Why Most SaaS Businesses are Chasing the Wrong Metrics (And What to Do Instead)
In the SaaS industry, it’s common to develop an obsession with measuring and tracking everything. But some metrics are more important than others, and some just aren’t important at all. In a world of data science and analytics, we often believe that capturing all this data and information will somehow make it crystal clear to us what we need to do in order to be successful. But there’s so much information, and with that, a lot of fluff and filler.
Here’s how to free yourself from the digital clutter, and focus on what matters.
Pay Attention to Your KPIs
At the core of your marketing initiatives, there are going to be some metrics that you’ll want to focus on specifically — your Key Performance Indicators, or KPIs. These are the indicators that show how well your business is actually performing relative to the objectives you’re setting for yourself. In other words, these are like the lifeblood of your business that reflects its health and wellness in terms of growth.
It’s very common to think of KPIs as things like your keywords, clicks or even your search engine rankings. While although those look like they’re KPIs, they really aren’t. They’re not an honest measure of how well your business is doing and are more like a superficial “readout”, or a snapshot of your business at any given time.
Below are a couple examples of this:
Clicks vs. Leads
One of the biggest metrics that’s thrown at SaaS businesses is clicks. Clicks on your email links. Clicks on your website pages. Clicks on your social media ads. With clicks being thrown this way and that, it’s easy to think that clicks must surely matter and should be incorporated into your evaluation plan.
But it’s not just the person on the other side of the screen (or phone) that’s doing the clicking. Lots of things get counted as clicks that probably shouldn’t be. In addition, many times, people confuse clicks with leads. If someone clicked on your SaaS ad, saw that it wasn’t for them and left, would you consider them a lead? Not at all.
Now, with that being said, clicks are often mentioned as measurable metrics because they are important. But realize that clicks aren’t the be-all-end-all of SaaS marketing metrics. Competitors can click your ads (and your emails), and robots from various search engines and other automated programs can do the same.
Bounce Rates
Likewise, bounce rates don’t tell the full story of how “sticky” your site is. You could have a high bounce rate but solid customer retention. You could have a low bounce rate but struggle to capture user attention. Bounce rate is like having a single piece of a much larger puzzle. You need more information from the other KPIs in order to make a well-rounded marketing decision. Bounce rate, just like clicks alone, doesn’t tell the whole story.
Rankings vs. Revenues
This is another common metric that SaaS companies seem to fall in love with — and it’s understandable. After all, your ranking in search engines determines how many people find you and subsequently sign up. But you could have the top ranking in the search engines and still not make the money you’d hoped you would, occupying such a place.
It’s easy to get a little too carried away with search engine rankings instead of looking at revenue. A higher ranking in the search engine doesn’t always necessarily translate to making more money — it’s what you do with that traffic to get it to convert that matters. So although it’s easy to think of ranking as a success metric, it’s what you do with that success that ultimately matters.
What Metrics Should Your SaaS Concentrate On?
Of course, these are just some of the many metrics that your SaaS should concentrate on. It is by no means an exhaustive list, and despite the fact that many SaaS companies are based on the same core idea, at times they may need to concentrate on very different metrics as an accurate measure of their success.
Reach out to our senior advertising professionals at Workdom today and let’s talk more about the metrics your SaaS company should be measuring and how to start getting information on the metrics that matter to your bottom line.
Originally published at https://www.workdom.io on October 9, 2020.
