When it comes to marketing your SaaS business, metrics are the key to success.

Without proper tracking and analysis of your marketing efforts, you won't be able to understand what's working for you and what isn't.

Knowing which metrics matter most can help you make informed decisions about how best to optimize your campaigns and maximize ROI.

With the right metric in place, you'll have a better understanding of how well each campaign is performing so that you can adjust strategies accordingly.

By tracking important SaaS marketing metrics like customer acquisition cost (CAC), lifetime value (LTV), and customer churn rate, among others, businesses can get an accurate picture of their performance over time and make more informed decisions on where they should invest their resources next.
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What are SaaS Marketing Metrics?

SaaS marketing metrics are measurements of performance that help businesses track the progress and effectiveness of their campaigns.

These metrics can include the following:
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• Customer Acquisition Cost (CAC)
• Customer Lifetime Value (CLV or LTV)
• The Net Promoter Score (NPR)
• Lead Velocity Rate
• Leads by Lifecycle Stage
• Activations
• Churn Rate
• Retention
• Unique Visitors
• Annual Recurring Revenue (ARR) / Monthly Recurring Revenue (MRR)
• Customer Engagement and Health Scores
• Signup to Paid Conversion Rate
• Number of Active Trials

By tracking these metrics, businesses can better understand which strategies are working to acquire and retain customers, how much revenue they are generating, and the overall health of their software business.
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13 Saas Marketing Metrics

Let's take a look at 13 of the most important SaaS marketing metrics that should be tracked and measured on a regular basis:
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1. Customer Acquisition Cost (CAC)

SaaS marketing & demand gen metric number one is customer acquisition cost (CAC). This metric measures the amount of money spent to acquire a single paying customer.

It is calculated as total marketing and sales expenses divided by the number of new customers acquired in a given period.

CAC is important to track as it can help businesses understand the cost and effectiveness of their campaigns and whether they are investing in the right channels to acquire customers.

But what's more important than CAC is the relationship between your CAC and customer lifetime value (CLTV).

Now, more than ever, it's essential for businesses to understand their CAC: LTV ratio as a way of measuring the success of their customer acquisition efforts.

But how do you determine CAC with an equation? CAC = Total Marketing + Sales Expenses/ Number of New Customers Acquired in a Given Time Period
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2. Customer Lifetime Value (CLV or LTV)

Customer lifetime value (LTV) is the total revenue generated from a single customer over their entire lifetime with your company.

This metric can help businesses better understand their customer's life cycles and determine how much effort to put into acquiring each customer.

It's also a great way to measure the long-term success of your SaaS business because it shows how much value you are generating from each customer over time.

To calculate LTV, divide the total revenue generated by the number of customers within a specific time period. LTV = Total Revenue Generated/ Number of Customers Acquired in a Given Time Period
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CAC vs CLTV Formula‍

The ratio between CAC and CLTV is an important metric to understand, as it can help businesses determine how well their customer acquisition efforts are doing.

This formula will help you measure the success of your SaaS business over time by understanding the return on investment for each customer acquired.

The higher the ratio, the more successful your campaigns are. CAC: CLTV Ratio = Customer Acquisition Cost/Customer Lifetime Value

As SaaS marketers, we need to consider retaining customers for longer periods of time to obtain maximum ROI.

By understanding the relationship between CAC and CLTV, marketers can optimize their campaigns to acquire customers that will stick around for longer periods of time.

This ratio is an important metric to track as it can provide saas companies with valuable insight into their customer acquisition efforts and help them to identify areas of improvement.
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3. The Net Promoter Score (NPR)

The Net Promoter Score (NPR) is a metric used to measure customer satisfaction and loyalty. The score ranges from 0-10, with higher scores indicating more satisfied customers.

Companies can use this metric to gauge how well their products or services are being received by the market.

Additionally, tracking NPR over time can help saas businesses identify trends in customer satisfaction and loyalty, as well as areas of improvement or opportunities to highlight customer stories.

By asking customers, "How likely are you to recommend our product to a friend or colleague?" and then tallying up the responses, companies can measure the success of their SaaS business.

You can classify your customers into three categories based on their answers: Promoters, Passives, and Detractors.
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Promoters

These are customers who are extremely satisfied with your product or service and would happily recommend it to others. The range of scores for Promoters is from 9-10.
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Passives

These are customers who are satisfied but might not be willing to recommend your product to others. The range of scores for Passives is from 7-8.
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Detractors

These are customers who are unsatisfied with your product or service and would not recommend it to others. The range of scores for Detractors is from 0-6.

