Understand and track the main performance indicators of a CRM SaaS company

Introduction

The CRM SaaS business is a highly competitive industry and staying on top of the game requires clear analysis of customer behavior and performance. As a business owner, tracking key performance indicators (KPIs) is one of the best ways to measure your business growth and assess operational efficiency.

Here are the top seven KPIs SaaS CRM leaders use to measure customer engagement and success:

• Average customer acquisition cost
• Average Lifetime Value
• Average retention rate
• Monthly subscriber growth rate
• Lead conversion rate
• Net promoter score
• Customer Satisfaction Score

In this blog post, we will discuss how to track and calculate these KPIs and why they are essential for measuring the performance of your CRM SaaS business.

Average customer acquisition cost

Definition

Average Customer Acquisition Cost (ACAC) is a metric that measures the cost of convincing a customer to purchase a product or service. It is a business KPI that can be used to measure the effectiveness of marketing campaigns, advertising, and other sales activities.

Benefits of Tracking

• Identification of the most profitable marketing and sales channels to acquire new customers.
• Ensure your customer acquisition costs are in line with industry benchmarks.
• Evaluation of the performance of customer acquisition campaigns.

Industry Benchmarks

The average cost of customer acquisition varies widely across different industries, but some useful benchmarks include the following:

• Retail: – 5
• E-commerce: –
• Technology: – 0
• Financial Services: 0 – 0

How to calculate

To calculate ACAC, divide the total cost of customer acquisition by the total number of customers acquired. The formula is:

Calculation example

For example, if your company spent ,000 on marketing and sales activities and acquired 100 customers, your ACAC would be:

Tips and tricks

• Track ACAC over time to identify trends in customer acquisition costs.
• Compare your ACAC to industry benchmarks to ensure your customer acquisition costs are in line.
• Segments customers by the channel in which they were acquired to assess the effectiveness of different acquisition strategies.
• Focus on optimizing customer lifetime value (LTV) instead of just focusing on reducing ACAC.

Average Lifetime Value

Definition

Average lifetime value (LTV) is a key metric in customer relationship management (CRM) software as a service (SAAS) business. This is the total benefit of a customer’s overall relationship with the company. This metric helps in understanding the long-term value of the customer to the business and how to maximize it.

Benefits of Tracking

Average lifetime value is a useful metric for understanding the overall success of a business. By tracking the average lifetime value of customers, the company can identify which groups of customers are most profitable and which are not. This helps to optimize customer relationships, leading to increased customer loyalty and retention. Additionally, LTV tracking helps identify trends in customer spending, allowing a business to adjust its marketing strategies to capture more customers and increase revenue.

Industry Benchmarks

The average LTV for SaaS companies is typically between three and five times the cost of customer acquisition (CAC). This means that for every dollar spent on customer acquisition, the customer will generate three to five dollars in revenue for the business. It is important to note that these benchmarks may vary depending on the industry, the type of customer and the product or service offered.

How to calculate

Average lifetime value is calculated by dividing the total profit from a customer’s relationship with the company by the total number of customers. The formula is:

Calculation example

For example, if a SaaS company had a total profit of ,000 from 500 customers, the average lifetime value would be calculated as:

Tips and tricks for tracking this KPI

• It is important to track average lifetime value over time to identify trends and customer behaviors.
• Average lifetime value should be compared to the cost of acquiring customers to determine if the business is profitable.
• It is important to segment customers by their average lifetime value to identify the most profitable customer groups.
• It is important to track the average lifetime value of different customer groups to identify opportunities to increase customer loyalty.

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Average retention rate

Definition

The average retention rate is a key performance indicator (KPI) that measures the percentage of customers who stay with a company over a given period. This metric is important for a SAAS CRM business because it reflects customer loyalty and the company’s ability to retain them.

Benefits of Tracking

Tracking this KPI can provide businesses with valuable insights into customer loyalty, customer satisfaction, and customer lifetime value. It can also help businesses understand how successful their customer retention efforts are and identify areas where they can improve. Additionally, tracking this KPI can help companies gauge the success of their customer service initiatives and marketing campaigns.

Industry Benchmarks

The average retention rate across industries is between 70-80%. However, this varies by industry, company size, and other factors. It’s important to compare your company’s average retention rate to the industry benchmark to make sure you’re meeting industry standards.

How to calculate

The formula to calculate the average retention rate is:

Calculation example

For example, if a company had 50 customers at the start of the period and 40 customers at the end of the period, and 10 new customers were acquired during the period, the average retention rate would be calculated as follows:

Tips and tricks

• Track customer retention rates regularly to identify trends or changes.
• Set specific goals and targets for customer retention and track progress toward those goals.
• Analyze customer feedback to identify areas where customer satisfaction can be improved.
• Focus on customer service initiatives and marketing campaigns designed to improve customer loyalty and retention.

Monthly subscriber growth rate

Definition

Monthly subscriber growth rate is a key performance indicator (KPI) that measures the growth rate of a company’s subscription base over a period of time. It is calculated by comparing the number of new subscribers in a given month to the total number of subscribers in the previous month.

Benefits of Tracking

Tracking the monthly subscriber growth rate gives businesses an indication of how well their subscription-based services are performing. It also helps them identify potential areas of growth, as well as potential areas of difficulty. The KPI is also useful for making decisions about marketing and sales strategies, as well as measuring the success of existing strategies.

