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The Little-Known Metrics Your SaaS Company Should Be Measuring (But Probably Isn’t)

March 02, 2016
Aaron Polmeer

By Sherice Jacob


When it comes to SaaS metrics, you’re well-acquainted with all the usual ones: churn, revenue per customer, customer lifetime value. But a new survey by Totango, released as part of their annual State of SaaS Metrics report, is showing some insights into what we’re measuring, and what still needs to be incorporated. So the question then becomes – are you measuring the right stuff? And what’s missing from the metrics puzzle? Let’s take a look:

There are a few telling concerns with this chart. First, it proves we’ve got churn, customer usage and expansion/add-on sales locked down. We’re using that information to make intelligent and confident decisions, but there’s more work to be done.

Understanding Customer Health as Part of the Lifecycle

For example, what’s meant by “customer health”, a metric that 46% of respondents planned on adding this year? It’s much more than just measuring the levels of customer satisfaction. It’s also about getting in touch with customers who may be signed up and established, but have yet to truly use the service to its fullest. There are reasons why their account has turned stale – and it’s your responsibility to find out and act on those reasons.

Lack of understanding on how to use the system efficiently? Not sure about implementation? How can you make the process easier or guide them through the first steps?

And that’s not even counting new users, who need a more helpful, user-friendly onboarding system. They’re short on time and need direction – fast. And of course, we’re not neglecting loyal customers – those who use and advocate for the service. We need to work to keep them that way.

In short, we have different ways to measure and adapt to customer health levels as their use and understanding of the service grows. Lumping all of these people into a single funnel or list is doing them (and yourself) a serious disservice. To put this kind of metric into action you’ll need to measure tangible things like how many sites your product is used on, how many projects your customers have running and so on. Being able to segment them based on usage (or lack of it) is vital to creating a process that gets them more involved and encourages even greater brand awareness.

How Much Does it Cost to Retain Customers?

You likely already know how much it costs to acquire customers – but what about retention? There are plenty of formulas out there to guide you, but one of the most overlooked areas where you can find a goldmine of information is your subscription payments and processing. Sure, you may have looked at that information to see how well your latest promotion is doing – but have you looked at how well it reflects your ability to keep customers subscribed?

Let’s say your average product price is $49/month and your customer lifecycle is two years. That’s $1,176 per customer. But if your customer unsubscribes after six months, that means you’ve only earned $294, leaving $882 in …read more

Source:: Kiss Metrics Blog