As a SaaS founder, it can be overwhelming to navigate the myriad of saas metrics available to track the performance of your business.
Venture capitalists, private equity investors, and even your team members may all emphasize different metrics, leaving you wondering which ones truly matter.
In this article, a seasoned SaaS expert Khadin Akbar with 9 years of experience shares the three key metrics that can provide clarity and guide you toward accelerated growth for your SaaS business.
Metric #1: Lead Conversion Rate
The first metric emphasized is the percentage of people who find out about your SaaS product and then become a lead or trial user.
This conversion rate, typically ranging from 10% to 20%, is crucial because it indicates whether you are attracting the right target audience and if your messaging is resonating with them.
If this conversion rate is low, it could signal issues with your ideal customer profile (ICP) or the effectiveness of your marketing efforts.
Monitoring this metric can help you identify and address any problems in the early stages of the funnel.
Also Read: Promote Your Saas for Free Using Facebook | Quick Sales
Metric #2: Opportunity Conversion Rate
The second metric is the percentage of leads that then become real sales opportunities or activated trials.
This 10% benchmark suggests that the leads you’re generating are genuinely interested in your solution and are willing to engage more deeply.
If this conversion rate is low, it could mean that your lead generation efforts are not effectively qualifying the right prospects, or that your sales process or product onboarding needs improvement.
Metric #3: Revenue Conversion Rate
The third and most crucial metric is the percentage of sales opportunities or activated trials that ultimately convert to revenue.
While this can vary based on factors like your sales cycle and ICP, a general benchmark is around 20%.
If this revenue conversion rate is low, it could indicate issues with your sales process, pricing, or the fit between your product and your target market.
Addressing this metric is essential, as revenue is the ultimate measure of success for any SaaS business.
These metrics are useful in keeping you away from the biggest saas mistakes that can be hindrances to your saas growth.
Implementing an Unstoppable Sales Funnel
To positively impact these three metrics, the expert recommends implementing an “Unstoppable Sales Funnel” that consists of three key elements:
1. Ideal Customer Profile (ICP): Clearly define your target audience and ensure your marketing and sales efforts are aligned with their needs.
2. Manifesto: Crafting a compelling message that resonates with your ICP and effectively communicates the value of your SaaS product.
3. Broadway Show: Developing a consistent set of sales and marketing activities to consistently bring your manifesto to your ICP.
By focusing on these three elements and continuously monitoring the three key metrics, SaaS founders can make informed decisions, iterate on their strategies, and accelerate the growth of their businesses.
Also Read: Top 7 Benefits of Saas Sales Outsourcing | Reasons
Conclusion
The three metrics highlighted – lead conversion rate, opportunity conversion rate, and revenue conversion rate – provide a powerful framework for SaaS founders to assess the health and performance of their businesses.
By understanding these metrics and implementing an Unstoppable Sales Funnel, you can make data-driven decisions, address issues at the root cause, and ultimately achieve sustainable growth for your SaaS company.