Top SaaS Marketing Metrics, as Voted on by SaaS Marketers

January 24, 2021
Kevin Kessler

Without clearly defined metrics that help you gauge performance and make decisions, you won’t know where you’re headed.

It’s a bit like driving down a dark road without headlights — you can still reach your destination, but you’re only making things harder for yourself.

And you’re far more likely to smash into a tree.

We reached out to 40 SaaS marketers — the people running marketing campaigns in the muck and mire of the SaaS world — and asked them to vote on the one metric they care most about and why.

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SaaS Marketing Metrics?

SaaS marketing metrics, (AKA key performance indicators (KPIs)) are clearly defined values that measure the effectiveness of SaaS marketing campaigns at every stage of your sales funnel — acquisition, retention, and monetization.

Tracking the right SaaS marketing metrics gives you a comprehensive view of the health and performance of your business.

It can help you accelerate growth by finding opportunities, diagnosing risk, and making sure you take the right steps to retain existing customers and monetize them.

Why do we give a sh*t?

Because metrics are what separates us from the animals. They’re what make your SaaS business data-driven, rather than something thrown together in your parent’s garage.

Metrics steer you in the right direction. They give you actionable insights that you can use to get back on track if you veer off course from a planning and budgeting perspective (so… the expensive stuff).

Without the right data, you’re only guessing as to what works and what doesn’t.

But too much data can also be a bad thing.

Many SaaS companies make the mistake of analyzing too many metrics. Or they focus on “vanity” metrics (metrics that look impressive, but otherwise have little value (looking at you Facebook Likes). 

While metrics can help, focusing on too many or the wrong ones can make you lose track of the bigger picture. 

So, let’s get back to the questionnaire: What did we ask?

We asked 40 leading SaaS marketers just two questions:

  • Which of the following marketing metrics do you care most about?
  • Why?

We could’ve compiled dozens of questions for our survey, but we wanted to keep things simple.

The metrics we identified were:

  1. Unique monthly visitors (UMV)
  2. Monthly qualified leads (MQL)
  3. Sales qualified leads (SQL)
  4. Lead conversion rate
  5. Customer churn rate
  6. Monthly recurring revenue (MRR)
  7. Customer acquisition cost (CAC)
  8. Customer lifetime value (CLV)
  9. Other

We’ll cover what each of these metrics are and which ones our respondents deemed most important. We’ll also provide actionable insights you can put to use today.

A snapshot, before we jump in:

most important metrics

If you’re scratching your head wondering what SaaS marketing metrics to track, these are a good place to start.

Let’s get into it.

#1: Unique Monthly Visitors (UMV)

Even with the most compelling SaaS product on the market, it’s all for naught unless you’re bringing in targeted traffic.

What is UMV?

Unique monthly visitors is the number of visitors who land on your website every month through organic search, paid ads, or direct visits.

UMV is a useful metric to track because it can help you:

  • Determine where your visitors are coming from
  • Measure how your audience responds to your marketing
  • Identify the types of content that visitors engage with

UMV shouldn’t be confused with sessions, which are the total number of visits within a specific timeframe. Someone may visit your website multiple times over the course of a month.

A snapshot of the data

7.5% of respondents chose UMV as their preferred SaaS metric. 

Farwa Anees, Digital Marketing Executive at ContentStudio, shares her thoughts on why she chose this metric:

“An increase in monthly visitors have a chance that all unique visitors will not turn into conversions but it helps big time making your brand name and organic mentions. The more Authority you have in Google, the more people will trust your brand or name and would like to know about your product. Ultimately leading to more conversions in the long-term.”

How to drive this metric upward

While there are many ways to generate traffic, organic search (i.e. Google) is arguably the most important channel to attract new visitors.

Start with a content marketing strategy that focuses on the top of the funnel — the stage of the customer journey where your audience is learning about your brand for the first time.

The aim here is to provide educational content. Research what your audience is searching for and create content that answers those questions (e.g., “What is…”, “How to…”, etc.).

Use a free tool like Google Analytics to track unique monthly visitors. Simply click on Audience and Overview, and enter a date range to see your unique visits.

#2: Monthly Qualified Leads (MQLs)

Tracking monthly visitors is pointless if you’re not also tracking how many of them turn into leads. But all leads aren’t the same, and each has a varying level of interest.

Based on their position in the sales funnel (middle or bottom), you’ll want them to qualify your leads into marketing qualified leads (MQLs).

What is an MQL?

