Key SaaS sales funnel metrics, like average sales cycle and conversion rates, reveal how effective your sales process is.
On a large scale, these metrics also indicate how well your business is doing. They can help you understand your customers’ needs and identify the areas you should focus on to accelerate growth. You’ll know what part of your sales process is working well, what’s not working, and the adjustments you need to make to produce better outcomes.
This guide explains the most essential SaaS sales funnel metrics you should consider if you want to optimize your sales funnel and drive profit.
SaaS Sales Funnel Metrics You Need To Use
There are two main types of SaaS sales funnel metrics – quantitative and qualitative metrics. Quantitative metrics provide concrete numbers you can use to gauge the performance of your sales funnel.
On the other hand, qualitative metrics offer customer feedback explaining why your numbers are as they are. This helps you interpret the quantitative data correctly and pinpoint what you need to do to improve your sales pipeline.
Here are the most significant quantitative and qualitative SaaS sales funnel metrics you should pay close attention to at different phases of your sales cycle.
Top-of-funnel (TOFU) Metrics
SaaS companies might use different terminologies to define various stages of their sales funnel, but the underlying framework is the same.
At the top of the funnel is customer acquisition, which often includes the first steps, i.e., awareness and interest-building. In this stage, sales or marketing teams focus on acquiring the best leads and getting them to develop an interest in the company’s SaaS product. They might use paid ads, social media outreach, or website content to serve their top-of-funnel needs.
You’ll want to analyze the following key TOFU metrics to see if your team’s primary efforts are bearing fruit:
Website Visits
Website visits indicate the number of times potential customers visit your website. The higher the number of site visits, the better. It means you get more opportunities to turn visitors into potential clients.
Social Media Engagement
Social media engagement specifies the number of interactions you get from your social media outreach efforts. These interactions may be replies to your messages, likes, and shares. High levels of engagement show your outreach efforts are successful.
Middle-of-funnel (MOFU) Metrics
The middle part of an effective SaaS sales process includes the consideration and intent phases. Prospects start considering your SaaS product and express their intent to purchase it.
You can then entice them to take the necessary steps to become qualified leads. The best way to do this is to follow your potential customers’ moves. If they expressed intent to buy your product by signing up for your mailing list, your primary outbound sales and marketing technique may be email marketing.
The key MOFU SaaS sales funnel metrics to track include
Qualified Leads
Qualified leads are the number of potential customers who intend to buy your product and have already taken specific actions to demonstrate this. They may have provided their contact info so your sales reps can contact them. Or, have visited your site multiple times, downloaded freebies on your site, and signed up for your newsletter.
The total number of scheduled demos and meetings over a certain period (say monthly) is a solid indicator of your qualified leads metrics.
Lead Velocity Rate
Qualified lead velocity rate (LVR) measures your monthly growth in the total number of qualified leads you generate.
It’s a critical SaaS sales funnel metric because it helps you track the efficiency of your lead-generation techniques over time. LVR also enables you to predict your revenue growth. Check out this guide about LVR and its importance to learn more about this.
To calculate LVR, determine how many new leads you’ve made in a month by subtracting your current month’s qualified leads from your previous month’s qualified leads. Then, divide the new leads by the number of qualified leads you made last month and multiply by 100.
LVR (%) = New LeadsNumber of previous month’s qualified leads 100
Bottom-of-funnel (BOFU) Metrics
The final stages of the sales process form the bottom part of the SaaS sales funnel. These stages include evaluation and purchase, retention, and advocacy stages.
Evaluation And Purchase Stage Metrics
In the evaluation and purchase stage, your lead weighs if your SaaS product fits their needs and decides to buy. It’s the point where leads can become paying customers. Some key metrics to track at this stage include:
Conversion Rate
Tracking this metric reveals what percentage of your leads turn into customers. Your lead conversion rates help you measure the effectiveness of your sales process. If your conversion rate is low, especially at the purchase stage, that’s a sign you need to put more effort into convincing qualified prospects to buy your product.
