What are the most important SaaS marketing KPIs? How do you know if your marketing, sales and support teams are doing a good job? If you are working in a SaaS startup or work at a larger enterprise that offers cloud subscriptions, you have to pay attention to these metrics.

Net Profit Margin

This very important metric tells you how much your company earns from its cost of goods sold. It’s calculated by subtracting your operating expenses from your total revenue. Cloud businesses mostly use the variable cost of goods sold, which does not include your personnel or marketing costs.

Customer Acquisition Cost

If you acquire a customer through paid acquisition channels (paid advertising, content marketing, lead generation, etc.), the Customer Acquisition Cost (CAC) is the cost of acquiring a customer, including the cost of marketing and sales. The CAC is calculated by taking total acquisitions and dividing it by the total marketing and sales expenses.

Customer Lifetime Value

Customer lifetime value refers to the value of a customer over the entire customer relationship. It is calculated by dividing the revenue generated from a customer by the customer’s retention rate. You can measure customer retention rate by calculating the percentage of customers who purchased your solution in a snapshot period and comparing it to the customer retention rate over the life of the customer relationship.

Monthly Recurring Revenue

This is the amount of revenue generated from your products or services that are billed on a monthly or annual basis. As a SaaS company, you can plan your working capital and expenses based on the monthly recurring revenue.

Funnel Conversion Rates

You need to understand how your prospects are making their way through your marketing, sales and support funnels. The funnel conversion rate refers to the rate at which prospects become customers. If a prospect becomes a customer, the conversion rate is 100%. If a prospect does not become a customer, the conversion rate is 0%.

Marketing, sales, and support teams can use the conversion rate to evaluate the effectiveness of their funnel. For example, if there is an increase in the conversion rate from your marketing, sales and support teams, there must be some changes that have led to this increase in your funnel’s effectiveness.

Net Promoter Score (NPS)

The Net Promoter Score (NPS) is a customer loyalty metric used to evaluate how happy or unhappy your customers are with their experience with your products or services. It is calculated by taking the percentage of promoters (customers who indicate that they are likely to recommend your company or product to a friend or colleague) minus the percentage of detractors (customers who indicate that they are likely to discourage a friend or colleague from using your company or product).

The Bottomline

Understanding your SaaS marketing KPIs is very important. KPIs provide a detailed view of the overall health of your business. In a SaaS business, revenue generation is dependent on your ability to acquire new customers and retain them for a long time. Your marketing, sales, and support teams should be able to track your KPIs to make adjustments to increase the funnel’s effectiveness.

Krafted Digital is a full-service digital marketing firm providing affiliate marketing services based out of Miami, Florida. At Krafted Digital, we specialize in developing custom-tailored, innovative, data-driven online marketing solutions for small businesses to Fortune 500 brands. Click here to contact us today.