The Most Important B2B SaaS Marketing Metrics to Track in Your Reports
Last updated: July 23rd, 2024
As a B2B SaaS marketer, the effectiveness of your marketing strategies is best shown through data. With so many metrics out there, knowing which ones to track in your reports can greatly influence your marketing strategy’s success and drive growth.
In this guide, we’ll focus on the 10 most important marketing metrics that every B2B SaaS company should track to have a clear understanding of their marketing performance. These metrics align with the four “I”s of marketing – insight, impact, importance, and input – so let’s get right into it.
1. Unique Visitors
Unique visitors refers to the number of individuals who visited your site for the first time in a given period. This measure doesn’t include repeat visits or the number of pages viewed; it solely tracks each visitor’s first visit to provide a clear picture of new user traffic to your site.
Why Track It?
Tracking unique visitors will help you estimate your site’s reach and understand the effectiveness of your marketing campaigns.
How to Calculate It?
You can find this metric through your website analytics. No calculations are required on your part, just keep monitoring your analytics dashboard.
2. Churn Rate
The customer churn rate is the percentage of customers who stop doing business with your company over a particular time frame. But, there are different types of churn rate and tracking them together can be helpful.
In addition to customer churn, there’s lost dollar churn, gross dollar churn, and net dollar churn. Lost dollar churn measures the lost dollar amount in any given period, while both gross dollar churn and net dollar churn measure the total revenue lost over a period of time. However, net dollar churn doesn’t include expansion revenue from subscription upgrades.
Why Track It?
If you have a high turnover of customers, you may inevitably be spending too much on advertising for the value you get from each customer. It can also give you insights into customer satisfaction – high turnover might indicate your customers are not happy with your SaaS, or your marketing is attracting wrong-fit customers.
How to Calculate It?
Calculating your churn rate is pretty simple. You take the number of customers you lost during a set period, divide it by the number of customers you had at the start of that period, and then multiply it by 100.
Let’s say you want to understand your churn rate over the last six months. Find the number of customers who canceled their subscriptions over those six months, divide it by the number of customers you had at the start of those six months, and then multiply by one hundred.
3. Marketing Qualified Leads
Marketing qualified leads are leads that are more likely to become customers or subscribers compared to other leads. This is mainly determined by their level of engagement with your content and level of interest in your product or service.
Why Track It?
By tracking marketing qualified leads, you can focus your marketing efforts on leads with the highest conversion potential. Identifying and developing your MQLs will ultimately lead to a higher conversion rate of leads into paying customers.
How to Calculate It?
You need to understand the past behavior patterns of your leads that end up becoming paying customers. What actions or steps have leads taken prior to becoming paying customers? Seeking feedback from customers themselves is also a helpful way to understand their mindset on the path to committing to a subscription.
4. Sales Qualified Leads
A Sales qualified lead (SQL) is a lead that has progressed further down the sales funnel and has shown clear intent to purchase. These leads typically engage in actions such as downloading bottom-of-the-funnel content (e.g., eBooks) or testing a demo version of the product.
Why Track It?
These leads are considered highly likely to convert and are, as such, valuable and worth spending more time and money nurturing. However, understanding how to identify SQLs and set them apart from MQLs is crucial. Correctly identifying SQLs will also help your marketing team capture and quantify the effectiveness of their lead-generation efforts.
How to Calculate It?
There isn’t a specific formula for calculating SQLs, but rather a set of self-determined criteria. Typically, an SQL will be very engaged with marketing content. They may have downloaded lead magnets, signed up for a mailing list, or attended a webinar. Setting this threshold criteria to identify an SQL will require communication and agreement between marketing and sales teams.
5. Opportunities
Opportunities refer to sales pipeline opportunities. These individuals are similar to SQLs but have been further qualified and are assessed as highly likely to convert based on their behavior and interactions.
It’s important to distinguish between leads, prospects, and opportunities because each user requires a different level of engagement and different content types based on their intent.
Why Track It?
