How To Monitor The Core Elements Of Your SaaS Business Part 3

David Barlev

October 18, 2018 · 3 minutes

This is final part of our series on monitoring the 3 core elements of your new SaaS business.

In case you missed it, we’re working with the belief that a SaaS company can be defined as a simple funnel:

Marketing → Sales → Customer Success → Revenue

Yesterday we went through sales, and the day before we covered marketing. Today, we’re going to dig into the customer success stage and put all the pieces together.

Stage 3 = Customer Success

It’s taken a long time to get to this point. You’ve wined and dined your leads, and done the work to convert them once they gave you a sign they were legitimately interested in what you had to offer. You made the sale, closed the deal. Now what?

The SaaS industry has its own set of unique challenges, this being one of them. Customer success is everything. If people aren’t happy, if they don’t continue to use your app after that initial sale, everything was for nothing. Sure, you made some money in the short-term for the sale, but the growth and scalability of your business goes out the window.

Without a solid strategy to track, measure, and improve customer success, all the marketing and selling in the world won’t keep you afloat. Your new customers have a goal in mind. There’s a reason they purchased your product. If you want them to keep using it, you’ve got to give them the outcome they were looking for – and fast. Your onboarding process is a crucial component to helping your customers become successful with your product. People continuing to use your product is a pretty good indicator that they’re satisfied and getting what they need, but how will you keep up as their needs and demands evolve over time?

As we’ve already mentioned, you can’t measure what you don’t track. You’ve got to start somewhere with this, and measuring successful usage and activation is a fairly simple way to do it.

Successful usage and activation

Set your parameters around what you determine successful usage and activation of your product are. Then, you can fill in the dots and essentially create a graph that will show you what percentage of your users are continuing to perform this key action over a period of time.

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Net Promoter Score

Your net promoter score (NPS) is a tool you can use to measure your online loyalty. What this really comes down to is customer satisfaction. It measures which of your followers are promoters or detractors of your business, in addition to the passive people who sit in the middle that are irrelevant for this purpose. For small ticket items, your NPS should be 25-30, or higher. People rave about your product online, and many say they’d be disappointed if they could no longer access your product. If your NPS is 10-15 or lower, it signifies that your product market fit is off.

For those higher-ticket purchases, expect to see your NPS at 10-20 or higher. Any less than 10, and there’s a problem.

Customer Churn

Lastly, you need to monitor what percentage of your customer base is lost month over month, or year over year.

You can calculate it simply as:

Industry averages show that typical churn rates are:

  • 3-7% for SaaS companies who target SMB’s
  • 1% for SaaS companies who target large-scale enterprises
  • Unknown for companies who target individuals and small businesses

Even at the very beginning stages of your business, reducing your churn rate should be a top priority. A high churn rate can mean all kinds of negative things, all of which should be handled sooner rather than later. Your onboarding process might need work, or perhaps your customer service is lacking. Start with a benchmark and work on improving it.

Tying it all together

So this concludes our 3-part series on metrics to monitor for your marketing, sales, and customer success.

Marketing → Sales → Customer Success → Revenue

If you want to reach the point of earning consistent revenue and building a thriving, growing business, you need to have the right strategies and metrics in place to take people from being strangers to customers and raving fans.

About David Barlev

David is the Co-founder and CEO of Goji Labs. David loves working closely with passionate founders to understand their vision and help them build beautiful applications while focusing on risk-mitigation. As an author, he focuses on informative and educational blogs that enable our clients to make the most of their businesses.

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