9 B2B Marketing KPIs Every SaaS Should Track In 2022
Did you know that 81% of B2B marketers track their marketing ROI using different KPIs?
Thanks to the digital marketing revolution, you can track every dollar you invest in marketing to determine whether it contributes to your brand’s growth or not.
Because “what gets measured, gets managed.”
The bigger question, however, is what B2B marketing KPIs should you track for SaaS?
I’ll share the answer in this article.
What Are B2B Marketing KPIs?
Key Performance Indicators (KPIs) help you measure your performance against various business goals. KPIs are usually represented in numerical form and allow your company’s decision-makers to review the business performance and determine its direction.
In B2B marketing, KPIs play a crucial role because they help you determine the ROI of your B2B marketing funnel.
What exactly do KPIs look like? According to the Content Marketing Institute, here are the KPIs B2B marketers use to gauge their content marketing performance.
There’s no fixed KPI list that every business needs to follow. Instead, you can choose to track the KPIs closest to your business goals or even create custom KPIs for your business.
Just make sure the KPIs you track are directly relevant to your business goals and help you make the right decisions.
9 Crucial B2B Marketing KPIs For SaaS
So, what marketing KPIs should a B2B SaaS company track?
Here are some of the most commonly tracked B2B SaaS marketing KPIs along with their brief descriptions.
1. Customer Acquisition Cost (CAC)
What’s the simplest way to determine your most profitable marketing channel?
By calculating its customer acquisition cost (CAC).
CAC shows you how much money you spend on acquiring a customer across your marketing channels. You can calculate CAC using this formula:
As you can see, you can calculate the CAC for your total marketing spent by adding the costs of your ads, SEO, content marketing, sponsored content, and any other activity for acquiring customers and dividing it by the total number of customers acquired through them.
For example, if your total marketing budget was $12,000 and it resulted in 100 new customers, your CAC is $120.
If you want to calculate the CAC of your Facebook ads campaign only, divide the total ad budget by the number of customers acquired.
2. Cost Per Lead (CPL)
Cost per lead (CPL) shows you the average advertising amount you spend on acquiring a new lead. You can calculate CPL by adding your advertising spent and dividing it by the number of new leads.
Although CPL is mainly used for advertising, you can also use it for other marketing activities such as email marketing, social media, etc.
Once you know how much you have to spend to acquire a lead, you can calculate precisely how much money you need to invest in a marketing channel to generate a certain number of leads.
3. Customer Lifetime Value (CLTV)
Customer Lifetime Value (CTLV) is a critical SaaS KPI because it tells you how much revenue you can generate from an average customer throughout their subscription with your company.
To calculate CTLV, you first need to determine three things.
- The average purchase value: Calculate it by dividing the total revenue by the total number of purchases.
- The average number of purchases: Calculate it by dividing the total number of orders by the total number of customers
- The average customer lifespan: Calculate it by adding the lifespans of all your customers and dividing it by the number of customers.
Now multiply Average Purchase Value by Average Number Of Purchases to get the Average Customer Value.
To calculate Customer Lifetime Value (CTLV), multiply Customer Value with the Average Customer Lifespan.
Let’s say your CTLV is $1000.
This means that if you generate 100 customers, you can expect to earn $100K over their lifetime.
4. Traffic To Free Trial Conversion Rate
Most SaaS companies consider website traffic a crucial metric.
However, traffic that doesn’t convert is useless.
This is why your real focus should be on conversion from traffic to free trial or email subscription sign-ups.
How do you calculate traffic to sign-up conversion?
Let’s say you’re calculating traffic to free trial conversion rate for your SaaS website.
To do that, divide the number of free trial sign-ups by the total number of website visitors in your selected duration and multiply it by 100.
So if your total traffic is 10,000, out of which 250 sign up for a free trial of your product, your conversion rate would be
Knowing this rate, you can calculate precisely how much traffic you need to generate a specific number of free trial sign-ups.
5. Marketing Qualified Leads (MQLs)
A marketing qualified lead (MQL) is any website visitor who performs a specific action that you think shows they’re interested in your product.
For example, you can mark a visitor as an MQL if they download your eBook, attend your webinar, sign up for a free trial, or request a free consultation.
An MQL is someone who you believe has a very high chance of becoming a customer. So choose its criteria wisely.
The more MQLs your business generates, the better your chance of converting them into customers.
6. Free To Paid Conversion Rate
Free trial sign-ups are great, but you ultimately want your free users to upgrade to your premium plan.
But how many free sign-ups does it take to get one paid conversion? You can find this by using the free-to-paid conversion rate.
Simply divide the number of free users upgraded by the total number of free sign-ups in a specific period.
For example, if you get 1000 free sign-ups, out of which 300 upgrade to a premium subscription, your conversion rate would be
Knowing this, you can predict how many free sign-ups you must generate to get a specific number of customers.
7. Churn Rate
Churn rate is among the most popular SaaS KPIs because it tells you exactly what percentage of customers leave you in a specific period. This is a crucial metric to consider in B2B SaaS, and especially in B2C SaaS.
To calculate the churn rate for a quarter, divide the number of customers you’ve lost in the quarter with the number of customers at the start of the quarter and multiply by 100.
For example, if you started a quarter with 5000 paying customers and lost 200 by the end of it, your churn rate will be:
For context, the average SaaS churn rate across SaaS companies is around 6%.
8. Retention Rate
Retention rate is the opposite of the churn rate. It gives you the percentage of paying customers that renew their subscription with you in a specific period.
For example, if you started a quarter with 5500 customers and ended it with 5300 customers, your retention rate would be:
In general, the higher the retention rate results in a higher customer lifetime value (CLTV) and lower customer acquisition cost (CAC).
9. Customer Product Engagement Rate
Product engagement rate represents how much your customers are using your product. This KPI is crucial because when customers use your product more frequently, they’re likely to find more value from it and increase your chances of retaining them.
However, there’s no fixed formula for calculating this KPI.
Instead, you can develop your own engagement criteria by identifying the key features you want your customers to use and assigning them an engagement score every time they use those features.
Are You Tracking The Right B2B Marketing KPIs?
Calculating your marketing ROI and determining your most profitable channels for generating customers and leads allows you to invest in the most promising areas of your business.
And this is where choosing the right B2B marketing KPIs is crucial, especially for SaaS.
If you need help developing a marketing strategy for your SaaS business, as a B2B content marketing agency specializing in SaaS, we’d love to help.