The day started with the social media team excitedly sharing that they were achieving their impressions target and earning 600 clicks per week. They reported, proudly, that they were achieving their KPIs (key performance indicators). That’s when the COO noted that in spite of 600 clicks, no one completed registration – so those accomplishments were not driving positive business results. They were achieving a KPI (perhaps poorly set) but not paying attention to the key SAAS marketing metrics that drive growth.
The social media team was not empowered to improve conversion, but their activities drew attention to the number of converted prospects. They partnered with the product team to address conversion issues, and conversions started to rise. With the systems were optimized to drive customer conversion, the social media team refocused on targeting audiences most likely to convert, driving business results.
Measuring what matters is crucial for go-to-market (GTM) leaders in high growth SAAS ventures. An agile marketing team (and an agile sales team) needs to embrace the Agile concepts of user stories and short sprints in order to create and execute campaign tests that reach, engage and convert prospects into customers. It’s critical that sales and marketing teams clearly understand the most important business objectives of those sprints.
Every function within sales and marketing often has their own metrics. However, optimizing for too many metrics means not truly optimizing any. The most impactful metrics provide early issue detection and insights from which to improve, especially those that tie to velocity and friction in your GTM operation. Connecting metrics that a team directly impacts versus metrics that drive the business is a crucial leadership function.
The metrics that matter vary depending on the type of business itself. Often, teams confuse their key metrics (very few and most important indicators of the business health) and the optimization metrics to help diagnose and improve their process. High velocity, low price businesses often focus on the fewest touches to an initial conversion – perhaps with freemium offers.
Key SAAM Marketing Metrics for Freemium models
- Number of customers acquired cost to acquire
- Traffic volume, cost and performance by source
Key SAAS Marketing Metrics to Optimize for Product Led Growth (use to improve)
- Conversion rate from landing page to user (by campaign, by landing page, by offer)
- Conversion rate from users to paying customer
- Abandonment rate (and where in the “checkout” process the abandonment occurs)
- Number of visits/engagements before conversion
- Renewal and upsell by campaign, landing page, offer, persona.
A critical distinction is that a high velocity, freemium model is most likely purchased by an individual. That individual can likely use a credit card and expense the initial purchase. There’s no complex negotiation or contracts. When compared to an enterprise purchase, it’s faster and simpler. Even freemium companies such as Slack, Dropbox, DocuSign and Wrike have had to create new sales playbooks for the transition from individual user/buyer to an enterprise license.
For enterprise sales motions without a freemium value proposition, the metrics are more complex. The average enterprise buying team has 5 members and conducts 70% of their buying process prior to speaking with any sales team member. There is no single contact or lead that is a buyer – it’s an account. There will be a contract and a negotiation. The metrics that matter are different:
Key SAAS Marketing Metrics for Enterprise Sales
- Sales Accepted (or Qualified) Opportunities created (by industry, by use case, by primary customer profile, by month) ÷ Sales and Marketing Expense
- Revenue in pipeline by stage
- Revenue in late-stage pipeline
Key SAAS Marketing Metrics to Optimize in Pipeline
- Time from demo request to demo scheduled
- Time between initial engagement to SAL (by industry, by use case, by persona). I prefer to create a “stage 0” opportunity associated with the first meeting with an account to accurately measure this duration because that’s an irrefutable moment of increased interest.
- Number of engagements per targeted account per month. Engagements have different values – a prospect attending a webinar is more valuable than receiving an email. One can measure engagements by ICP within the target account to be more precise
- Engagements per qualified opportunity
- % conversion from each stage of the sales process
- Duration of each stage in the sales process (by industry, per persona, by use case)
- Sales productivity by rep, region and segment
- Retention rate
- Time to first expansion (by industry, segment, persona, geography)
- Total Contract Value (TCV) – by industry, segment, persona, geography
As customers, competitors and marketplaces shift, so will the friction points or bottlenecks in the go to market operation. With the limited metrics above, teams and leaders can inspect, identify and prioritize the opportunities to improve targeting, efficiency and revenues. It’s crucial that the entire GTM team is using the same high-level metrics to determine investment and optimizations – the metrics that drive the business forward.