Marketing qualified leads or MQLs are leads who have expressed interest in your SaaS product. These are individuals who are more likely to convert based on their behavior.

Examples of actions that turn visitors into MQLs include:

  • Downloading gated content such as a white paper
  • Sending a product enquiry via your Contact Us form
  • Subscribing to your newsletter
  • Visiting your pricing pages

MQLs are important because they represent your future customers. They also help your sales team determine which leads to prioritize.

A snapshot of the data

5% of respondents chose MQL as the most important metric. 

SEO consultant Dan Taylor shares his thoughts on MQLs: 

“Whilst further down the funnel we do focus on CLV, CAC, etc – the initial primary focus for us is on MQL, combined with a feedback loop from the sales team so we improve and refine acquisition campaigns. We also take into consideration feedback from client customer support teams as to why there may be higher customer turnover (churn) rates, and look into the reasons why.”

How to drive this metric upward

Without a clear picture of who your audience is, you’ll have a hard time turning traffic into MQLs.

Start by zeroing in on your buyer persona — a profile that describes your target audience. This is based on data from your analytics, customer surveys, and input from your sales team.

buyer persona

(Image Source)

One way to use buyer personas to increase MQLs is to create lead magnets. Examples include free ebooks or white papers that visitors can download in exchange for their emails.

Lead magnets are valuable tools as you can use them to build relationships with your audience and move more prospects down the sales funnel.

#3: Sales Qualified Leads (SQLs)

Nobody likes pushy salespeople.

If you engage MQLs too soon, you risk pushing prospects away and ruining your chances of making a good impression. Qualify your MQLs before reaching out.

What is an SQL?

Sales qualified leads or SQLs are prospects who are past the initial research stage. Prospects at this stage are ready to be followed up directly by someone from the sales team.

SQL

(Image Source)

An important distinction is that an SQL has displayed intent to buy. They might have signed up for a free trial or requested a consultation. 

A snapshot of the data

SQLs were the preferred metric for 2.5% of respondents.

In the pithy words of Mark Lindquist from Mailshake, “It’s the metric I can most directly affect that is closest to revenue.”

How to drive this metric upward

Moving an MQL to an SQL involves lead scoring — assigning points to leads based on certain actions. Examples include visiting your website, opening your emails, and booking demos.

An MQL becomes an SQL when they reach a certain score. At that point, the sales team can directly follow up with a phone call.

Use a good marketing automation software such as HubSpot or Marketo to help you track your leads, and set criteria that qualifies them from MQLs to SQLs.

#4: Lead Conversion Rate

No matter how sales-ready your leads are, there’s no real benefit until they turn into customers.

What is Lead Conversion Rate?

A lead conversion rate or lead to customer rate captures the rate at which your qualified leads are converted to customers.

It helps you track whether your team of SaaS marketers and salespeople are doing a good job of converting your qualified leads to customers. It also reveals how well (or not) your content marketing efforts are paying off in nurturing and converting qualified leads.

A snapshot of the data

27.5% of our respondents chose lead conversion rate as the most important metric — making it the most popular answer.

As Mia Naumoska, Chief Marketing Officer at Chanty, aptly puts it:

“Lead conversion rate is one of the most important marketing metrics for us at Chanty. We track this number every week and compare it with the previous one. A constantly growing percentage shows that we attract the right audience thanks to our content marketing efforts and they turn into leads and paying customers.”

How to drive this metric upward

To calculate your lead conversion rate, divide your total monthly customers by the number of total leads (multiple by 100 to get the percentage).

Suppose you have 200 leads and 10 of them turn into customers…

  • Lead conversion rate = 10/200 x 100 = 5%

If sales is only closing a handful of the MQLs, you’re likely qualifying them too soon. Set a higher lead score for MQLs before passing them onto sales. 

This helps your sales prioritize higher value leads and generate more conversions.

#5: Customer Churn Rate

Customer churn is an essential metric that all SaaS businesses need to track.

What is Customer Churn Rate?

Customer churn rate is the proportion of customers who stop using or fail to renew their subscription of your product or service.

Since SaaS businesses are subscription-based models which need to be renewed periodically, losing customers at a high rate can bleed your business.

A snapshot of the data

Customer churn rate was the preferred metric for 7.5% of respondents.

Shrushti Shah, Digital Marketing Executive at Acquire, shares her thoughts on this metric:

“In today’s digital world it’s easier to acquire new customers but difficult to retain existing ones. Successful businesses understand how important customer retention is when it comes to growing a business. It’s an important metric in determining your overall business success.”

