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In the fast paced world of SaaS marketing, CMOs are responsible for a lot of moving pieces. It isn’t as simple as creating compelling marketing strategies, getting buy-in from stakeholders and leading their teams to deliver—it’s also about proving the value of their efforts in multiple ways to justify budget allocation, hiring, and spend. This is where Key Performance Indicators, or KPIs, come into play. 

In this article, we'll explore why KPIs matter in SaaS marketing and outline a comprehensive list of marketing KPIs that every CMO should track to measure success. From Customer Acquisition Cost (CAC) to event attendance, we'll break down how each of these metrics can guide your marketing strategy and contribute to your SaaS company's growth.

What Is A KPI?

Key Performance Indicators, or KPIs, are quantifiable metrics that organizations use to evaluate their success in achieving specific business objectives across all marketing channels. 

Like when you’re sick, you take your temperature to see if you’re getting better, or worse! KPIs provide a clear, measurable way to track progress, identify areas for improvement, and make data-driven decisions. They help you understand what's working, what's not, and where you should allocate your marketing budget to achieve your goals.

Why KPIs matter In Marketing

KPIs play a pivotal role in marketing by providing a yardstick for measuring success. They are crucial in assessing the impact of digital marketing campaigns and ensuring that they yield tangible results. 

When the right KPIs are in place, they ensure that every marketing effort contributes meaningfully to the company's overarching success. 

Relying on intuition or assumptions isn’t always the best strategy. KPIs are the marketing metrics that offer critical data necessary for informed decision-making, allowing businesses to adapt and fine-tune their strategies as circumstances evolve. Additionally, KPIs instill accountability, both at the team and individual level, creating a clear benchmark against which the effectiveness of the marketing team can be measured. 

Let’s take a deeper look into the important KPI examples that hold particular relevance for CMOs in the SaaS industry.

KPIs Relevant To Marketing In SaaS

Customer Acquisition Cost (CAC)

CAC measures the cost incurred to acquire a new customer, or cost per lead. Lowering CAC is often a top priority for SaaS companies, as it directly impacts profitability.

A high CAC means that a substantial investment is needed to bring in each new customer, which can eat into profit margins, especially in the early stages of a SaaS company's growth. The average customer acquisition cost in the B2B SaaS world is $200!

Companies that can consistently acquire customers at a lower cost have a competitive advantage. They can either pass these savings on to customers in the form of lower prices or invest more in product development, marketing, or customer support.

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Lifetime Value of a Customer (LTV) or Customer Lifetime Value (CLV)

LTV, sometimes called CLV, estimates the total revenue a customer is expected to generate throughout their relationship with your company. It helps you determine how much you can invest in customer acquisition.

This is a great metric to compare to CAC. If your CAC is higher than your LTV, you’re spending way too much money to bring in customers.

For SaaS businesses, the benchmark to measure success for the LTV/CAC ratio is around 6:1.

Customer Retention

Customer retention is the cornerstone of long-term business success. While acquiring new customers is essential for growth, it's equally crucial to keep your existing customer base satisfied and loyal.

Loyal customers are not only more likely to make repeat purchases, but they also tend to spend more over time. This consistent revenue stream from loyal customers provides stability and predictability to your business, reducing its reliance on sporadic new customer acquisitions.

Return on Investment (ROI)

Marketing ROI calculates the profitability of your marketing campaigns by comparing the gain from the investment to the cost of the investment.

It provides valuable insights into the success or efficiency of an investment by quantifying the relationship between the gains obtained and the costs incurred.

It is determined by subtracting the total marketing expenses associated with a specific campaign from the sales growth or revenue generated as a direct result of that campaign. This difference is then divided by the total marketing cost.

Return on Ad Spend (ROAS)

ROAS specifically focuses on the performance of your advertising campaigns, helping you assess the effectiveness of your ad spend. It’s usually displayed as a ratio.

For example, if you make $10 for every $1 of ad spend, your ROAS is 10:1.

On average, a 4:1 ratio is a good measure of success.

Marketing Qualified Leads (MQL)

Plain and simple; MQLs are potential customers who have shown interest in your company.

They have engaged with your marketing efforts, such as visiting your website, downloading an ebook, signing up for a newsletter, or attending a webinar. MQLs are individuals or businesses that are in the early stages of the sales funnel, and they hold the potential to become paying customers, provided they receive the right nurturing and information.

MQLs are valuable because they represent a pool of prospects who have shown some level of engagement or interest, making them more likely to be receptive to further marketing and sales efforts. The marketing team's responsibility is to nurture these leads with relevant content and communication to move them closer to the point of conversion.

When compared to sales qualified leads (more on that next), the team can figure out how many of their MQLs become SQLs and finally, paying customers. 

Sales Qualified Leads (SQL)

Sales Qualified Leads are MQLs that have been further assessed and determined to be ready for conversion into paying customers by the sales team. This assessment involves evaluating factors like the lead's budget, authority, need, and timeline. SQLs are typically the leads that have progressed through the marketing funnel and are now considered "sales-ready."

The handoff from marketing to sales occurs at the SQL stage, where the sales team takes over to engage with these leads directly. Sales representatives can have meaningful conversations with SQLs, understand their specific needs, and present tailored solutions.