Industry Benchmarks

The industry benchmark for monthly subscriber growth rate varies by industry. Generally, a healthy growth rate is considered to be in the range of 10-15%.

How to calculate

The monthly subscriber growth rate is calculated by dividing the number of new subscribers in a given month by the total number of subscribers from the previous month. The formula is:

Calculation example

For example, if a company had 300 new subscribers in a given month and a total of 3,000 subscribers from the previous month, the monthly subscriber growth rate would be:

Tips and tricks the KPI

• Regularly track the monthly subscriber growth rate to better understand the rate at which your subscriber base is growing.
• Compare your monthly subscriber growth rate to industry benchmarks to see how your business is performing against others in your industry.
• Use this KPI to assess the effectiveness of marketing and sales strategies.

Lead conversion rate

Definition

Lead conversion rate is a business KPI metric that measures the percentage of leads that are converted into paying customers. It is calculated by dividing the number of leads that were converted into customers by the total number of leads. This metric is a useful indicator of the effectiveness of a company’s marketing efforts and sales process.

Benefits of Tracking

• Allows you to track the success of your marketing campaigns.
• Provides insight into how your sales process works.
• Helps you identify opportunities for improvement.

Industry Benchmarks

The average lead conversion rate varies by industry. Typically, the average lead conversion rate is between 2-5%. However, some industries have higher averages, such as software as a service (SAAS) companies, which can have conversion rates of up to 10%.

How to calculate

Calculation example

For example, if a SaaS business has 100 leads and 10 of them convert to customers, the lead conversion rate is 10%.

Tips and tricks

• Keep track of your leads in a CRM system to easily calculate your conversion rate.
• Analyze the data to identify areas that need improvement.
• Test different approaches to see which lead to higher conversion rates.

Net promoter score

Definition

Net Promoter Score (NPS) is a customer loyalty metric used by many SaaS companies to measure customer satisfaction and loyalty. This is a simple question that asks customers to rate the likelihood of recommending the service to a friend or colleague on a scale of 0 to 10. The score is calculated by subtracting the percentage of customers who respond with a score from 0 to 6 (detractors) compared to the percentage of customers who respond with a score from 9 to 10 (promoters).

Benefits of Tracking

Tracking the NPS metric provides valuable insight into customer loyalty and is a great way to measure the success of customer service initiatives. It can also be used to identify areas for improvement and track changes in customer satisfaction over time.

Industry Benchmarks

The average NPS score across all industries is 40. However, it can vary widely depending on the industry. For example, the software and services industry has an average NPS of 68.

How to calculate

The NPS score is calculated by subtracting the percentage of customers who respond with a score of 0-6 (detractors) from the percentage of customers who respond with a score of 9-10 (promoters).

Calculation example

For example, if you have 100 customers who responded to your survey and 25 of them responded with a score of 9 to 10 (promoters) and 15 of them responded with a score of 0 to 6 ( detractors), then the NPS would be calculated as follows:

Tips and tricks

• Use the NPS metric to measure customer satisfaction and loyalty.
• Be sure to track changes in NPs over time to identify areas for improvement.
• Compare your NPS score to industry benchmarks to gauge your performance.

Customer Satisfaction Score

Definition

Customer Satisfaction Score (CSS) is a metric used to measure customer satisfaction with a company’s products and services. It is calculated by collecting customer feedback on a scale of 0 to 10, with 10 being the highest level of satisfaction and 0 being the lowest. This score is used to gauge customer sentiment and get an overall picture of customer loyalty.

Benefits of Tracking

Tracking customer satisfaction score is beneficial for businesses as it helps them to keep ahead of customer needs and identify areas for improvement. By understanding customer sentiment, businesses can tailor their services and products to better meet customer expectations. Additionally, tracking customer satisfaction score can help companies identify customer trends and make informed decisions about their business.

Industry Benchmarks

The average customer satisfaction score across industries is 8.2 out of 10, with some industries scoring slightly higher. For example, the retail industry has an average customer satisfaction score of 8.5, while the software industry has an average score of 8.4. It’s important to keep in mind that customer satisfaction scores can vary by industry, so it’s important to compare your company’s score against the industry average.

How to calculate

The customer satisfaction score is calculated by collecting customer feedback on a scale of 0 to 10 and then averaging the responses. The formula to calculate the customer satisfaction score is as follows:

Or:

• Σ score: sum of all client scores
• N: Number of customers

Calculation example

For example, if you collected customer feedback from 10 customers, the customer satisfaction score can be calculated as follows:

Therefore, the customer satisfaction score for this example is 8.2 out of 10.

Tips and tricks

Here are some tips and tricks to help you track and calculate customer satisfaction scores:

• Make sure to collect customer feedback regularly and consistently.
• Consider using surveys or other customer feedback tools to collect customer feedback.
• Be sure to track customer feedback over time to identify changes or trends.
• Analyze customer feedback to identify areas for improvement.
• Engage with customers to understand their needs and expectations.

Conclusion

SAAS CRM companies require careful tracking of KPIs to measure customer engagement and success. The seven KPIs mentioned above, when tracked and calculated correctly, can give you valuable insight into customer behavior and help you gauge operational efficiency. With the right KPIs, your SAAS CRM business can maximize customer satisfaction and profitability.

Using these KPIs also helps identify potential areas for improvement, sets goals and objectives, and provides a clear picture of customer loyalty. To ensure the success of your business, regular monitoring and calculation of KPIs is essential.