As someone who is leading a B2B SaaS company with a great product, what keeps you up at night? What’s the trouble?
- Is adding more SDRs not helping the revenue growth?
- Spending huge $$$$$$$ on the event booths without generating much interest?
- Losing customers faster than acquiring them?
- Is marketing not impacting the revenue numbers?
- or something similar that’s not getting out of your way to grow your SaaS company?
I’ve been working with B2B SaaS companies for the major part of my life at Openthrive, and one thing is clear —- there are a lot of myths and confusions in the industry that hold companies back from growing faster. There could be 50+ performance indicators that you can track. But what matters the most are only and only three of those that I’ll discuss with you in this short piece.
All your brand-building, marketing, sales, and support must be built around these 3 B2B SaaS metrics.
Before getting into the mud, let me lay out the simple context of customer lifecycle management.
Impact Of Customer Lifecycle Management On SaaS Revenue
A customer comes into existence for your business way before it becomes a customer. You’re a SaaS leader, and I am 101% sure that you already know about the lifecycle this customer would go through with your product. So let’s focus only on the $$$$$ that you give away or make during the lifecycle of this customer.
Money spent — on all the branding and reputational activities
Money spent —- on marketing on omnichannel
Money spent —- on hiring SDRs for outbound
Money spent —- on hiring a marketing agency for all activities (or an in-house marketing team)
Money spent —- on paid campaigns on Google, LinkedIn, YouTube etc
Money spent —- on finally acquiring the customer AND onboarding them on your platform
Money made —- from the subscription that the customer is paying for
Money spent —- on retaining the customer for the long term
100% money lost —- when the customer stops using your platform and moves to a competitor
Back to square 1.
Your revenue team’s goal should be this: Over a period of 1 year or 2 years, the total money you spend during a customer’s lifecycle with your product, should be reduced lower than what the customer brings during its lifetime.
If this doesn’t happen, you lose, even if the product is the best in the industry.
Having established that, let’s move to the main performance indicators you need to focus on because that would drive your marketing and sales and everything around it.
The Only 3 B2B SaaS Metrics For Revenue Growth
Marketing is funny. There are definitions of all sorts. But in B2B SaaS, marketing specifically doesn’t mean that you’ve to be popular in the whole world. Marketing helps you stay top of mind of your target accounts + hold their trust in you for the long term + have customers who are not looking for options ever again.
To build that kind of system, we have a structured approach at Openthrive. (Need to discuss it? Let’s talk)
So, to support the kind of marketing that B2B SaaS actually needs and deserves, here are the 3 KPIs that you must build your business around:
1. Customer Acquisition Cost
CAC is the total money spent acquiring one customer. It includes strategic engagement on all your channels, the technology cost, advertising budgets, and other assets you’re building and using for this acquisition. The goal is to reduce this as much as possible. And the best part about this one is that it is in your control.
Quite a lot of SaaS companies wrongly implement the CAC reduction by removing their marketing team from the picture. That’s not a solution.
The answer lies in optimization.
Build your GTM Engine so strong that you don’t waste a dollar on the people who would never become your customers.
Your funnels and flows decide the path these people will take to become your customers. And they also organize the way you treat them in your ecosystem. The experience they get can either pull them in or push them away.
Is your website proving to them that you’re not the modern solution they’re looking for? Revamp it. Better strategy and messaging that talks like a human to them.
Track all your touchpoints and see where these people are dropping off. Make it better.
2. Retention Rate
You can get free signups or even your custom enterprise signups at first. And what happens next will define whether these signups will stay alive or drop dead.
Retention. Most SaaS companies focus so much on new customer acquisition that they don’t really focus on the art of building deeper relationships and keeping the sweet customers they already have at home.
To retain SaaS customers in the long run, you need to focus on customer experience and engagement.
Marketing’s job is not done when the deal is closed. Marketing’s job is never fully done, in fact.
Your customers have come to you to solve a certain problem or to achieve a certain goal. If your GTM engine is done right, if your funnels & flows, and your content strategy is done right, you will be able to give a great experience to your customers by having your marketing team engage with them every step of the way.
And whatever the Marketing team does, will be only to support your customer’s goals.
Why in the world would they ever leave you? They won’t.
This takes an investment of deep effort, time, and money. But this is exactly where you can create the opportunity to upgrade your customers to a larger deal size. Because they trust you and love you.
Side note: When we work with SaaS companies on their retention part, we also focus on the product experience you provide. Because anything minor could turn people off easily, and you don’t want to do that to yourself.
3. Churn Rate
That turn-off leads us to the deadly word —- CHURN.
You don’t want to deal with this monster. But it deserves your attention.
When SaaS marketing teams lose focus during their retention strategy implementation, the churn rate goes high.
Answer me this —- What would you do if tomorrow there’s another company doing 100% exactly the same thing, right next to you? How would you differentiate?
If your GTM Engine is built on strong grounds, you will not bother about this ditto competitor. Your customers would love your product for a reason, and that differentiation would hold them to you. Even for a higher price, they would stay.
You miss on that, they churn.
How About Excelling At These?
If you master these 3 B2B SaaS metrics, all the rest will build around it.
If you’re an energetic individual personally, whose mind travels faster than light, I’m assuming you might be bustling with a lot of ideas right now.
And that’s great.
Now, here’s a disclaimer —- Do not abandon other SaaS metrics that your team runs on. But when you build these 3 KPIs strong enough and keep improving on them, you will see better results on the others as well.