Follower Growth

On social media, tracking follower growth can help you gauge your brand's popularity and reach. Social media analytics software can help you track this.

Follower growth will increase your brand awareness and provide essential opportunities to engage with your audience. It's also quite common for brands with more followers to be more trusted on social media than those without.

One brand added 36x its usual followers per day during four days, in which it ran a set of sponsored posts on Instagram. That’s great to keep in mind for future efforts on ad spend!

Conversion Rate

Conversion rate measures the percentage of visitors who take a desired action, such as signing up for a trial or making a purchase.

For example, if the action you want potential customers to take when reaching your website is to fill out a form, but the conversation rate is low, you’ll need to reevaluate strategy on the landing page.

The top SaaS businesses often aim at a conversion rate higher than 10%.

You’ll also want to tie bounce rate into this number as well. Track how many times your website is opened and then immediately closed, indicating that the user didn’t immediately feel satisfied with what they saw. If that number is high, it’s another reason to reevaluate strategy.

In email marketing, a conversation rate to look out for is the email open rate. If your customer’s aren’t opening your emails, add a snappy subject line!

Website Visitors

Monitoring the number of visitors to your website is fundamental to understanding the reach of your online presence. It can also track the success of several campaigns at once. 

For example, tracking organic website traffic will measure the success of your SEO, while tracking website visits via social media will measure the success of your social media campaigns. 

Through marketing analytics tools like Google Analytics, you can segment your visitors based on various criteria like demographics, location, referral source, and more. This segmentation enables you to tailor your marketing messages and content to different audience segments, improving engagement and conversion rates!

Organic Traffic

Organic traffic tracks individuals who stumble upon your site naturally, primarily by using search engines like Google.

This form of traffic is fundamentally different from paid methods like advertising, where you spend money to attract visitors. Instead, organic traffic is a testament to the quality and relevance of your content and the effectiveness of your search engine optimization (SEO) efforts.

A good benchmark to keep in mind is a 10% growth of organic traffic month-over-month.

Referral Traffic

Referral traffic is a valuable way to track website visitors. It represents the outcome of links placed on other websites that guide users to your site. These links manifest in various formats, such as clickable hyperlinks strategically embedded within articles, blog posts, or social media content.

This traffic source is a testament to the interconnected nature of the internet and the way information spreads across various online platforms.

It also provides insights into your online marketing efforts. By monitoring the sources using dedicated digital marketing software, you can identify which websites, blogs, or social media channels are sending you the most visitors. This information can help you refine your digital marketing strategy, focusing more on platforms and partners that generate valuable traffic.

Social Media Engagement

Engagement metrics on social media platforms help measure the effectiveness of your social media marketing campaigns.

Social media KPIs such as likes, shares, comments, and click-through rates, are all important. Any way a customer interacts with you online counts as engagement! Alongside the social media analytics software we mentioned above, you can also use social listening tools to track this.

If your engagement rate is high, your customers are tapped in and actively participating with you online. If you’re getting a lot of unsubscribes or unfollows, that’s something to investigate.

When running ads on social media, you can track your click through rate, or CTR. It is the number of clicks that your ad receives divided by the number of times your ad is shown: clicks ÷ impressions = CTR. For example, if you had 10 clicks and 100 impressions, then your CTR would be 10%. The higher this number, the better!

Net Promoter Score (NPS)

NPS measures customer satisfaction and loyalty by asking customers how likely they are to recommend your product or service to others, on a scale of 1-10.

The 2023 NPS Benchmark for B2B technology and services is 64.

When you add this form into your website or email follow ups, be sure to leave space for customers to put their written comments. This will give you direct insights that you can use to improve! 

Event Attendance

For SaaS companies hosting or participating in industry events as a part of their content marketing strategy, tracking attendance and engagement can help assess the impact of these activities.

For virtual events, attendance is around 40-60%. The average no-show rate for paid events is 10%, while free events could have rates of up to 50% or more!

You’ll also want to have a way to contact the individuals that came to the event so you can follow a post-event sales funnel.

Keeping Up Performance

Your success hinges on the ability to adapt, innovate, and prove the value of your efforts. CMOs play a critical role in orchestrating business goals, and the North Star in your marketing activities need to be your KPIs.

Marketing key performance indicators ensure that every marketing investment you make contributes meaningfully to your company's overarching success. In an era where intuition and assumptions can only take you so far, these metrics provide the empirical data necessary for strategic navigation so track them diligently in a KPI dashboard.

Marketing dashboards are key to tracking how your team is progressing towards their KPI goals. Additionally, the visualizations are great to bring to your shareholders as proof of growth. They instill accountability, fostering a culture where every team member can gauge their performance against clear benchmarks.

As you set off on your marketing endeavors, remember, your success lies in the numbers, your compass is the KPIs, and the course is yours to chart. Don’t forget to subscribe to The CMO newsletter for the latest marketing trends straight to your inbox!

By Melissa Glazar

Melissa specializes in growth marketing and digital marketing. With experience at small to medium sized companies, she has driven social media growth, optimized a sales funnel to work with overall company marketing efforts, and seen enough KPIs to make your head spin. She’s excited to bring her knowledge to you, and knows you’ll find it valuable!