.
7. Industry-Wide Metrics
Industry-wide metrics help you compare your product's performance against competitors. Having this data will allow you to benchmark your own product against similar services.
This data can also be really helpful for your marketing team, since they can use it to demonstrate the value of using your product over similar ones.
Some useful industry-wide analytics include:
- Number of competitors: Measures the number of companies competing in a specific market.
- Market share: Monitors the percentage of your product's users against competitors.
- Market size: Tracks the total amount of money spent on a specific market.
- Competition growth: Measures the change in your competitors' market share over a specific time frame.
Time to Choose Your Marketing Metrics
Depending on the type of product you have and your company's business model, different SaaS marketing metrics might be better or worse.
But don't get too caught up in the details. Instead, focus on the main concepts and use them to guide your marketing decisions.
Make sure you're focusing on the metrics that will help you learn about your target audience and improve your product.
Don't let your analytics overwhelm you; instead, pick a few metrics and start working on those.
By doing this, you'll quickly understand what kind of data is important to track.