Opportunities are critical because they are on the verge of becoming customers. When you identify a sales opportunity, you can streamline your engagement and finetune your content to target their needs. This is both cost-effective and will improve your conversion metrics and ROI.
How to Calculate It?
Identifying a sales opportunity requires agreement between the marketing and sales teams on the criteria and definition of each user stage. Opportunities need to display clear signs of an intention to buy.
6. Conversion Rate
Your conversion rate is the percentage of users who carry out a desired action, like clicking on an ad or subscribing to a service.
Why Track It?
By understanding your conversion rate, you’ll have a better idea of how effective you are at converting leads into paying customers. Low conversion rates can indicate your marketing efforts and/or landing page are not attracting the right visitors, or there’s friction in their buying journey.
How to Calculate It?
A conversion rate is calculated by dividing (A) the total number of conversions by (B) the number of ‘clicks.’ For example, the number of users that click on the mailing list button is 100 (B) and those that follow through and submit their details are (10) A, then your conversion rate is 10/100 or 10%
7. Customer Acquisition Cost
Customer acquisition cost is the amount you spend to secure new customers, which includes both marketing and sales expenses.
Why Track It?
To run a profitable business, you need to be making more than you are spending. So, understanding how much it costs you per each newly acquired customer will help you optimize your SaaS business and develop your marketing budget.
How to Calculate It?
The easiest way to calculate CAC is to take your total sales and marketing expenses over a set time period (salaries, marketing costs, tools) and divide it by the number of new customers acquired over the same timeframe.
For example, if over a period of one month you spent $50,000 in total on sales and marketing and you acquired five new customers, then your CAC would be $50,000/5 = $10,000 CAC. However, buying cycles don’t always overlap, which can complicate this.
As a rule of thumb, an ideal customer acquisition cost should be at least three times lower than your customer lifetime value.
8. Lead Velocity Rate
The lead velocity rate measures the growth rate of qualified leads from month to month. To understand this, you first need to know how many qualified leads you have.
Why Track It?
Tracking the changes in qualified leads is an excellent predictor of business growth – or lack thereof. Because lead velocity rate focuses on the current rate of qualified lead generation, it’s a valuable metric for B2B SaaS companies.
How to Calculate It?
You’ll first need to subtract the number of qualified leads from the previous month from the current month’s number of leads. Then divide the difference by the number of qualified leads from last month, and multiply the result by one hundred to get the answer as a percentage.
For example, if you had 10 qualified leads in the current month, compared to 5 qualified leads in the previous month then your Lead Velocity Rate would be ((10 – 5) / 5)*100 = 100%
9. Monthly Recurring Revenue
Your monthly recurring revenue is the total amount of revenue you expect to receive from current subscriptions. It excludes any one-off payments and only factors in recurring payments. There is also an annual recurring revenue metric if your business deals with annual subscriptions.
Why Track It?
Monthly recurring revenue is a very basic B2B marketing metric but understanding how much revenue you’re generating on a regular basis is essential for planning ahead and making strategic decisions.
How to Calculate It?
To calculate your MRR, you need to know your average revenue per user and then multiply that by the number of accounts you have.
10. Average Revenue per User
The average revenue per user is exactly that, the average amount a business expects to make per customer. Some customers will pay for premium products, and others will pay only for the basic level subscription. This metric tells you how much revenue you make per customer across the board.
Why Track It?
Tracking ARPU is key for determining the value of each customer and identifying revenue growth. It can also help you assess whether your current pricing needs adjustments and establish how many subscriptions you need in order to reach your desired return on investment.
How to Calculate It?
To calculate your average revenue per user, divide your total revenue by your total number of customers.
11. Customer Lifetime Value
Customer lifetime value is certainly one of the best B2B SaaS metrics to track. It shows the total revenue you can expect to make from a single customer over the duration of their relationship with your SaaS.
Why Track It?
Your CLTV will give you a clear indication of the viability and popularity of your product. It also helps to distinguish your most valuable customers so you can focus on retaining them while also working on increasing revenue from less profitable customers.
How to Calculate It?
