The success and growth of a SaaS company depend on a number of factors. While the effectiveness of the solution offered is a basic foundation, renewing the trust of customers and acquiring new market share is not easy. So how do you stand out in an ultra-competitive sector? How do you double your customer base? What are the performance indicators you need to monitor to adapt your communications strategy? Here's a detailed review.
What is a SaaS company?
A SaaS company specializes in publishing software hosted on a remote server. SaaS is an acronym for Software as a Service, meaning that the business develops, makes available and hosts applications on behalf of its customers.
SaaS software is not installed on on-site hardware, but can be accessed directly online, with data stored on external servers. These highly flexible solutions generally operate on a subscription basis. It's often easier for customers to subscribe to a SaaS offering than to make IT investments. But it's also very easy to end the contract and move on to the competition.
In such a context, it is imperative for SaaS companies to implement certain actions to gain visibility of the user experience, in order to work on growth drivers and new customer acquisition opportunities.
KPIs or key performance indicators to track
To differentiate yourself in the SaaS business world, engage new prospects and inspire existing customers to maintain or increase their level of engagement, you need to be able to accurately measure your performance. Many KPIs can be monitored for a SaaS company.
The conversion rate from visitors to leads and from leads to customers
This involves looking at the figures for monthly site visitors who leave their contact details via opt-ins (downloading an e-book, taking part in a webinar, subscribing to a newsletter...), then comparing this number of interactions with the number of actual new customers.
Churn or attrition rate
This is the number of customers lost over a given period (e.g. one month), divided by the number of customers at the very beginning of that period.
Monthly Recurring Revenue (MRR)
To find this revenue, the calculation takes into account new customers and growth with existing users. This sum is then reduced by the churn rate.
Customer acquisition cost (CAC)
It includes all expenses leading up to customer acquisition, i.e. marketing, business expenses, staff salaries... The cost of acquisition is divided by the number of new customers.
Long-term value or LTV (Long Time Value)
Long-term value is a sensitive factor, since it is difficult to predict how long a customer will maintain a subscription. A quick calculation of LTV is possible using one of the following formulas:
- Average MRR per customer divided by churn rate
- Average MRR per customer multiplied by customer subscription duration
LTV / CAC ratio
Calculating your LTV / CAC ratio enables you to measure the health of your SaaS business, and determine whether the actions you've taken are effectively ensuring the acquisition of new customers.
Inbound marketing: the right communication strategy for SaaS companies
By monitoring KPIs, we can improve customer support, prevent the spread of incidents and resolve any problems as quickly as possible, as well as adapting our communication strategy to direct our efforts in the right direction.
Inbound marketing is particularly well suited to SaaS companies, enabling them toattract visitors to the site, convert them into qualified leads, and then conclude the act of purchase, thanks in particular to :
- High-value-added content that addresses target issues and demonstrates expertise (blog, social networks, FAQ area, etc.).
- Information delivered free of charge with non-intrusive opt-in to collect contact addresses (e-book, webinar, newsletter...).
- Setting up automated e-mail sequences, advice and assistance during the trial offer.
But be careful not to neglect customer service afterwards, as maintaining the established relationship is essential in this highly competitive field. It's a good idea to carry out satisfaction surveys to boost your recommendation rate and turn your customers into ambassadors.
A SaaS company must always listen to its customers. That's what KPI research and inbound marketing are all about.