Listen up, aspiring b2b product managers! If you want to be the creme de la creme, you’ve got to have a voracious appetite for information. But let’s not go overboard, folks — we don’t want you getting bloated on data overload! With all the technological wonders at our disposal, it’s easy to gorge ourselves silly on metrics. But don’t worry, I’m here to help you keep that SaaS product metrics diet in check. We’ll cut out the fluff and focus on the juiciest, most succulent metrics that’ll make your product sing. Trust me, your product strategy will thank you for it!
First Steps
When it comes to tracking and prioritizing metrics for a B2B SaaS product, there is no one-size-fits-all answer. The metrics you track will depend on your business goals, your product, and your target customers.
However, here are some general steps you can follow to help identify and prioritize the metrics that matter most for your B2B SaaS product:
- Identify your business goals: Start by identifying the overall goals of your business. What do you want to achieve? Are you looking to increase revenue, acquire new customers, retain existing customers, or something else?
- Identify your product goals: Next, identify the goals of your product. What problem does your product solve? What are the key features that differentiate your product from competitors? How can you measure the success of these features?
- Identify your target customers: Who are your target customers? What are their pain points? What are their priorities? How can you measure their satisfaction with your product?
- Identify relevant metrics: Based on your business goals, product goals, and target customers, identify the metrics that matter most. Some common metrics to consider include revenue, customer acquisition cost (CAC), customer lifetime value (CLV), churn rate, customer satisfaction (CSAT), and net promoter score (NPS).
- Prioritize the metrics: Once you have identified the relevant metrics, prioritize them based on their importance to your business goals and product goals. You may also want to consider the ease of tracking and the availability of data.
Product Lifecycle has different metrics
The key metrics for a SaaS B2B product can change depending on the maturity of the product and the stage of the product lifecycle. Here are some examples of how key metrics may differ across different stages of the SaaS B2B product lifecycle:
- Early stage: In the early stages of a SaaS B2B product, the focus is often on acquiring new customers and validating the product market fit. Key metrics may include customer acquisition cost (CAC), customer lifetime value (CLV), churn rate, and user engagement. Metrics related to product development and user feedback may also be important at this stage.
- Growth stage: In the growth stage, the focus is on scaling the business and increasing revenue. Key metrics may include monthly recurring revenue (MRR), annual recurring revenue (ARR), customer acquisition rate, and retention rate. Metrics related to customer satisfaction and user experience may also become more important at this stage.
- Mature stage: In the mature stage, the focus is on maintaining market share and continuing to drive revenue growth. Key metrics may include market share, net promoter score (NPS), customer satisfaction (CSAT), and product usage metrics. Metrics related to operational efficiency and cost control may also become more important at this stage.
It’s important to note that the specific key metrics for a SaaS B2B product will depend on the goals of the business and the product, as well as the industry and target customers. Additionally, metrics can overlap across different stages of the product lifecycle, and some metrics may remain important throughout the lifecycle of the product. It’s important to regularly evaluate and adjust the key metrics as the product and business evolve.
Few Examples
There are many B2B SaaS companies that have good product metrics practices. Here are a few examples of companies and some of the metrics they track:
- HubSpot: HubSpot is a leading marketing and sales platform that helps businesses attract, engage, and delight customers. HubSpot tracks a range of metrics, including customer acquisition cost (CAC), customer lifetime value (CLV), monthly recurring revenue (MRR), and churn rate. HubSpot also uses metrics related to user behavior, such as user engagement with different features, to inform product development and optimization.
- Salesforce: Salesforce is a cloud-based CRM platform that helps businesses manage customer relationships and sales processes. Salesforce tracks metrics such as customer acquisition cost (CAC), customer lifetime value (CLV), monthly recurring revenue (MRR), and net promoter score (NPS). Salesforce also uses metrics related to customer satisfaction and user experience, such as customer support response times and user feedback, to drive product development and improvements.
- Zoom: Zoom is a video conferencing platform that enables remote communication and collaboration. Zoom tracks metrics such as monthly active users (MAU), customer acquisition cost (CAC), churn rate, and net promoter score (NPS). Zoom also uses metrics related to user engagement, such as the number of meetings and minutes of use per user, to inform product development and feature optimization.
- Intercom: Intercom is a messaging and engagement platform that helps businesses communicate with customers and leads. Intercom tracks metrics such as monthly recurring revenue (MRR), customer acquisition cost (CAC), customer lifetime value (CLV), and churn rate. Intercom also uses metrics related to customer engagement and behavior, such as the number of messages sent and received, to inform product development and optimization.
- Intuit: Intuit is a financial software company that offers products such as QuickBooks, TurboTax, and Mint. Some core metrics that Intuit tracks include customer acquisition cost (CAC), customer lifetime value (CLV), monthly recurring revenue (MRR), churn rate, and net promoter score (NPS). Intuit also tracks metrics related to user engagement and satisfaction, such as the number of transactions and customer support response times.
