SaaS Metrics Benchmarks: What You Need to Know

SaaS businesses rely on acquiring and keeping customers, which requires carefully balancing several metrics. These metrics must be optimized to create a scalable business; otherwise, you may run into severe problems, like spending more acquiring a customer than they generate before canceling. 

Keep reading to learn more about important SaaS metrics and how real-time peer benchmarking can help you gain an advantage.

Why Do SaaS Metric Benchmarks Matter?

Most SaaS businesses understand how essential it is to track, measure and enhance KPIs to build a business ready to grow. Additionally, many businesses benchmark the results of a given campaign against their own historical performance to determine its success.

However, many organizations overlook the value of competitor benchmarking in the entire process. Real-time peer benchmarking from Varos grants insights into the KPIs of other SaaS companies within your specific industry.

Understanding how others in your industry are performing allows you to stay aware of overall industry trends, areas you can improve, and what you’re doing well.

Crucial SaaS B2B Metrics to Track and Analyze

There are arguably dozens of metrics for a SaaS business to track, analyze, and improve. However, many of those metrics are related to KPIs that more directly relate to acquiring and keeping customers. 

Let’s explore the most critical metrics that are necessary to build a genuinely scalable marketing campaign.

1. Conversion Rates

Conversion rates describe the percentage of visitors that reach your website who sign up for your SaaS platform. The higher your conversion rate, the more successful your marketing effects are. 

SaaS conversion benchmarks help you understand your performance in relation to other SaaS businesses in your industry. Below, you can see how Varos provides real-time benchmarks for SaaS platforms using Facebook Ads.

If the above screenshot were for your company, you’d know you’re leading the pack and can focus on maintaining your lead rather than making significant changes to try to catch up.

2. Churn Rates

Churn rates describe how many users are lost for the given period. Your churn rate is helpful on its own as an indicator of your platform and overall customer experience, but it’s also valuable in projecting future growth.

Using a SaaS churn benchmark that considers more than your past results keeps your churn rates in the context of your industry. For example, you might think your churn rate is too high, but churn benchmarks might show that you’re within the normal range compared to your peers.

A low churn rate, high conversion rate, and growing annual recurring revenue lay the foundation for a successful and scalable business. However, if you’re not retaining customers, all other efforts will fail to properly grow your business.

3. Annual Recurring Revenue

SaaS businesses depend on acquiring and retaining customers. Unlike other businesses focusing on annual revenue, a SaaS business focuses on annual recurring revenue (ARR).

ARR establishes a baseline intending to increase revenue as the years' progress. If your conversion rates are high and churn rates are low, you’ve set the stage for sustainable growth. This growth will be reflected in the percentage growth of your ARR year-over-year.

Positive growth indicates what you’re doing is working and can help secure investments or launch an IPO as your business grows.

4. Customer Acquisition Cost

Customer acquisition cost (CAQ) describes the average cost of new conversion. Most businesses track CAQ, but it’s crucial for SaaS companies to carefully measure and improve in the context of other metrics.

For example, a high CAQ combined with a high churn rate means you’re spending a lot for customers that are not being retailed.

Benchmarking industry CAQ metrics give you the entire context of your own results. For example, you might think your CAQ is too high, but industry benchmarks demonstrate that you spend less than your peers. Then, you can evaluate if spending more to earn customers might improve your ARR or conversion rates.

How to Use Competitor Benchmarking to Scale

Using industry-specific SaaS marketing benchmarks to guide your decisions allows you to create a business model ready for growth. Unlike other types of businesses, a SaaS business isn’t relying on continually making one-off sales but acquiring and retaining customers for as long as possible.

Varos built specific features for SaaS businesses to equip them with more data to make tactful decisions. Let’s review how our benchmarks can help you scale:

• Evaluate the effectiveness of specific paid ad campaigns compared to other SaaS businesses using the same advertising platform.
• Understand if your churn rate is within a normal range, even if it may seem high on its own, to avoid making the wrong assumptions about your loss of customers.
• Maximize your efforts by balancing your KPIs to create cost-effective customer acquisitions, lower churn rates, and create a growing ARR.

Your off-site and on-site marketing efforts are the overall focus to balance these metrics and create a scalable. Ultimately, Varos gives you real-time benchmarking to help you understand if your results are average, lagging behind, or leading the pack.

Team Up with Varos to Unlock True Data-Driven Decisions

SaaS benchmarking shouldn’t only focus on your past results but also consider overall industry performance. Otherwise, you’re making decisions in a vacuum while remaining unaware of how the rest of your industry is doing.

Fortunately, Varos allows you to break your benchmarking practices out of the vacuum and understand the entire context behind your results. Below, you can see how our platform shows the entire SaaS market’s Google Ads results. So how do you stack up?

Is your business ready to use comprehensive industry data to drive future decisions? Sign up today or reach out to us for a demo to see how our platform can help.

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About the Author

Yarden Shaked

Co-founder & CEO at Varos

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