Calculating your CLTV can be a bit challenging, and there are a few methods to do this, so let’s go through the simplest one.
You first need to have collected data on your customers over some time to understand how long the average customer spends with your business. You also need to establish the customer value, which is the payment value multiplied by the number of payments.
Once you have these two figures, multiply the customer value by the average customer lifetime to get the customer lifetime value.
For example, if your annual customer value is $20,000 and your average customer lifetime is 3 years, then your customer lifetime value is $20,000 * 3 = $60,000.
12. CAC:LTV Ratio
The CAC:LTV ratio compares the value each customer brings to the cost of acquiring them. This ratio can tell you how much you can afford to spend on acquiring new customers.
Why Track It?
Both of these metrics are incredibly valuable on their own, but as a ratio, this metric is important for assessing business profitability and can be a great indicator for correct budget allocation.
Once you’ve done the necessary calculations, you can focus on optimizing the CLV: CAC ratio. The priority is to increase customer lifetime value without increasing customer acquisition costs.
How to Calculate It?
Calculating your CAC:LTV ratio is very simple. You work out the CAC, which is the total of all business expenses divided by the number of customers for that period. Then, you divide the CAC by the LTV.
A ratio of between 3-5:1 is acceptable – anything more than 5:1 means you have a good margin of profit that you could consider investing in marketing.
13. Return on Investment
Return on investment shows the profitability of an investment. SaaS marketing metrics like this are displayed as a percentage, which is more effective at comparing investment decisions.
Why Track It?
Understanding your return on investment can help you make sound strategic decisions, whether in marketing, product development, or other business areas.
How to Calculate It?
Return on investment is usually calculated by dividing the net profit by the cost of investment and then multiplying by one hundred.
Another way to calculate ROI is to subtract the present value from the cost of investment, divide that by the cost of investment, and then multiply by one hundred.
14. Payback Period
Also known as the CAC payback period, this metric identifies the time it takes to recover the costs of acquiring a new customer. All costs are considered, including staff salaries and advertising expenses. It’s a very important metric because it highlights a company’s growth potential and likelihood of long-term success. It can also be really helpful for a company to get their pricing just right and ensure they’re competitive but still profitable.
Why Track It?
Most B2B SaaS companies use a subscription-based payment model, which means that if a customer churns before the end of the payback period, the company doesn’t make enough money. So, it’s important to know the payback period so that enough focus is placed on retaining customers.
What is considered a good payback period will vary depending on the business’s maturity and funding source. However, most SaaS businesses will want to aim for a payback period of 3 to 12 months to be considered financially secure.
How to Calculate It?
First, you need to calculate the customer acquisition cost (CAC), which is the total of all marketing and sales expenses divided by the total number of customers for the given period. Once you have the CAC, divide that by the MRR, and you will have your payback period. This figure is the minimum duration you need a customer to stay in order to not lose money.
15. Average Time to Close
The average time-to-close measures the time it takes to reach a sale. Some companies consider first contact with a lead the starting point, while others only begin to measure once a lead is qualified.
A few factors will influence the average time to close. For example, a complex product or a more expensive product will have a longer sales cycle because it often takes longer to win over the customer. Conversely, if your target market is SMBs, you’ll have a shorter sales cycle because there are fewer decision-makers involved.
Why Track It?
Time-to-close is important because it tells you the average length of your sales cycle. Understanding whether you have a short or long sales cycle will dictate your budget and resource allocation. A long time-to-close can indicate bottlenecks in the sales process that, if addressed, could lead to improvements in CAC.
How to Calculate It?
First, establish the point at which you consider the start of your sales cycle and then add up the amount of time it takes to achieve a sale, for all sales in a given period. Then divide this by the number of sales and you have the average time-to-close. However, if you have some extreme outliers in your data this will affect the result. In this case, it’s better to calculate the median value rather than the average.
In Summary
Tracking these important B2B SaaS marketing metrics will help you gain actionable insights to boost growth. If you want to get an idea of the company’s current scalability, calculate your scalability score using our free assessment tool.
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