By understanding the customer's response to your product or service, you can make changes to improve their experience and increase the likelihood of them becoming a promoter.

Additionally, tracking the NPR over time can help you identify trends in customer satisfaction and loyalty.
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4. Lead Velocity Rate (LVR)

Lead Velocity Rate (LVR) is a metric used to measure the rate at which your leads are converting into customers.

It helps you understand how quickly your lead generation efforts are bearing fruit and if changes need to be made to improve efficiency.

To calculate LVR, divide the total number of paying customers over a specific time period by the total number of leads in that same period. LVR = Number of Paying Customers/Number of Leads in a Given Time Period

By understanding your lead velocity rate, you can better optimize your sales process and ensure that you are focusing on the right leads.

Additionally, tracking LVR over time can help you identify areas where improvements need to be made to increase your conversion rate.
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5. Leads by Lifecycle Stage

Leads by Lifecycle Stage is a metric used to measure the number of leads at each stage in your sales cycle.

It helps you understand how quickly each stage progresses and if changes need to be made to improve efficiency.

To calculate, divide the total number of leads in a given time period by the average duration of that same period.

It is divided into two common categories, namely, marketing-qualified leads (MQL) and sales-qualified leads (SQL).
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Marketing qualified leads (MQL)

These are leads that have expressed interest in your product or service and have met certain criteria indicating they're likely to become customers.

Tracking MQLs over time can help marketers understand the effectiveness of their campaigns and identify areas for improvement.
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Sales-qualified leads (SQL)

These are leads that have passed through the marketing stage and are ready to be contacted by the sales team.

Tracking SQLs over time can help sales teams understand how quickly leads are being qualified and converted into customers.

By tracking Leads by Lifecycle Stage, you can better optimize your sales process and ensure that you are focusing on the right leads at each stage.

Additionally, tracking this metric over time can help you identify areas where improvements need to be made to increase your conversion rate.
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6. Activations

Activations is a metric used to measure the number of customers who have fully completed onboarding and are actively using your product or service.

It helps you understand the effectiveness of your onboarding process and if changes need to be made to improve its efficiency.

To calculate Activations, divide the total number of active users in a given time period by the total number of signups in the same period.

By tracking Activations, you can better understand how successful your onboarding process is and if changes need to be made to improve it.

Additionally, tracking this metric over time can help you identify areas where improvements need to be made to increase customer engagement and retention.
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7. Customer Churn and Revenue Churn Rate

Churn Rate is a metric used to measure the rate at which customers leave your product or service.

It helps you understand how successful your retention efforts are and if changes need to be made to improve them.

It is also the rate at which customers cancel their subscriptions or stop using your product.

To calculate Churn Rate, divide the total number of customers churned in a given time period by the total number of customers at the beginning of that period.

What does this metric tell us?

By tracking Churn Rate, you can better understand the effectiveness of your retention efforts and identify areas where improvements need to be made to reduce customer attrition.

Additionally, tracking this metric over time can help you identify potential problems in your product or service and suggest ways to improve customer satisfaction. Next, let's look at customer lifetime value.
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8. Retention Rate

Retention Rate here refers to both revenue retention as well as user retention.

Revenue retention measures the rate at which customers are returning to make purchases, while user retention measures the rate at which users are actively using your product or service.

Most businesses get it wrong by thinking that by quelling churn, they're extending retention or visa versa, but that's not the case.

Tracking these two rates helps you understand how successful your retention efforts are and if changes need to be made to improve them.

To calculate Retention Rate, divide total number of customers who have made a purchase or used your product in a given time period by the total number of customers at the beginning of that period.

By tracking your Retention Rate, you can better understand how successful your retention efforts are and if changes need to be made to improve them.

Additionally, tracking this metric over time can help you identify areas where improvements need to be made to increase customer loyalty and satisfaction.

According to a study by Fred Reichheld on the prescription of cutting costs, he states that increasing customer retention by as little as 5% boosts profits by 25-95%! Therefore, tracking this metric is key for any business.
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9. Unique Visitors

Unique Visitors is a metric used to measure the number of unique individuals who visit your website.

It helps you understand how successful your online marketing efforts are and if changes need to be made to improve them. You can get visitors from the following channels organic traffic, paid search, and social media.

Organic traffic is when visitors find your website through an organic search on a search engine like Google.

