How to Understand the Health of Your B2B SaaS Business
The SaaS industry has seen exponential growth in recent years. It is one of the fastest-growing markets in the world worth USD 143.77 billion in 2021. According to Skyquestt’s forecast, the global SaaS industry will be worth USD 720.44 Billion by 2028.
If you are a B2B SaaS company owner, the future holds exciting opportunities for phenomenal growth. With that, the market is bound to get more competitive and you don’t want to land at the bottom of ladder.
To ensure sustainable growth for your company, it is vital to define the relevant B2B SaaS metrics and closely monitor them to measure the health of your business.
In this post, I will discuss the 5 essential metrics you need to keep an eye on to ensure your B2B SaaS is on the growth trajectory.
Let’s get rolling.
5 Important B2B SaaS Metrics You Should Watch Out for
Here is a quick look at the 5 metrics you need to monitor to measure your B2B SaaS company’s health and improve it.
1. CAC – Customer Acquisition Cost
Acquiring new customers is fundamental to your business growth and Customer Acquisition Cost is an important metric to quantify your growth.
CAC refers to the average cost of gaining a new customer for your B2B business. CAC is calculated by dividing the cumulative sales and marketing expenses in a given period by the number of new customers you gained.
Measuring this metric will help you to understand whether the revenue you are generating is worth the amount you are spending on marketing efforts to gain new buyers.
Use the right types of CRM software to manage and keep minimum customer cost in the optimization process.
2. MRR and ARR – Monthly Recurring Revenue and Annual Recurring Revenue
The next metric that you need to monitor to measure the financial status of your business is Monthly Recurring Revenue and Annual Recurring Revenue.
MMR is the estimated revenue your business may earn from monthly subscription billing. You also need to take into consideration the revenue from recurring ad-ons, discounts, and coupons. ARR, on the other hand, is the yearly recurring revenue generated by your business.
And if your MRR and ARR are healthy or increasing, then you can conclude that your business is growing.
3. NPS – Net Promoter Score
As a business, your aim is not only B2B SaaS lead generation but also to ensure customer satisfaction. Net Promoter Score is a metric that measures customer satisfaction by means of customer surveys.
These surveys consist of a variety of questions asking your customers to rate your business and services on a scale of 1 to 10. NPS helps you to understand the sentiments of your customers, their challenges, and how likely are they to recommend your SaaS to others.
By understanding what makes your customers happy, you can work towards improving customer experience and retaining them for a longer time.
4. CLV – Customer Lifetime Value
When you acquire new customers, your aim is to turn them into loyal customers who will do business with you for a long period of time. To boost customer loyalty, you provide them discounts, exclusive offers, access to new features, and so on.
Let’s say your SaaS is an ecommerce platform. You can allow your loyal customers to create shoppable videos for free and thus win their trust. All such efforts positively influence the revenue they generate for you over a long period of time.
Customer Lifetime Value is an important metric that represents the revenue a customer generates for you over a long period of time. Retaining such clients is far more beneficial for you than going after new ones.
5. CCR – Customer Churn Rate
What does churn rate mean for a B2B SaaS company? It is the rate at which clients are stopping doing business with you. While these numbers can be quite depressing, it is necessary to keep an eye on CCR to measure the rate at which your customers are leaving you.
Analyzing this metric will help you understand the reasons for customer churn and how you can restructure your customer retention strategy to keep them satisfied for a longer period of time.
Wrapping It Up
These and several other B2B SaaS metrics can help you successfully understand the financial health of your business. The insights that you derive by analyzing these metrics are accurate and valuable.
They help you to better understand your customer expectations and customize your product bundles and pricing packages to retain more customers to ensure sustainable growth.
Based on the B2B SaaS you offer, go ahead and define the metrics that are most relevant to you and actively work towards establishing a successful future for your business.
Author Bio – Reena Aggarwal
Reena is Director of Operations and Sales at Attrock, a result-driven digital marketing company. With 10+ years of sales and operations experience in the field of e-commerce and digital marketing, she is quite an industry expert. She is a people person and considers the human resources as the most valuable asset of a company. In her free time, you would find her spending quality time with her brilliant, almost teenage daughter and watching her grow in this digital, fast-paced era.
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