- ServiceNow: ServiceNow is a cloud-based platform that offers IT service management, employee workflows, and customer service management. Core metrics that ServiceNow tracks include monthly recurring revenue (MRR), customer acquisition cost (CAC), customer lifetime value (CLV), and churn rate. ServiceNow also tracks metrics related to customer satisfaction and user engagement, such as the number of incidents resolved and customer support response times.
- Snowflake: Snowflake is a cloud-based data warehousing platform that enables businesses to store and analyze large amounts of data. Core metrics that Snowflake tracks include monthly recurring revenue (MRR), customer acquisition cost (CAC), customer lifetime value (CLV), and net promoter score (NPS). Snowflake also tracks metrics related to data usage and performance, such as the volume of data stored and query performance.
- Workday: Workday is a cloud-based HR and finance software company that offers products such as human capital management (HCM) and financial management. Core metrics that Workday tracks include customer acquisition cost (CAC), customer lifetime value (CLV), monthly recurring revenue (MRR), churn rate, and net promoter score (NPS). Workday also tracks metrics related to user engagement and satisfaction, such as the number of HCM transactions and customer support response times.
- Atlassian: Atlassian is a collaboration software company that offers products such as Jira, Confluence, and Trello. Core metrics that Atlassian tracks include monthly recurring revenue (MRR), customer acquisition cost (CAC), customer lifetime value (CLV), and churn rate. Atlassian also tracks metrics related to user engagement and satisfaction, such as the number of active users and user feedback.
- Autodesk: Autodesk is a software company that offers products for design, engineering, and construction industries. Core metrics that Autodesk tracks include monthly recurring revenue (MRR), customer acquisition cost (CAC), customer lifetime value (CLV), and churn rate. Autodesk also tracks metrics related to user engagement and satisfaction, such as the number of design projects and user feedback.
These companies are exemplary in their use of product metrics because they have a clear understanding of their business goals, target customers, and product offerings. They have identified the key metrics that matter most for their business, and they use these metrics to inform product development, marketing strategies, and business decisions. Additionally, they regularly evaluate and adjust their metrics as their business and product evolve, ensuring that they are always focused on driving meaningful outcomes and delivering value to their customers.
Industry Benchmarks
It’s difficult to provide average values for product metrics as they can vary widely depending on the specific company, industry, and stage of growth. Additionally, companies may have different benchmarks and goals for each metric, so what might be considered a good value for one company might not be relevant for another.
That being said, here are some general benchmarks for some of the metrics that are commonly tracked by B2B SaaS companies:
- Monthly Recurring Revenue (MRR): According to a survey conducted by OpenView Partners, the median MRR for early-stage SaaS companies (less than $10 million in ARR) is around $50,000, while the median MRR for more mature SaaS companies (over $10 million in ARR) is around $250,000.
- Customer Acquisition Cost (CAC): The ideal CAC varies depending on the product, industry, and company size, but as a general rule of thumb, the CAC should be lower than the Customer Lifetime Value (CLV) to ensure profitability. According to a study by OpenView Partners, the median CAC for SaaS companies is around $1,134.
- Customer Lifetime Value (CLV): According to a study by Harvard Business Review, the average CLV for a B2B SaaS company is around $50,000.
- Churn Rate: The ideal churn rate varies depending on the company and industry, but as a general rule of thumb, a churn rate of less than 5% per month is considered good for B2B SaaS companies.
- Net Promoter Score (NPS): The ideal NPS varies depending on the industry, but as a general rule of thumb, a score of 50 or higher is considered good for B2B SaaS companies.
It’s important to keep in mind that these are just general benchmarks and that each company’s goals and benchmarks may differ depending on their specific situation.
Recommendations
Based on the information provided, here are some recommendations for a B2B SaaS Chief Product Officer (CPO):
- Define and track key metrics: Identify the key metrics that are most relevant to your business, industry, and stage of growth, and track them regularly. Some common metrics for B2B SaaS companies include MRR, CAC, CLV, churn rate, and NPS.
- Set goals and benchmarks: Once you have identified your key metrics, set goals and benchmarks that align with your company’s strategy and growth plans. Use industry benchmarks as a starting point, but adjust them based on your specific situation and goals.
- Segment and analyze data: Slice and dice your metrics to gain deeper insights into customer behavior, product usage, and other key drivers of growth and retention. Analyze the data to identify trends, patterns, and areas for improvement.
- Prioritize product improvements: Use your metrics and data analysis to prioritize product improvements that will drive growth, reduce churn, and improve customer satisfaction. Prioritize improvements based on their potential impact and feasibility.
- Test and iterate: Test new product features, improvements, and pricing models to see what resonates best with your customers. Use A/B testing and other experimentation techniques to validate assumptions and make data-driven decisions.
- Communicate and collaborate: Communicate your product strategy, goals, and progress to the rest of the organization. Collaborate with other teams, such as sales, marketing, and customer success, to ensure that everyone is aligned and working towards common goals.
These recommendations are focused on using data and metrics to drive product strategy and growth, prioritizing improvements based on potential impact and feasibility, and collaborating with other teams to ensure alignment and common goals
