5 Key business metrics for SaaS business
I've read a lot about business metrics and I could leave only 5 most important from them. It's as cost of customer acquisition, monthly recurring revenue, churn rate, average revenue per customer and lifetime value.
What product metrics usually are observed
Marketing specialists usually view at google analytics metrics such as number of visitors, depth of site visit, time on site, number of registered users etc. The point is that if you have betters metrics than you'll definitely have better business metrics. But, it's wrong.
These metrics are bullshit
They don't give you any information about real situation in your project. User can sign up and never return again. For instance Linkedin reported number of registered users and it's a good example of bullshit metrics.
For many kinds of online businesses -- collaborative, SaaS, media, game, mobile app -- the One Metric That Matters is similar: ENGAGEMENT
Engagement numbers are critical: daily active users, monthly active users.
In these businesses, revenues are generally a function of engagement. If you engage your users well than you'll definitely be in a good position.
The exception is transaction-based businesses. So, revenue is almost always a function of active users, it's true.
So, you should track engagement vs other metrics and of course in a right slice of people not sessions, pageviews or visits.
Try bitscup analytical tools for free. In the next post we'll discuss what is the right cohort report you should have
We all know some basic business metrics as cost of customer acquisition, monthly recurring revenue, churn rate, average revenue per customer and lifetime value. But it's resulting metrics, means that you get it and understand that your business is going good or bad. It's like a bird's view, not a lot information, but still very crucial.
What you should track to have more control and understand more your business
Dave McClure has such metrics called AARRR, Acquisition, Activation, Retention, Referral and Revenue. I love Dave for such simple model and even more, its simplicity gives you more power. I think we could make even easier and throw away Referral, for lot of SaaS-business it could be not so crucial not to have a significant amount of viral users.
How to track it easy
You just need simple web analytics to measure conversions of your landing pages. Measure conversions of your key actions. Google analytics gives you track events. It's boring to add code each time and to search for all settings in GA. You can use Bitscup to set up its easily and see conversions measured for each of your users individually.
You can use People report in Bitscup to see how many returning users you have and what they've done.
You can create events such as 'bought something' and add properties for them - value of purchase. You'll see total revenue for all events, number of events per user, average check and trend for desired period.
That's all you don't need to be a PhD in Google Analytics, it's not a rocket science it's really simple math, everyone could figure out.
Many companies say we are data driven, they collect a lot of data but they are not still data driven. Having a lot of data not an advantage by itself. Let me explain how to collect meaningful data and make right decisions from it.
Every business has some key metrics to track. Let's assume these metrics are number of orders, number of reviews users read, number of recurring orders.
All these metrics are resulting metrics, you can offer better prices, better product or attract more visitors and you'll get these metrics increased. It's quite simplified model, but it's not simple at all, it doesn't give you any information on what exactly you need to do.
For what products you need to change prices, which visitors you need to attract more and what should be improved in your product. Yeah, quite complex problems to solve...((
Earn more understanding users behaviour
Knowing what your valuable users do, what is interesting to them give you a lot. But it's also important to visualize data right to see all dependencies. Which metrics are correlated, which are caused by others. A lot were written in the web about core business metrics, what you should track, how many reports you should have. Let me show you what reports we've done in our company and now it's a separate service, you can also use.
Really easy to use report, but very powerful at the same time. Let you make any sequence of events and see conversions between each step. Filter data by sources, campaigns.
It's a bird's-eye view on all your events and at the same time you can see dependencies between different events.
Set up events and properties in few clicks
We've always dream about web analytics without developer's help each time you need to add something. So, we've developed such tool, you only need once to paste code into your web-site and each time you need to change something you can do it with add events tool.
Try it free bitscup.com
I've been working as a product manager for at least 5 years and always I don't know all about my customers. Google Analytics is a very powerful tool used by majority to track visitors, to track events - gather statistics. But it isn't enough nowadays, especially due to it's integration inconvenience and routine each time you want to change something. Despite it's free, you will lose money in some way:
You need to add event tracking, customers variables, which are limited to 10 fields, build custom reports with a lot of drilldowns, quite sophisticated things. GA do not have heat map, ok, they have but it doesn't work oftenly and data are really poor, it based on some percent of data they stored. Yep, it's google and it should be quite reliable, but the reality is not so.
So, it didn't give more sense to me in researching the exact behavior of my customers. And I've found a quite good decision in kissmetrics.com or even better mixpanel.com with really awesome design. For those who do not know these services it's events based analytics which gathers data for real people not visitors as GA does. Fuck, I really hate GA?)
It's really helpful, but it takes a lot of time to add tracking each time I need to track something. Especially it's crucial when you have quite limited developers in your product, show me those who have a lot of dev resources ))) And, anyway, we are living in design age where nobody wants to dig in settings to set up something. On my view, set up should be easy. And as we see usually we have quite routine situations so it could be automatized.
We've been working with my friend, a great developer on the idea of easy setting up tracking tool which could be used by anyone. And the crucial point was - to make all set up without any developer )
A few months we've been working on the prototype and now we have bitscup.com - a new, reinvented approach to analytic tool as it should be.