Building a successful SaaS business is a herculean task that comes with a unique set of challenges. The wide range of SaaS solutions available in the market makes it difficult to woo new customers. Moreover, unlike a regular software company, SaaS businesses are subscription-based and thrive on their ability to retain existing customers. This, in turn, requires you to track various metrics to boost customer retention and maximize revenue.
The good news is that you’ll find a plethora of SaaS analytics tools on the internet. These tools help you monitor several metrics such as website traffic, customer churn, revenue, etc. You can also track the performance of your marketing campaigns and understand what communication prompts users to sign-up. This, in turn, helps you improve your overall marketing strategy and grow your business.
However, the sheer variety of SaaS analytics tools available in the market can be overwhelming. It’s crucial to select the tools that are most suitable for your business requirements and goals. This is particularly important if you’ve just launched a SaaS business and are looking for analytics tools. Otherwise, you’ll just be tracking metrics that aren’t relevant to your business.
In this blog, we’ll list some of the most useful SaaS analytics tools. But let’s first take a closer look at the metrics you’ll likely track using these tools.
Key Metrics for SaaS Businesses
If you want to grow your SaaS business, you must track and optimize the right metrics. From your website design to marketing campaigns – you must monitor various metrics to understand their impact on your revenue. Moreover, it’ll help you understand the factors that drive conversions and help retain customers.
Here are a few important metrics that are crucial for the growth of your SaaS company:
1. Churn Rate
SaaS companies typically deal with two types of churn – customer churn and revenue churn. Customer churn is the percentage of customers who’ve stopped using your service over a specific period. Likewise, revenue churn is the percentage of revenue generated by customers who’ve stopped using your service over a certain period.
Measuring the churn rate helps you monitor the number of users your company is losing over time. You can also assess its impact on your revenue. This, in turn, helps you develop cost-effective retention strategies.
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2. Activation Rate
It’s a measure of the rate at which your acquired customers become active users of your SaaS application. In other words, it’s the percentage of users who take a specific action to derive maximum value from your product. For instance, only a fraction of the users who sign-up for your free trial convert into paying customers. Likewise, only a fixed percentage of active users might be using the latest features of your product.
Measuring the activation rate requires you to identify the activation event i.e. the moment when a user discovers your product’s potential. This, in turn, helps you optimize onboarding and reduce the time it takes for a user to reach the activation event and start adopting your product. It also gives you an insight into how various marketing channels and assets take users to the activation event.
3. Revenue
SaaS businesses rely on recurring revenue. Therefore, their revenue is measured using the following metric – monthly recurring revenue (MRR) and annual recurring revenue (ARR). MRR refers to the revenue your existing customers generate each month. Multiplying it by 12 gives you the ARR. Monitoring MRR and ARR are essential to understand whether your business is profitable and self-sustaining.
In addition to these metrics, you’ll likely come across other parameters such as:
- Cost of Acquiring a Customer (CAC)
- Customer Lifetime Value (CLTV)
- Net Promoter Score (NPS)
It’s now time for us to take a look at the most effective SaaS analytics tools available on the internet.
If you’re launching a SaaS application, you must have a dedicated website that showcases its features, benefits, and pricing plans. It’s crucial to monitor your website’s performance and understand whether it is attracting new visitors and driving conversions. Here are a few useful tools:
1. Google Analytics
If you’re looking for a simple and intuitive tool to monitor website traffic, Google Analytics is the right fit. It lets you track the number of active visitors throughout the day. You can also identify the source of traffic i.e. whether it’s coming from search engines, social media platforms, email campaigns, etc. Additionally, you can identify the web pages and content assets that attract the maximum visitors.
Google Analytics also provides you with a plethora of helpful behavioral metrics such as bounce rate, time-on-site, conversion rate, etc. This, in turn, helps you understand how your website is succeeding in holding a visitor’s attention. You can also get insights about your audience including their gender, age group, device, etc. The best part is that you can use this tool for free.
Source: Neil Patel
2. Crazy Egg
Crazy Egg is yet another useful web optimization tool that lets you monitor how individual elements on your website are performing. It generates useful reports (called Snapshots) to help you understand where visitors click on a web page and how far down they scroll. You can also access detailed insights about visitors and analyze their online behavior.
