Cloud Security Authors: Pat Romanski, Yeshim Deniz, Elizabeth White, Liz McMillan, Ed Featherston

Related Topics: @CloudExpo, Java IoT, Linux Containers, Containers Expo Blog, Cloud Security, @BigDataExpo

@CloudExpo: Blog Feed Post

Driving SaaS Customer Acquisition with Success Metrics

Is it possible to apply SaaS customer success metrics to customer acquisition?

As a SaaS business matures, the importance and value of SaaS metrics increase. Most SaaS businesses begin their journey down the SaaS metrics path by tracking recurring revenue in relation to customer acquisition costs. After building a solid customer base, churn becomes a priority. These fundamental SaaS metrics are all apparent in the standard SaaS profit equation below.

SaaS profit =
current customers x ( avg recurring revenue – avg recurring cost )
– new customers x avg acquisition cost

saas customer acquisition metricsHowever, it quickly becomes apparent that fighting churn requires a SaaS metrics toolkit that digs significantly deeper than simple financial metrics. Operational metrics are needed that connect day-to-day business reality to financial performance. It is this realization that gives birth to the new Metrics-driven SaaS Business as it discovers the goldmine of SaaS customer success metrics and predictive analytics that enable it to eliminate churn before it begins.

But what about the other half of the profit equation? Is it possible to apply SaaS customer success metrics to customer acquisition? The answer is most emphatically yes! Prospects are merely future customers, and their success lies in the purchase of your SaaS product. It’s a SaaS best practice to provide a seamless customer experience from visiting your website to trial to purchase to use, therefore the metrics used to describe this process should be seamless as well. In all cases, the goal is to help customers become happy users of your SaaS product, i.e., successful customers. SaaS customer acquisition is merely SaaS prospect success.

saas customer success metrics kpi dashboard

Customer success metrics are equally applicable to SaaS customer acquisition,
because prospects are merely future customers whose success lies in purchase.

This is the third post in a series inspired by my ongoing collaboration with Bluenose Analytics that explores the new Metrics-driven SaaS Business based on emerging best practices in SaaS customer success metrics. The last post discussed the promise of SaaS customer success metrics for churn reduction and upselling. This third post examines their use in SaaS customer acquisition.

Improving Trial Conversions
Marketing automation vendors built an entirely new software category based on the idea of facilitating purchase by helping B2B companies engage more effectively online with the New Breed of B2B Buyer. Unfortunately, marketing automation products focus all their attention on trying to get prospects to read your content, not use your product. Reading content is good, using product is better. Online trial is a foundational SaaS best practice and improving trial conversion is strategically important to many SaaS vendors. Fortunately, SaaS customer success metrics offer as much potential to increase trial conversion as they do to reduce churn.

saas customer success metrics root cause analysis

The same statistical methods used in customer success can be applied to customer acquisition,
only we are looking for drivers of purchase rather than drivers of churn.

Trial is the moment where the SaaS vendor establishes that always-on communication channel to the SaaS customer through the product. Prior to trial login, customers are just cookies and email addresses. After trial login, product usage can be monitored and every click can be associated with an individual customer. Trial forms also collect key customer demographics that can be used in predictive models. In fact, The Metrics-driven SaaS Business uses these same models to decide exactly what questions should be asked on a trial form, i.e., the ones that can be used to best predict and facilitate purchase! Using SaaS product usage data to create predictive purchase models is SaaS lead scoring done right.

Reducing Acquisition Costs through Metrics
Moving along our SaaS profit equation, we come to one of the most important SaaS financial metrics for every SaaS vendor: customer acquisition cost. Keeping customer acquisition cost is line is essential to the financial success of every SaaS business, because customer acquisition eats cash. The lower your customer acquisition cost, the sooner you get repaid for your upfront investment in acquiring a customer, and the sooner you can reinvest that money in acquiring yet another one.

saas customer acquisition is saas prospect success

Tweet it!

By now you should be able to guess exactly how SaaS customer success metrics can be applied to reduce customer acquisition costs, because they are essentially similar to the methods for improving customer success efficiency. First we need to identify the key predictors of purchase. For example, our analysis of product usage data may indicate that prospects that use the product every day of the free trial can usually be converted with a single phone call, whereas those that stop using it within the first week are twice as likely to convert if we can get them to attend an instructional webinar. Now what SaaS account manager wouldn’t love to have that little jewel of information?