Paid search is traffic from paid ads, such as those placed on Google AdWords or Bing Ads. Social media is traffic from social networks, such as Facebook, Twitter, and LinkedIn.

To calculate Unique Visitors, divide the total number of visits to your website in a given time period by the total number of unique visitors in the same period.

Tracking this metric over time can help you identify areas where improvements need to be made to increase website traffic and engagement.

Additionally, it can help you understand how successful your online marketing efforts are and if changes need to be made to improve them.
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10. Annual Recurring Revenue (ARR) / Monthly Recurring Revenue (MRR)

Annual Recurring Revenue (ARR) is a metric used to measure the amount of revenue that a business expects to generate over the course of a year from its existing customers.

Monthly Recurring Revenue (MRR) is a metric used to measure the amount of revenue that a business expects to generate over the course of a month from its existing customers.

Tracking ARR/MRR helps you understand how successful your customer retention efforts are and if changes need to be made to improve them.How these two metrics are calculated is simple. Take the total amount of revenue that an average customer brings in each month/year and divide it by the number of customers.

This figure gives you your ARR/MRR. According to a recent study, 62% of customers are willing to pay more for good customer service.

Therefore, if you are able to increase customer retention, then you can also expect to see an increase in ARR/MRR.

Therefore, tracking these two metrics is key for any business as it helps you understand how successful your customer retention efforts are and if changes need to be made to improve them.
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11. Customer Engagement and Health Scores

Customer Engagement and Health Scores are metrics used to measure the level of engagement and health of your customers.

They help you understand how successful your retention efforts are and if changes need to be made to improve them.

Customer engagement is the number of activities that customers perform with your product or service.

It can include anything from viewing a page, subscribing to emails, or making a purchase. Customer Health Score is a measure of how well the customer is engaging with your product or service.

It can include anything from the number of active users to customer satisfaction scores.

To calculate these metrics, you can use a combination of customer engagement data, customer satisfaction scores, and other relevant metrics.

Tracking these metrics over time can help you identify areas where improvements need to be made to increase customer engagement and satisfaction.

Additionally, it can help you understand how successful your customer retention efforts are and if changes need to be made to improve them.

By tracking these metrics, you can better understand how successful your customer retention efforts are and if changes need to be made to improve them.

This can help you make more informed decisions about how to best retain your customers and grow your business.
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12. Signup to Paid Conversion Rate

Signup to Paid Conversion Rate is a metric used to measure the percentage of users who sign up for a paid service or product.

This metric gives you an idea of how successful your marketing efforts are and if changes need to be made to improve them.

To calculate this metric, take the total number of new signups for a given period and divide it by the total number of conversions (those who signed up for the paid service or product).

This figure gives you your Signup to Paid Conversion Rate. Tracking this metric over time can help you understand how successful your marketing efforts are and if changes need to be made to improve them.

It can also help you identify areas where improvements need to be made to boost conversions and grow your business.

By understanding these metrics, you can better understand your online business's success and if changes need to be made to improve it.
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13. Number of active trials

Last but not least, another metric to track is the Number of Active Trials. This metric measures the number of customers actively using your free trial or demo version of your product or service.

It's a great way to measure the effectiveness of your marketing efforts and if changes need to be made to improve them.

To calculate this metric, take the total number of trials in a given period and divide it by the total number of active users. This figure gives you your Number of Active Trials.

Tracking this metric over time can help you understand how successful your marketing efforts are and if changes need to be made to improve them.

It can also help you identify areas where improvements need to be made to boost conversions and grow your business.
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Wrapping It All Up!

In summary, there are several key metrics to track when monitoring the success of your online business. The most important saas metrics include:
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• Customer Acquisition Cost (CAC)
• Customer Lifetime Value (CLV or LTV)
• The Net Promoter Score (NPR)
• Lead Velocity Rate
• Leads by Lifecycle Stage
• Activations
• Churn Rate
• Retention
• Unique Visitors
• Annual Recurring Revenue (ARR) / Monthly Recurring Revenue (MRR)
• Customer Engagement and Health Scores
• Signup to Paid Conversion Rate
• Number of Active Trials

When tracked over time, these metrics can help you understand how successful your online business is and if changes need to be made to improve it.

This information is invaluable for any business looking to maximize its success and growth.

By understanding these metrics, you can make more informed decisions about how to best retain your customers and grow your business.

With the right data, you can make better decisions to increase customer engagement and satisfaction, as well as improve your marketing efforts.

So start tracking the right metrics and start growing your business today!
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