Monthly Recurring Revenue (MRR)
MRR is the earnings you expect to get each month from your customers. You can use this metric to predict your company’s growth and sustainability into the future. To calculate MRR, figure out how many paying customers you have and multiply this by the average amount they pay monthly.
Customer Acquisition Cost (CAC)
How much do you spend to acquire one new customer? The answer is your CAC. CAC helps you measure the viability of your current sales and marketing efforts. The lower your cost is, the more viable your efforts are. Divide your overall sales and marketing costs by the number of new customers you’ve gained in a specific period to get CAC.
CAC =( Marketing + Sales Cost)Total number of new customers 100
Sales Cycle
The sales cycle estimates the average time your potential customers take to move from the initial contact to a well-paying client. With this metric, you’ll know how long it takes to finalize a deal and whether you need to make any adjustments to speed up the process.
To know your average sales cycle, calculate the days you’ve taken to close each deal you’ve won, then work out their average.
Average Revenue Per Account (ARPA)
ARPA helps you understand how much monthly recurring revenue one customer account brings in. By analyzing this metric, you’ll identify the products or subscription tiers that make the highest profit for your SaaS business. ARPA is also essential for calculating your customer’s lifetime value.
To compute ARPA, divide your monthly recurring revenue by the total number of paying customers.
Retention Stage Metrics
Because of their subscription-based business model, retaining existing customers is more profitable than acquiring new ones for most SaaS companies. SaaS businesses that depend on customer retention grow the fastest. They generate nearly 35% of their annual contract values by upselling. The most significant metrics to monitor at this stage include
Churn Rate
Your churn rate refers to the percentage of clients who’ve canceled their subscriptions and left within a given period. A high churn rate shows you’re losing clients faster than you’re gaining new ones.
To calculate your churn rate, divide the total no. of clients who’ve canceled their subscriptions by the number of active clients. Then multiply by 100.
Churn Rate (%) =Number of lost customersNumber of customers at the beginning of period 100
Retention Rate
Retention rate measures the number of clients still using your SaaS product after a given period. It’s the opposite of your churn rate and shows how well your SaaS product is performing. A high rate means clients are happy with your product’s performance.
Calculating your retention rate requires you to subtract the no. of customers you’ve acquired within a specific period from your total paying customers. Then, divide the result by the number of clients you had at the beginning of the period and multiply by 100.
Retention Rate (%) = (No. of paying customers – No. of customers acquired during period)Total number of customers at the beginning of period 100
Customer Lifetime Value
Customer lifetime value (CLV) estimates the amount of money a customer is likely to spend throughout their time with your company. CLV is essential for measuring your business’s profitability in the long run.
Work out the average time each client subscribes to your product and multiply it with your average revenue per account (ARPA) to determine your CLV.
Advocacy Stage Metrics
The advocacy or referral stage is where your clients go beyond being users and become active promoters of your products. Essential metrics to track here include:
Net Promoter Score (NPS)
NPS measures the likelihood of your customers promoting your SaaS products. It reveals your customer base’s loyalty. The higher the score, the more likely your clients will stick around and vouch for you.
Customer Satisfaction Score
The Customer satisfaction score monitors your customers’ experience and level of satisfaction with your product or its features.
To define your NPS and customer satisfaction score, send surveys requesting your customers’ feedback on various aspects. The surveys may contain simple questions like, on a scale of 1-10, how likely are you to tell a friend about our services? Or how satisfied are you with X features?
Conclusion
Remember, the phases of your sales funnel work together. The success of one stage depends on the success of the previous stage and the one before that. Monitoring the metrics discussed above will give you a full 360° view of how successful your sales funnel is at each stage and as a whole. So you can streamline your sales activities and set clear goals your sales team can work with to hit revenue quotas without fail.
You may have to use various automation tools or platforms to make gathering helpful insight at each stage easy and sustainable. One such platform is Saleo. The platform helps you optimize your product demos to increase the effectiveness of your efforts during the middle phase of your Sales funnel.
With Saleo, you can create captivating demos that make closing the best deals a sure bet. Book a demo today to see how the platform works.