How to decrease customer churn rate

Churn happens to every SaaS. But a high churn rate signals that it’s time to look into reasons why customers are leaving. 

What’s a “good” SaaS churn rate?

Average churn rates sit at 5.60%, so anything below that would be considered very respectable.

To calculate your churn rate, note down how many customers left in a given month. 

Say that number is 250. Divide that by the number of new customers you acquired in the same period. Say that number is 5,000.

Multiply that value by 100 to get your churn rate. That gives us 250 / 5,000 = 5%.

churn rate formula

If your customers renew annually, then multiply your monthly churn rate by 12 to calculate your annual churn rates.

Get together with your sales and marketing teams to work out strategies to reduce churn. 

A few best practices:

  • Talking directly to your customers and gathering feedback
  • Adopting tactics to deliver value and increase retention
  • Taking a proactive approach to customer service
  • Optimizing the user onboarding process

Keep a close eye on this metric to determine how well your efforts are working.

#6: Monthly recurring revenue (MRR)

This is basically the lifeblood of your business, because every SaaS is dependent on recurring revenue.

What is MRR?

Monthly recurring revenue or MRR is the sum of all the recurring revenue generated by your customers in a given month.

Unlike a traditional software business, there’s no huge one-time upfront fee. Instead, SaaS businesses make money in smaller renewals or subscriptions over a longer time frame.

This is a primary metric that all SaaS businesses should track because it shows how much profit your business brings in every month.

A snapshot of the data 

25% of respondents chose MRR as their most important metric.

Vito Peleg, founder and CEO of Atarim, shares his thoughts on this metric:

“As an early-stage startup, at Atarim – although we track basically all of the above metrics, if there was one metric I would say we focus on the most or put the most important on, it would have to be MMR. Because as a stand-alone metric when compared to previous months, and knowing the sources of it tells you how much more than any of the other metrics would in isolation. And beyond that, MRR is also the metric that (for almost bootstrapped) companies very much determines how they are able to operate (i.e. how much we can re-invest in marketing, we spend our time doing, etc.).”

How to drive this metric upward 

Start by calculating your MRR. 

Let’s say you have 5 customers in January who are on different subscriptions.

One is paying $250 per month for a basic service, two are paying $300 each for the premium model, and one is paying $500 per month for the enterprise model.

  • MRR = 1($150) +2($300) + 2($500) = $1,750

Average revenue per account (ARPA) in this case would be $1,750/5 = $350

To calculate your ARR or Annual Recurring Revenue, multiply your MRR by 12. That gives us an ARR of $21,000.

Increasing MRR doesn’t necessarily depend on customer acquisition. It’s much easier selling to existing customers than to acquire new ones. 

A survey of over 500 SaaS companies found that 36% of new ARR bookings came from expansion revenue — revenue generated from existing customers via upsells and add-ons.

Other ways to increase MRR include reducing churn rates, optimizing marketing funnels, and experimenting with pricing models.

#7: Customer Acquisition Cost (CAC)

There’s a good reason behind why customer acquisition cost has been called a start-up killer.

What is CAC?

Customer acquisition cost or CAC is how much you spend on acquiring a new customer. Tracking this metric can help you figure out your most profitable marketing channels.

But SaaS companies need to be wary about spending too much on attracting new customers.

Spending too much on acquiring new customers and not enough on customer retention will lead to a falling ROI — even if your product or service is top notch.

A snapshot of the data

Customer acquisition costs were the preferred metric for 5% of respondents.

Here’s what Andriy Zapisotskyi, Growth Manager at Mailtrap.io, says about CAC: 

“Customer Acquisition Cost (CAC) is something that we’re focusing on right now the most. It helps us better understand what’s the price of a lead in each channel where we experiment and better diversify our budget. We review the effectiveness of each channel on a monthly basis. If we see that Google Ads, for example, works for us really great – we invest more budget in it.  Think about CAC as investments and always experiment with new channels.”

How to reduce this metric

Reducing acquisition costs means higher ROI over the long-term.

CAC can be calculated by dividing your sales and marketing expenses by the number of new customers in a given period. 

Expenses here should include money spent on marketing campaigns, paid advertising, and the salaries of your sales and marketing teams.

If you spent $100,000 in sales and marketing over a month and acquired 200 customers, your CAC would be 100,000 / 200 = $5,000 per customer.

