Expert Article: The #1 Metric to Measure Your SaaS Marketing ROI
As every lean SaaS company knows, return on investment is of the utmost importance. The efforts of an experimental marketing strategy can be constantly hard to justify to an entrepreneurial, yet budget-conscious CEO. As a SaaS marketing team ventures down the paths of different campaigns of messaging and promotion channels, it’s important to not only be tracking data but to be using that data to inform and support every marketing decision.
So what is the most important metric SaaS companies should use to determine the return on investment (ROI) of their marketing efforts? We asked several SaaS leaders and marketers to share their answers as the landscape of digital and SaaS-specific marketing constantly evolves. If you’re going to start tracking data, here’s what to consider:
Your Stage of Company Growth
“It really depends on a stage where you’re at. Since the company is growing you have to focus on different metrics one by one at every stage. In the early days it can be engagement, later you might focus on growth. But I would advise pick one metric, get the maximum out of it and then move to the next one. And, yes, your cash balance is the most important metric at the every stage.”
-Alex Kistenev, CEO, Standuply.com
Before settling on one end-all-be-all metric to hold your marketing efforts up to, Alex Kistenev brings up an important point of the need to consider the stage of growth that a particular SaaS company is experiencing. A company that is just starting out, determining their buyer personas, and gaining traction will be attentive to different metrics than a more seasoned and expanded enterprise. However, don’t get metric fatigue! Instead, abide by Kistenev’s recommendation to choose one or two metrics per campaign and stick with it, even if the results are not what you expect. Instead, shape your next campaign to address that metric and master it before your company grows to the next one.
“Engagement is the ultimate success metric for SaaS companies. And I don’t mean content downloads or email clicks, but product engagement. SaaS companies live and die by their subscription metrics…For marketers, it’s no longer about bringing in as many leads as possible, but instead delivering a smaller number of (PQL) product qualified leads. Why? PQLs leads convert at around 50%… They’re proof that your campaigns were successful because the leads not only signed up to try your product but became heavily engaged during their initial use.”
-Elle Morgan, Content Marketing & Evangelist, Woopra.com
Although Kistenev advocates for engagement to be a key metric for early SaaS company marketing, Elle Morgan of Woopra.com qualifies this to suggest that the specific metric of engagement is the product qualified lead or PQL. Although the false friend of social media can be enticing to track metrics like likes, shares, and followers, this does not correlate to company sales and growth. Instead, as Morgan shares, PQLs are leads who not only engaged with your company, but went for a free trial and are therefore already primed to convert into a customer or long-term subscriber. In this way, a PQL metric is great to track marketing efforts, such as those free trials, content offers, or digital community events that capture contact information.
“Leads that turn into sales.”
-Sam Lloyd,Founder, Klicker Inc.
Kistenev said it before and Sam Lloyd echoes this sentiment that when it comes down to it, the conversion rate of leads that increase your cash balance is the ultimate metric. At the end of the day, marketing efforts should be driving qualified leads to your website, but without converting, your marketing is not delivering quantitative value to the business. To get the true return on your marketing investment, you should see your leads converting into paying customers.
System of Metrics
“The most important metric in determining your marketing ROI is the metric tracking the system itself. Choosing the appropriate metric at the appropriate stage of company growth is key in your overall success. There is no one single metric for all companies at all stages of growth. At the heart of it, a metric is a system of measurement. If you are getting bad data in, you’re going to be making bad decisions off that. So my most important metric that marketing agencies should use to determine their marketing ROI is a proper tracking system.”
–Grant Phillips, CEO & Founder, Growth Labs
As your SaaS company and its community evolves, the most important metric is changing, as well. While Kistenev, Morgan, and Lloyd provide options for what these metrics might be, Grant Phillips advocates for developing a system for how to look at the data of different metrics over time. If you’re basing ROI on engagement to start and conversion rates later on in your company growth, a proper system should account for this shift and also prepare for at what engagement metric it should occur. A proper system should also focus on how to track different metrics simultaneously, yet weighted with importance differently, pending the stage of company growth.
Measuring your marketing ROI can be tricky when there are so many metrics to consider and marketing activities to take into account. Ultimately, all your marketing activities should be based on data, so choosing particular metrics to track is crucial to increasing your ROI in the long run. To measure your ROI effectively, our experts confirm that the most important step is to determine what stage your SaaS company is currently in and then prioritize a metric accordingly as your company continues to grow.