As with our customer success organization, the key to reducing acquisition costs is to embed our predictive models into the daily sales activities. The process is the same. First we create descriptive models to identify the root causes of why prospects do and don’t purchase our product. Then, we use these models to create KPIs at the trial account level that reps can use to guide their daily activities. We can also create alerts when specific trigger events require a reps attention, such as increased or decreased product use of a particular kind. And, finally, we can automate communications within the product itself to facilitate purchase.

Improving Onboarding with SaaS Customer Success Metrics
Onboarding a new customer is where customer acquisition and customer success meet. Most SaaS customer success professionals will tell you that inadequate onboarding at the beginning of a contract is one of the key drivers of churn at the end of the contract. In addition, onboarding can be an expensive and time-consuming task for more complex SaaS products. The Metrics-driven SaaS Business understands the strategic impact of onboarding and applies SaaS customer success metrics to streamline the onboarding process and reduce onboarding costs.

Where are your new customers getting stuck? This is the primary question of the onboarding challenge, and I can think of no better indicator than product usage data. Whereas acquisition and churn KPIs were largely focused on predicting future events, onboarding customer success metrics are looking at the here and now, as in “Why is this customer stuck right here, right now?” By drilling down on this question, we can identify root causes and predictive indicators of onboarding failure that can be used by both customer success reps and product managers to streamline the onboarding process.

Driving Customer Advocacy and Viral Growth through Metrics
At the beginning of the SaaS customer lifecycle, SaaS customer acquisition and SaaS customer success first meet in onboarding, but at the end they meet again in viral growth, where life begins anew. Up until now, we’ve explored a number of ways SaaS customer success metrics can be applied to eliminate problems: stopping churn, reducing service costs, improving trial conversions, etc. At the top of the capability pyramid, The Metrics-driven SaaS Business uses SaaS customer success metrics to create opportunities, not just resolve problems.

The same techniques we used to identify customers who might churn can be used to identify customers that will never churn, customers that love us, and customers that will recommend us! By applying SaaS customer success metrics to identify advocates, we can improve our bank of potential sales references, customer testimonials, case studies and user group leaders. Many organizations use methods like Net Promoter to measure customer advocacy, and these are good ideas for SaaS businesses as well, but only SaaS businesses can complement these qualitative measures with quantitative customer advocacy metrics based on actual product use.

saas customer success metrics product usage data

By applying SaaS customer success metrics to identify advocates,
we can improve our bank of potential sales references, customer testimonials,
case studies and user group leaders.

Enabling viral growth through sharing is a common SaaS product design best practice. The main idea is to encourage customers to create work products, such as documents, charts, projects, etc. that are integral to the SaaS product experience, and then share those work products with non-customers with whom they need to collaborate. Understanding and facilitating the activities that lead to sharing is strategic goal of the Metrics-driven SaaS Business, because viral sharing leads to viral revenue growth.

More Stories By Joel York

Joel York is an Internet software executive and popular SaaS / Cloud blogger at Chaotic Flow and Cloud Ave. He is well known for his work in SaaS / cloud business models, sales and marketing strategy, and financial metrics. Professionally, he has managed global sales and marketing organizations serving over 50 countries, including local offices in the United States, United Kingdom, Germany, and India. He holds degrees in physics from Caltech and Cornell and received his MBA from the University of Chicago. Joel York is currently VP Marketing at Meltwater Group and Principal at the Internet startup consulting firm affinitos.

