SaaS Analytics: 3 Key SaaS Metrics To Measure Your Success

SaaS Analytics is critical for any SaaS business. SaaS companies need to be agile to cater to customer needs and survive changing markets and technology. Quick action is essential and delay can be irreparable. Here are 3 key metrics that can help them understand their user behavior, business impact, and success.

Every business relies on data and numbers to make informed decisions. Data is how companies figure out how much to spend on each channel, what the demographics of their audience is, and it can even determine the success or failure of a business. In the SaaS industry, data analytics are even more important as users might be signing up for your product but it's also important that these signups lead to revenue generation and more importantly recurring revenue from engaged customers You need to know everything you can about the people using your product in order to optimize and improve their experience. 

Do you know –

  1. A number of users who have logged in within a defined window of time (e.g., last 7 days, last 30 days).
  2. The average number of days between each login event (i.e., how often people log in). This helps you assess the stickiness of your service.
  3. The total lifetime value of your customers.
  4. The amount of money you've invested in acquiring them (their cost per acquisition) and the amount you've spent retaining them as customers (their lifetime value divided by their cost per acquisition).
  5. The average customer lifetime value minus the cost per customer acquisition yields your customer profitability which is expressed as a percentage (% of revenue per customer).

What Is SaaS Analytics?

SaaS analytics is the process of collecting and plotting data about a SaaS business. The goal is to use the information and insights gained from these analytics to identify defects and make decisions to improve the product and user experience.

Why SaaS Analytics?

SaaS (Software as a Service), the business model that catapulted companies like Salesforce, Dropbox, and Shopify, is a different breed than traditional software. Most of the users using a SaaS product are paying a monthly or some form of a recurring subscription fee, so they can access the software without interruption. This means it’s crucial to track every stage of your product's usage: Collecting information by logging behaviors on your website or app; analyzing patterns to create future features; and finally, sending out reports to SaaS companies to keep customers informed and happy. SaaS Analytics allows businesses to do a better job of understanding their customers. The most innovative businesses use SaaS data analytics to grow faster than their competition, keep costs down, and maintain greater efficiency with their resources. 

3 Key SaaS Metrics To Keep An Eye On

When you're starting to scale your SaaS business, there are a few key metrics you must track. These metrics will inform you whether or not you're on the right track to growing your business and helping you make smarter decisions.

  • User Stickiness – It measures how long customers and users stay engaged in the system and how they are using the features available. Stickiness is one of the most important metrics to track for a SaaS company because it is directly linked to your growth. Key metrics to track in order to calculate user stickiness:
    • Retention rate: User retention rate is the ratio between the number of users from the previous period and a number of users from the current period. Hence, this metric tells you how many users are still actively using your product after n periods.
    • Customer churn rate: It is calculated by comparing the number of customers from the previous period with the number of customers from the current period. This metric helps you understand how many customers are leaving your business after certain periods and hence, it can tell you how fast your business is growing or shrinking.
    • Total revenue churn rate: This is another important metric that helps you understand the loss of revenue in your business due to churned customers. Total revenue churn rate = ( total revenue for current period – total revenue for previous period) / total revenue for the previous period.
  • Customer Lifetime Value: It is the amount of revenue that a single customer will contribute to your business in their lifetime. It is based on assumptions about the probability that they will continue to use your product or service and the average revenue per user over time. To calculate LTV, multiply the average monthly revenue of each customer by the number of months they are expected to be a paying customer. For example, if there are 12 months in a year and an average paying customer contributes $1,000 per month, then the LTV equals $12,000. If customers pay for less than a full year (for example, three months), then prorate the amount for that time period accordingly.
  • Customer Satisfaction – It is the most important metric for SaaS companies because it helps them reduce churn rates and lower customer acquisition costs. Customer satisfaction is a direct reflection of how well you are delivering your product or service to your customers. It is not based on the duration of the contract, but rather on the quality of the relationship between the customer and your organization. Customer satisfaction is measured using qualitative and quantitative metrics. The qualitative metrics include Net Promoter Score (NPS), Customer Effort Score (CES), Customer Effort Index (CEI), and Customer Satisfaction Index (CSI). The other metrics are Customer Retention Rate, Churn Rate, and Lifetime Value of an Average Customer. For each metric, you must understand its significance and how it contributes to increasing customer loyalty. If a metric is not performing well, you need to find out why and make required changes immediately. Remember that good customer satisfaction leads to increased sales, which in turn translates into improved overall financial performance.

When you are relying on a number of metrics to evaluate the success of your product, the last thing you want to do is to make these measurements time-consuming or difficult. That’s where SaaS analytics software comes in. It allows your company to collect, store and analyze relevant customer data in real-time and provide your critical insights to develop a winning product.

Qualetics – A Powerful SaaS Analytics Software

To make your SaaS product a success, you need SaaS analytics software that is tailored to your unique business model and empowers your team with actionable intelligence and insights. Whatever be your need, Qualetics AIMS, our Software Intelligence Platform, can help you better track and understand user performance, and grow your subscription business quickly, cost-effectively, and efficiently. It captures multi-dimensional data points from your software in real-time powering advanced analytics and AI-based outcomes. To know more about our product or for a free demo, contact us here.

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