It’s a great tool to understand how many website visitors are following the ideal customer journey and taking the desired actions. Pricing for Crazy Egg starts at $24 per month. It also offers a 30-day free trial.
The next set of SaaS analytics tools help you analyze whether your marketing campaigns are driving subscriptions and retaining customers. Take a look:
3. HubSpot
HubSpot is a powerful all-in-one inbound marketing software used by many SaaS businesses. From generating and nurturing leads to driving conversions and providing customer support – you can use HubSpot for a plethora of tasks. It groups its features under different hubs, namely – CRM, Marketing, CMS, Sales, and Service.
What sets HubSpot apart from other marketing automation software is that it provides you with a comprehensive analytics dashboard. This, in turn, helps you monitor how your potential customers respond to your marketing campaigns and move through the sales funnel. Even though HubSpot’s pricing is on the higher side, it offers free plans with limited features.
Pricing details for HubSpot are as follows:
- HubSpot CRM – Free
- CMS Hub – $300 per month (with a 14-day free trial)
- Marketing Hub – Free or $800 per month
- Sales Hub – Free or $500 per month
- Service Hub – Free or $400 per month
4. Mixpanel
If you want to delve deeper into user behavior and engagement, Mixpanel is the right tool for you. It helps you understand how your customers interact with your product/website and why they’re converting or not converting. The best part is that it lets you track user interaction and engagement in real-time. This, in turn, lets you improve your product and optimize your marketing strategy.
Moreover, the tool creates individual user profiles for each customer including their name, contact information and account details. You can access these profiles, find out if users are facing any problems, and reach out to them.
Mixpanel offers the following pricing plans:
- Starter – Free (1,000 monthly tracked users)
- Growth – $89 per month (up to 25,000 monthly tracked users)
- Enterprise – Custom pricing (all features of growth plus customizable data history and B2B analytics)
This is likely the most important category of SaaS analytics tools. These tools help you track relevant metrics such as churn rate, activation rates, etc. to maximize active subscriptions. Here are a few useful subscription analytics tools:
5. ProfitWell
ProfitWell provides you with accurate real-time data to minimize churn rate and maximize recurring revenue. It also helps you optimize your pricing strategy to increase conversions. Additionally, you get an insight into where your business stands compared to other companies in similar stages. The tool also tracks user interaction to determine which users will likely churn.
ProfitWell offers a freemium model where the main tool (ProfitWell Metrics) is available for free. However, other tools such as Price Intelligently, Retain, and Recognized are chargeable. You have to contact them for a custom quote.
6. SmartKarrot
SmartKarrot is a powerful analytics tool that provides you with a treasure trove of insightful data to track user onboarding and engagement. You can monitor how users interact with different product features and track them across different onboarding phases. It also helps you monitor trial users and identify accounts that might churn.
If you want to reduce churn rate and boost customer retention, SmartKarrot is the right tool for you. SmartKarrot offers the following pricing plans:
- Starter Plan – $499 per month (billed annually)
- Growth Plan – $699 per month (billed annually)
- Enterprise Plan – Custom pricing
7. ChartMogul
ChartMogul provides you with plenty of meaningful and relevant real-time data to boost customer retention and revenue. It also lets you segment your customers into different cohorts and analyze each cohort to monitor churn rate. The best part is that it integrated with all the popular subscription billing services. This eliminates the need to track and import revenue data.
Additionally, ChartMogul offers comprehensive mobile subscription analytics. If your MRR is less than $10,000, you can use the tool for free. Paid plans start at $100 per month and are based on your MRR.
Conclusion
Data-driven decision making is the key to growing your SaaS business. You should carefully assess various analytics tools and select the ones that best suit your needs. You should also have a clear idea of the metrics and data that need to be monitored.
Does your company use any SaaS analytics tools? Share your views in the comments section below.
Ritesh has over 20 years of experience collaborating with customers and adding value to their organizations. In his prior role as head of healthcare practice for a high growth US healthcare tech organization, he built a centralized knowledge house to drive customer-centric delivery.
Published July 08, 2020, Updated June 22, 2022