@ThingsExpo Stories
Cloud based infrastructure deployment is becoming more and more appealing to customers, from Fortune 500 companies to SMEs due to its pay-as-you-go model. Enterprise storage vendors are able to reach out to these customers by integrating in cloud based deployments; this needs adaptability and interoperability of the products confirming to cloud standards such as OpenStack, CloudStack, or Azure. As compared to off the shelf commodity storage, enterprise storages by its reliability, high-availabil...
The IoT industry is now at a crossroads, between the fast-paced innovation of technologies and the pending mass adoption by global enterprises. The complexity of combining rapidly evolving technologies and the need to establish practices for market acceleration pose a strong challenge to global enterprises as well as IoT vendors. In his session at @ThingsExpo, Clark Smith, senior product manager for Numerex, will discuss how Numerex, as an experienced, established IoT provider, has embraced a ...
The Internet of Things (IoT), in all its myriad manifestations, has great potential. Much of that potential comes from the evolving data management and analytic (DMA) technologies and processes that allow us to gain insight from all of the IoT data that can be generated and gathered. This potential may never be met as those data sets are tied to specific industry verticals and single markets, with no clear way to use IoT data and sensor analytics to fulfill the hype being given the IoT today.
Donna Yasay, President of HomeGrid Forum, today discussed with a panel of technology peers how certification programs are at the forefront of interoperability, and the answer for vendors looking to keep up with today's growing industry for smart home innovation. "To ensure multi-vendor interoperability, accredited industry certification programs should be used for every product to provide credibility and quality assurance for retail and carrier based customers looking to add ever increasing num...
In the next forty months – just over three years – businesses will undergo extraordinary changes. The exponential growth of digitization and machine learning will see a step function change in how businesses create value, satisfy customers, and outperform their competition. In the next forty months companies will take the actions that will see them get to the next level of the game called Capitalism. Or they won’t – game over. The winners of today and tomorrow think differently, follow different...
“Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. CloudBerry Backup is a leading cross-platform cloud backup and disaster recovery solution integrated with major public cloud services, such as Amazon Web Services, Microsoft Azure and Google Cloud Platform.
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, will discuss how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team a...
The security needs of IoT environments require a strong, proven approach to maintain security, trust and privacy in their ecosystem. Assurance and protection of device identity, secure data encryption and authentication are the key security challenges organizations are trying to address when integrating IoT devices. This holds true for IoT applications in a wide range of industries, for example, healthcare, consumer devices, and manufacturing. In his session at @ThingsExpo, Lancen LaChance, vic...
What are the successful IoT innovations from emerging markets? What are the unique challenges and opportunities from these markets? How did the constraints in connectivity among others lead to groundbreaking insights? In her session at @ThingsExpo, Carmen Feliciano, a Principal at AMDG, will answer all these questions and share how you can apply IoT best practices and frameworks from the emerging markets to your own business.
Big Data has been changing the world. IoT fuels the further transformation recently. How are Big Data and IoT related? In his session at @BigDataExpo, Tony Shan, a renowned visionary and thought leader, will explore the interplay of Big Data and IoT. He will anatomize Big Data and IoT separately in terms of what, which, why, where, when, who, how and how much. He will then analyze the relationship between IoT and Big Data, specifically the drilldown of how the 4Vs of Big Data (Volume, Variety,...
SYS-CON Events announced today that SoftNet Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. SoftNet Solutions specializes in Enterprise Solutions for Hadoop and Big Data. It offers customers the most open, robust, and value-conscious portfolio of solutions, services, and tools for the shortest route to success with Big Data. The unique differentiator is the ability to architect and ...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform and how we integrate our thinking to solve complicated problems. In his session at 19th Cloud Expo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm ...
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
A completely new computing platform is on the horizon. They’re called Microservers by some, ARM Servers by others, and sometimes even ARM-based Servers. No matter what you call them, Microservers will have a huge impact on the data center and on server computing in general. Although few people are familiar with Microservers today, their impact will be felt very soon. This is a new category of computing platform that is available today and is predicted to have triple-digit growth rates for some ...
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
In past @ThingsExpo presentations, Joseph di Paolantonio has explored how various Internet of Things (IoT) and data management and analytics (DMA) solution spaces will come together as sensor analytics ecosystems. This year, in his session at @ThingsExpo, Joseph di Paolantonio from DataArchon, will be adding the numerous Transportation areas, from autonomous vehicles to “Uber for containers.” While IoT data in any one area of Transportation will have a huge impact in that area, combining sensor...
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
Most people haven’t heard the word, “gamification,” even though they probably, and perhaps unwittingly, participate in it every day. Gamification is “the process of adding games or game-like elements to something (as a task) so as to encourage participation.” Further, gamification is about bringing game mechanics – rules, constructs, processes, and methods – into the real world in an effort to engage people. In his session at @ThingsExpo, Robert Endo, owner and engagement manager of Intrepid D...
SYS-CON Events announced today that LeaseWeb USA, a cloud Infrastructure-as-a-Service (IaaS) provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LeaseWeb is one of the world's largest hosting brands. The company helps customers define, develop and deploy IT infrastructure tailored to their exact business needs, by combining various kinds cloud solutions.