10 KPIs every B2B SaaS company should track

What should be on the marketing dashboard for a SaaS Company?

Here are the easy to track, and most important metrics that should form your first KPIs. They are relatively easy to track and will provide a great foundation as you grow and add more detailed metrics.

  1. Unique Visitors
    Growth unique visitors is a proxy for being found, being viewed and your reach. You can use simple tools like Google Analytics to get accurate data.
     
  2. Contacts
    These are also called "subscribers". This is the so-called "follow me home" metric. This includes everyone who starts to follow you. This includes people who give you their email as a newsletter subscription, or who follow your RSS feed, podcast or Video Channel.
     
  3. Leads
    • Leads are not the same as "contacts" or email addresses. When you get started it's sufficient to define these as "hand raisers". Hand raisers are people who have shown interest in an actual outreach by your team. Examples are people who have filled out an explicit "Contact me" form, or a product demo request. So subscribers to your newsletter or people who signed up to get a free gift don't count as leads.
       
    • When you get bigger you should start differentiating as follows:
      1. MQL (Marketing Qualified Leads) - These contacts have triggered multiple "buyer signals" like downloading product information, visiting a competitive comparison guide or asked for a sales conversation. These are "qualified" hand raisers. 
      2. SAL (Sales Accepted Leads) - You have reached out to an MQL, and have been able to get in touch. An appointment is scheduled for a phone call with a Sales Development Representative for further qualification.
      3. SQL (Sales Qualified Lead) - After the initial meeting (or sometimes the completion of an online questionnaire) these leads have been determined to be ripe for an Account Executive from the sales team to follow up and manage this lead as a sales opportunity. The sales team will now take over accountability from the marketing team and will add data like potential deal value, competitors in play, needs, budget and decision makers (also see this article on BANT)
         
  4. Conversions
    • Try to measure conversions through the funnel as granular as possible, as long as your data is accurate and meaningful. Here is a typical prioritized list of conversions to measure as your dashboard gets more granular
      1. Leads to Customer (Wins) - How is your funnel turning opportunity into customers
      2. Leads/MQL to SQL - How are you converting hand raisers into real opportunities
      3. Visitors to Leads - How are you turning traffic into an actual business opportunity?
      • Next, you can start measuring every step of the conversion funnel, make sure to start with the above 3 though.
         
  5. Churn
    1. The most important KPI of all is customer retention, or the opposite, churn. Churn levels not only predict your future ability to grow revenue and profitability, they also tell you if your product has reached Product-Market Fit (PMF) with your audience, and are a good indicator for the quality of your customer onboarding and support performance (Customer Success).
    2. Initially, I recommend measuring real customer churn (# of customers churned as % of all paying customers). Don't get confused with concepts like "negative churn" where ARPU and revenue growth per customer are being mixed in. These are great KPIs to worry about later.
       
  6. Monthly Recurring Revenue (MRR)
    1. This is the total revenue billed monthly. You should pull this straight from your billing system (like Recurly or Chargify).
       
  7. Average Revenue Per User (ARPU)
    1. Also measured as Average Revenue per Customer/Account. Divide your total monthly recurring revenue (MRR) by the total number of paying accounts (customers who have paid their last bill and have a valid payment method status in your billing system for the next billing cycle). 
       
  8. Life Time Value (LTV)
    1. Now that you have ARPU you can also calculate Customer Life Time Value (LTV) by dividing ARPU by your Churn rate. If your ARPU is $50/Month, and your churn is 0.5%/Month, your Customer LTV equals $50/0.5% = $10,000.
       
  9. Customer Acquisition Cost (CAC)
    1. Ideally, the CAC includes all your sales and marketing cost, including people. Just divide your all up marketing and sales spend by the total number of paying customers for a given period of time. Don't overcomplicate this. Be generous and include all cost that you should allocate to your sales and marketing functions.
    2. Using, for example, the LTV:CAC ratio to show the ROI on getting new customers is key to determining marketing investments. 
       
  10. Cost-to-Service (CTS)
    1. As you start understanding the all-up cost to service your paying customers, it's time to add this to the dashboard. Include the cost of your Customer Success team (onboarding, support), infrastructure and product (cloud capacity, engineering investments into the service) and the cost of retaining your customers with special programs (loyalty campaigns, incentives, promotions).
    2. For a SaaS company, the ongoing cost of running a service is the key to profitability. As you get insights into your CTS you can start targeting the customers who are the ideal customers for your bottom line.

With these metrics on your dashboard, you can manage your marketing function responsibly.