(Image Source)

Ways to reduce customer acquisition costs include:

  • Optimizing marketing funnels
  • Running retargeting campaigns
  • Increasing customer retention
  • Improving your conversion rates

Using marketing automation tools can also help you lower acquisition costs. More than 30% of sales-related activities can be automated (think data entry and invoicing).

Automation frees marketing and sales teams from repetitive tasks, allowing them to focus on higher-value work like qualifying leads and closing deals.

#8: Customer Lifetime Value (CLV)

This metric reflects the value of your average customer.

What is Customer Lifetime Value?

Customer lifetime value or CLV is the total amount of money or revenue that you’ll earn from your existing customers as long as they remain subscribed to your product or service.

customer lifetime value chart

(Image Source)

CLV is an important SaaS metric because it helps you identify those channels that are delivering your most profitable customers.

This can help you make more strategic decisions about your budget. For example, you can increase your spending on certain channels knowing they’ll deliver a higher ROI over time.

A snapshot of the data

7.5% of respondents chose CLV as their preferred metric.

Mikkel Andreassen, Customer Experience Manager at Dixa, shares his thoughts on CLV:

“At the end of the day, the most important metric for any SaaS should be the longevity of its customer loyalty. CLV allows you to measure these parameters and understand the big picture when it comes to determining the lifespan of your product.”

How to drive this metric upward

A boost in CLV is a favorable sign as it shows that more renewals are taking place, leading to more revenue for your company.

Follow these steps to calculate customer lifetime value:

  1. Calculate Average Customer Lifetime (ACL) by dividing 1 by your churn rate. If your monthly churn is 5%, your ACL would be 20 (1 / 0.05).
  2. Calculate your Revenue Per Account (ARPA) by dividing your monthly recurring revenue (MRR) by the total number of active accounts. If your revenue is $100,000 a month and you have 200 accounts, your ARPA would be $500.
  3. Calculate your CLV by multiplying your ACL by your ARPA. With the figures above, your CLV would be $10,000 (20 x $500).

Customer lifetime value tends to go hand in hand with customer retention — the longer customers stick around, the more they’ll spend in the long-term.

79% of business buyers have made purchase decisions based on the quality of customer service they’ve received.

Leverage customer service automation tools to reduce resolution times, deliver a consistent experience across all channels, and collect feedback to identify areas of improvement.

#9: Other

12.5% of respondents selected “Other” in our survey. 

Here are the marketing metrics they care most about and why.

Peter Watson-Wailes, founder of Hirundin, prioritizes share of search:

“As a growing SaaS, we’re more concerned about creating mindshare and positive brand affinity. Our main metrics there are around that, and the single biggest for us is how many people search for us, compared to our main competitors in market. It correlates well against sales, but also gives us a nice way of understanding what our mix of marketing activities is doing to the number of people discovering our product and being interested enough to look for us.”

Liam Barnes, SEO analyst at Harness, assigns more value to the company’s pipeline:

“Pipeline is an indicator of qualified leads that we have held a business meeting with, and added a dollar value to the potential deal. If we are able to generate qualified leads, that is great. But if you cannot assign a dollar value, it is hard to determine your ROI.”

SaaS marketing consultant Garit Boothe hones in on product registrations:

“My main marketing metrics for my clients is free product registrations. I know that if I get a client to register for a product, there’s a huge chance that they will buy it. Regardless of whether the client offers a free trial, a freemium product, or signing up for an account that requires immediate payment.”

There you have it — the top marketing metrics as voted on by those with first-hand experience on growing SaaS companies. 

Final Thoughts

If you’re a new SaaS business looking to scale, your marketing efforts need to be underpinned by clear SaaS metrics that show a clear, positive ROI.

Stay clear of vanity metrics that aren’t a clear indicator of real business growth. Instead, choose a few key metrics that can measure success and give you insights to make informed decisions to scale your business. 

This could include tactics such as changing your pricing strategy, producing gated content to attract leads or reducing churn via incentives.

After reviewing the metrics above, choose a few high-level metrics that make sense for your business, and run with it. 

But, keep in mind that they need to be closely linked with your marketing goals to impact the overall success of your business.

Looking for actionable SaaS content marketing tips and strategies? Luckily you’re already on the Wordable blog.

Kevin Kessler
Kevin J. Kessler is a published author of five fantasy novels, a professional wrestler, and a puppeteer (not all at the same time). Kevin is a content writer at Codeless.

About the Author

Kevin Kessler
Kevin J. Kessler is a published author of five fantasy novels, a professional wrestler, and a puppeteer (not all at the same time). Kevin is a content writer at Codeless.