Metrics

Funnel Metrics for SaaS Marketers

Funnel Metrics for SaaS Marketers
Illustration by Luc Chaissac
By Alex Kracov
ex- VP of Marketing at Lattice
Scaled Lattice from seed to 2,000+ customers like Slack and Postmates.

The following post provides a framework for how SaaS marketers should think about metrics across the funnel. 

The Funnel

The best way to think about marketing metrics is by mapping metrics to each stage of the marketing funnel.

SaaS Funnel Metrics


Awareness

The first step is to get your name out there in the world. If people don’t know about you, nobody is going to buy your product. 

Key Metrics:

  • Website visits: The number of people who visit your website. Importantly, the number of website visitors is relative based on market size and search volume. 
  • Digital Impressions: The number of people who see your ads, content, brand, watch videos, etc. across all of the platforms. 
  • Digital Engagement:  The number of people who take an action on various networks (watching a video, like a tweet, etc.)
  • Email Opens: The number of people who open your emails.

Generally speaking, this stage is least important from a metrics standpoint as it’s furthest from the business metrics that matter ($$). It’s also a trap stage. Too many marketers spend their time reporting on awareness metrics. Instead, they should focus more on down-funnel metrics like MQLs and Pipeline. 

Interest

The next step is to get someone to take action and track those interactions. This means getting someone to give their email in exchange for something like an e-book, event, newsletter, quiz, etc.

Key Metrics:

  • Touchpoints: higher-level actions (similar to the concept of a lead). For example, a Touchpoint would count when a prospect downloaded an ebook, not when you send them an email. The concept of touchpoints scales as prospects start to take action multiple times.
  • Leads: The number of opt-in emails you acquire. The traditional marketing metrics for this stage. 

Consideration

Marketers need to turn the interest around the company into getting a prospect to think about using the product. This stage typically starts with a free trial sign up or demo request, which kickoff the sales conversation. 

Key Metrics:

Marketing Qualified Leads (MQLs)

MQLs are leads that the marketing team (in partnership with sales) has defined as worthy of a sales conversation. These leads are sent over to the sales team for further qualification.  Depending on your business model, you’ll have different definitions and sources of these MQLs, but here’s how to think about MQLs:

  • Demos MQLs: Leads from “Demo Request” 
  • Product MQLs: Leads who sign up for free trials
  • Lead Score MQLs: Leads who have taken enough action that you think they are ready for sales. 

Importantly, there are often rules layered on top of MQLs to make sure they meet the sales team’s qualifications. These rules are usually based on firmographic and demographic details like geography, industry, company size, title of the prospect and more. The behavioral criteria combined with these rules determine the definition of an MQL.

Meetings

The next step from an MQL or outbound sales conversation is to set up a meeting. There’s oftentimes an intro meeting and then a proper demo meeting, but every company has their own unique sales process. Regardless, it’s important for you to track the number of meetings that are happening each month. 

Intent

Now, the sales team will determine whether a prospect is really interested in buying the product. If the buyer meets the requirements, then they will become a Sales Qualified Lead (SQL) or Opportunity. Every organization has their own rules, but it generally means that the SQL wants to make a purchasing decision in the near future.

It’s important for marketing teams to track the number of these opportunities. But more importantly, the overall dollar value of these opportunities. This is called Pipeline. 

Pipeline is the most important metric for SaaS marketing teams. Pipeline assigns a dollar value to marketing activities which brings the metric closer to the ultimate goal: revenue. Pipeline shows how marketing is making an impact on business objectives and supporting the sales team. Pipeline is the metric that the board will want to hear about. 

Key Metrics:

  • Pipeline: the amount of potential revenue from all the deals in the opportunity stage.
  • Opportunities: Sales qualified leads (SQLs). The sales rep believes the prospect is qualified and there’s a good chance that they will become a customer. 

Evaluation

In the evaluation stage, the sales team takes over and the marketing team plays a supporting role.

There’s no major marketing metrics to track during this stage. Advanced marketing teams start to track campaign engagement (ex.are they attending our prospect dinner?) and what resources the prospect is engaging with to support the sales rep.

Purchase

The prospect agrees to become a customer. Yay!

Key Metrics:

  • New Logo ARR: amount of revenue booked from new logo deals in a given period
  • New Logo #: The number of new accounts in a given period.
  • ACV: Average contract value

Customer

Marketing teams need to support the product and CX team in making sure the customers are happy and they will renew their subscription. 

Key Metrics:

  • NPS: net promoter score, how likely customers will recommend a company to their friend
  • Product Usage: the amount customers are using the product (metrics vary by product) 
  • Logo & Dollar Retention: the number of customers you retain, the amount of revenue per customer you retain. A good logo retention is around ~85%, but dollar retention should be greater than 100%+ (customers spend more with you over time).
  • Upsell & Expansion Revenue: the amount of incremental revenue you get from customers buying new products, adding more seats, and/or consuming more product.

In the early stages of a company, marketing teams are focused more on driving more new logo business. But as the customer base expands the team’s focus transitions to retention/upsell revenue.

Advocacy

Marketing teams need to amplify happy customers and their stories. There’s no single way to measure customer advocacy, so companies will often take a variety of inputs to create a customer advocacy score. 

Metrics to include in customer advocacy score:

  • Reviews: customer reviews on platforms like G2 and Capterra
  • Case Studies: participation in a written or video case study
  • Referrals:  frequency of customer in sales referral calls
  • Campaign Participation: how often the customer joins marketing events, downloads content, etc. 
  • Speaker: whether the customer has spoken at your events or webinars

Funnel rates

One of the most important ways to understand the business is through the different rates across the funnel. The number of people who move between each step that we just walked through above. 

Touchpoint > Demo > Meeting > SQL > Closed Won

Key rates:

Web Visit to Demo: the rate that people who visit your website request a demo

MQL to Meeting: the rate at which people who request a demo book a meeting

MQL to SQL: the rate sales accepts leads from marketing

Close Rate: the rate sales closes opportunities

MQL to Closed: the percentage of MQLs that close

Once you understand the funnel rates, you can predictably scale the entire go-to-market engine. You’re able to understand how much revenue you can drive as you add more prospects into the funnel.


Putting the funnel together

Here’s what the metrics and their stages look like in a simple model from Interest to Purchase.


Simple SaaS Funnel Model


Funnel Analysis Tips

As you start to analyze your funnel, here’s a few things to keep in mind:

Measure by segments

Look at your data by different segments. At Lattice, we analyzed our segments by company size. The performance of segments can vary widely. SMB sales cycles are very different from ENT sales. As a result, it’s important that you measure everything by segment to really understand what’s going on in the business.

View by cohort

Track how groups move through the funnel, rather than in aggregate. For example, the MQLs that came in during March. How many of those MQLs turned into SQLs and Deals? This will give you a sense of how your funnel rates are changing over time. 

Rates change over time

When you take a snapshot of your overall funnel, remember that many of the prospects are still moving through the funnel. Make sure you take snapshots of a mature funnel and understand how long it takes each segment to move through the funnel. 

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