When it comes to KPIs, it might be tempting to settle for a one-size-fits-all list of SaaS metrics to measure and influence the success of your product and your business.
If you dig a little deeper, however, you can develop a framework with the set of metrics that best suits your own SaaS business, based on your own company profile, its stage, and your business goals.
At 2Checkout, we recently hosted a webinar on “Finding the Most Relevant SaaS Metrics to Fuel Growth”, where I had a chance to discuss the subject with Claudiu Murariu, “data detective” and CEO/Founder of Inner Trends. Claudiu has developed a framework based on the work of Dave McClure, venture capitalist and founder of 500 Startups, and his 5-step framework for growth, also known as the Pirate Metrics.
To start implementing this framework for your own business, Claudiu recommends taking it in steps, according to the five stages your users follow in their buying journey:
Within each of these action stages, you’ll want to examine Primary Metrics (those that are the most important and which you want to change), and Secondary Metrics (additional metrics that affect and influence those primary metrics). You can look at all these stages at the same time or determine which of these five stages are the most critical and need the most attention for your business.
Identifying these metrics is only a matter of answering key questions about how your users move from introduction to your product all the way through purchase, retention, and referral.
Claudiu shares the 10 key questions you should rely on to define your actionable metrics, one to uncover the primary metrics and another to uncover the secondary metrics of each stage:
1.What is your customer acquisition strategy?
- What are the actions that lead up to getting the prospects to convert?
2. What is the promise of your product?
- What are the steps a user needs to take to get to experience the promise of your product?
3. How will you make money from your new users?
- How will you make more money from existing customers?
4. What are the main reasons your customers are using your product?
- What are the actions that help people achieve their reasons?
5. How can a user generate a new seat in your product?
- What are the actions they need to take to get more people to use your product?
So, you’ve taken these steps in establishing your framework for your business. What’s next? How does it all come together to provide valuable information about opportunities for growth?
Your main objective is to determine how many of your users are having success with your product and where to put your efforts to create and maximize opportunities for growth. Claudiu identifies the two main areas to analyze: the Funnel and the Process. The Funnel is what happens from the user’s first visit all the way through to their purchase. The Process is retention, engagement, and referral from your user once they’ve signed on.
When you’ve gotten this far in establishing your framework, it’s time to align your team around the metrics. It’s important to answer the following questions:
- What team is responsible for growing them?
- What person on the team is responsible for addressing any challenges?
- Where will the metrics be tracked?
- What are the strategies to grow them?
- What tools are needed to execute the strategies?
After you’ve addressed these questions regarding your team, track your progress to help monitor the metrics and hold your team accountable for their growth. To do this, you should:
- Determine goals
- Create a company scorecard
- Create team scorecards
Finally, it’s important to identify opportunities within each of the five stages of actionable metrics. Ask questions about each stage, including but not limited to the following:
Acquisition: What marketing channels drive users to onboard at higher rates? What are the paths that people take during the signup process?
Activation: How are people converting during the onboarding process? What are the sections of the product that influence people to onboard or drop off?
Revenue: How many people upgrade without finishing the onboarding process? What are the most used features before upgrading to a paid plan?
Retention: What is the difference in actions between onboarded users that return and those that churn? What are the engagement movements among active users?
Referral: How many accounts invited a second user to join? What is the influence of emails on getting second users to join?
To view the entire webinar I hosted with Claudiu Murariu and learn more about how a framework of metrics can fuel your company’s growth, click here.