If you are launching your SaaS business, or are already getting some traction and are able to praise yourself for acquiring a certain number of customers, you’re probably already very conscious of the power of data.
If it’s become common knowledge that the food business is all about location - the SaaS business is indeed all about data.
Knowledge is power. And has there ever been a better time to benefit from this knowledge? My guess is no.
Remember a time (the 1990s?!) when software companies sold their products without ever knowing if it ended up fitting their customers needs. Did they end up using 20%, 80% or 100% of the product features? Were they happy customers? Were they going to buy again at the end of their licence?
Since then though, the advent of Software as a Service (SaaS) has reshuffled the cards - allowing for recurring revenues while creating data points at every step of the customer journey - and raising many more questions… Starting from “how many people really are using my solution?” and “are they satisfied?” to “how many users and/or paying customers do I have?” and “how much money do they generate each month?”.
Now, if the SaaS model makes this data available… Does this mean every SaaS business owner can answer all of the above questions right off the bat?
Unfortunately not. Thus missing on a lot of opportunities.
Let me thus go back to basics - to the 2 steps to unleashing the power of your SaaS data (while answering all the above questions and more!)
Step 1 : Tear down the data wall: a product-led culture at sight
Like any other industry, technology, although much more recent than others, has managed in a very short period of time to create its own customs and corporate guidelines. One of them being an almost obsessive desire for spreadsheets.
From the manual entry tools such as the almighty Excel, to sales-designed complex databases such as CRMs… it has become popular belief that any relevant data can be put into one of those matrices and that whatever you would need to learn from it can be processed through those as well.
But should this remain true for SaaS? Think product-led.
While never forsaking the importance of marketing outreach, sales feedbacks nor support reports - the magic of SaaS actually happens in the product.
I mean, that’s where your customers leave the clues to finding out who they are, what they do and whether or not they’re satisfied - and where the teams should interact with them (but that’s another story ;))
And as with everything revolving around data, the clues are limitless. Thankfully, priorities and hierarchy prevails through a set of basic - yet essential - SaaS metrics.
Step 2 : Know your basic SaaS metrics : a product-led approach in motion
Now that you are determined in collecting the clues your users leave in plain product sight, you need to dedicate a bit of time determining what are the first and most important things you want to know about your business and your customers.
So, take a blank sheet and a new pen and start….
Since time is of the essence, here are, the 4 categories of metrics - you ought to have at hand - and at any given moment - in order to answer 4 essential questions.
Product metrics - what?
The heart and soul of SaaS companies.
Ultimately, what you are offering is a product. And what people are doing with it should be of great concern to you.
You can start with activity monitoring by day, week or month - at contact and account levels.
Then getting down to session lengths, feature usage and licence utilization.
Customer metrics - who?
No need for a lot of explanations for that one.
From launch to scale, measuring your success starts from very simple maths operations: adding and grouping.
Knowing the number of people using your solution (number of contacts), or companies (number of accounts) and how many are paying customers (number of paying customers).
Plain and simple. Yet, not having access to this live information will prevent you from discovering all the good stuff about your business.
Revenue metrics - how much?
Cash is king. And SaaS companies know it all too well. Recurring revenues are a blessing when it comes to optimizing cash-flow. Never before was there a revenue-model allowing for such predictivity.
Monthly Recurring Revenue (MRR), Average Revenue Per Account (ARPA), New Converted MRR, Net MRR… you’ve got everything at hand to know your financial situation by the penny.
Customer Success Management metrics - how?
At the end of the day, success will come if all the above metrics rise and rise… Simply put, it means more users, spending more time in your product and paying you more.
As such, success for you ultimately means success for them.
For that, you’d better keep a close eye to what symbolizes being successful with your product.
You’ll wanna use all the gathered information to come up with a clear indicator of your customers well being, both functionally and financially.
Start with Customer Health Distribution and Life-cycle Distribution.
Finally, one should not forget that these metrics also reflect the personnel, human relationship you keep with your customers. And, keeping this human relationship is fundamental if you want to achieve success with your customers.
I know what you think.
All this talk for these 10+ basic metrics you could have looked for and inputed in an Excel sheet or in your CRM…
Well, did you?
You might have already monitored some of those key elements...But, the truth is, when building a business, the amount of work is overwhelming, and priorities are hard to make…
Besides, let’s not forget how your data is siloed across teams and tools. Some are under sales’ supervision and hosted in a CRM...Others, such as payment information - remain in the hands of your PSP etc.
Aggregating all the different sources to being able to access it “live” is pretty much impossible for most companies.
Despite these technical difficulties, accessing these metrics is paramount indeed - and even more so when crossed and put into perspective with users' journey within your product-led flywheel.
At the end of the day, your product data will provide the business insights you need to power your revenue engine and enrich teams’ decision-making with something a little bit more tangible and objective than gut-feeling…
And that, my fellow SaaS player, is the starting point of your product-led growth strategy.