Welcome!

Cloud Security Authors: Pat Romanski, Elizabeth White, Liz McMillan, Donald Meyer, Jose Diaz

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
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit y...
SYS-CON Events announced today that MangoApps will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device. For more information, please visit https://www.mangoapps.com/.
SYS-CON Events announced today that ContentMX, the marketing technology and services company with a singular mission to increase engagement and drive more conversations for enterprise, channel and SMB technology marketers, has been named “Sponsor & Exhibitor Lounge Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York. “CloudExpo is a great opportunity to start a conversation with new prospects, but what happens after the...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo New York Call for Papers is now open.
Designing IoT applications is complex, but deploying them in a scalable fashion is even more complex. A scalable, API first IaaS cloud is a good start, but in order to understand the various components specific to deploying IoT applications, one needs to understand the architecture of these applications and figure out how to scale these components independently. In his session at @ThingsExpo, Nara Rajagopalan is CEO of Accelerite, will discuss the fundamental architecture of IoT applications, ...
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discuss how businesses can gain an edge over competitors by empowering consumers to take control through IoT. We'll cite examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He'll also highlight how IoT can revitalize and restore outdated business models, making them profitable...
In his session at 18th Cloud Expo, Bruce Swann, Senior Product Marketing Manager at Adobe, will discuss how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects). Bruce Swann has more than 15 years of experience working with digital marketing disciplines like web analytics, social med...
SYS-CON Events announced today that Enzu, a leading provider of cloud hosting solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Enzu’s mission is to be the leading provider of enterprise cloud solutions worldwide. Enzu enables online businesses to use its IT infrastructure to their competitive advantage. By offering a suite of proven hosting and management services, Enzu wants companies to foc...
Customer experience has become a competitive differentiator for companies, and it’s imperative that brands seamlessly connect the customer journey across all platforms. With the continued explosion of IoT, join us for a look at how to build a winning digital foundation in the connected era – today and in the future. In his session at @ThingsExpo, Chris Nguyen, Group Product Marketing Manager at Adobe, will discuss how to successfully leverage mobile, rapidly deploy content, capture real-time d...
IoT generates lots of temporal data. But how do you unlock its value? How do you coordinate the diverse moving parts that must come together when developing your IoT product? What are the key challenges addressed by Data as a Service? How does cloud computing underlie and connect the notions of Digital and DevOps What is the impact of the API economy? What is the business imperative for Cognitive Computing? Get all these questions and hundreds more like them answered at the 18th Cloud Expo...
As cloud and storage projections continue to rise, the number of organizations moving to the cloud is escalating and it is clear cloud storage is here to stay. However, is it secure? Data is the lifeblood for government entities, countries, cloud service providers and enterprises alike and losing or exposing that data can have disastrous results. There are new concepts for data storage on the horizon that will deliver secure solutions for storing and moving sensitive data around the world. ...
What a difference a year makes. Organizations aren’t just talking about IoT possibilities, it is now baked into their core business strategy. With IoT, billions of devices generating data from different companies on different networks around the globe need to interact. From efficiency to better customer insights to completely new business models, IoT will turn traditional business models upside down. In the new customer-centric age, the key to success is delivering critical services and apps wit...
The essence of data analysis involves setting up data pipelines that consist of several operations that are chained together – starting from data collection, data quality checks, data integration, data analysis and data visualization (including the setting up of interaction paths in that visualization). In our opinion, the challenges stem from the technology diversity at each stage of the data pipeline as well as the lack of process around the analysis.
SYS-CON Events announced today that 24Notion has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. 24Notion is full-service global creative digital marketing, technology and lifestyle agency that combines strategic ideas with customized tactical execution. With a broad understand of the art of traditional marketing, new media, communications and social influence, 24Notion uniquely understands how to con...
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, will discuss the importance of WebRTC and how it enables companies to fo...
SYS-CON Events announced today TechTarget has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. TechTarget is the Web’s leading destination for serious technology buyers researching and making enterprise technology decisions. Its extensive global networ...
Korean Broadcasting System (KBS) will feature the upcoming 18th Cloud Expo | @ThingsExpo in a New York news documentary about the "New IT for the Future." The documentary will cover how big companies are transmitting or adopting the new IT for the future and will be filmed on the expo floor between June 7-June 9, 2016, at the Javits Center in New York City, New York. KBS has long been a leader in the development of the broadcasting culture of Korea. As the key public service broadcaster of Korea...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York and Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty ...
There are several IoTs: the Industrial Internet, Consumer Wearables, Wearables and Healthcare, Supply Chains, and the movement toward Smart Grids, Cities, Regions, and Nations. There are competing communications standards every step of the way, a bewildering array of sensors and devices, and an entire world of competing data analytics platforms. To some this appears to be chaos. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will discuss the vast to...