The SaaS industry has grown to encompass a great many niche services over the years. Companies and consumers alike can find SaaS offerings for business management, analytics, communication, payroll concerns, compliance, and more. These many novel offerings have made many people’s lives easier at work and at home, but they have also generated fierce competition for fledgling companies and established staples in the SaaS industry.
Getting ahead of this competition can prove to be challenging. To remain successful at market, team leaders must strive to keep up with changes in their own businesses as well as in the industry as a whole. Leveraging the right metrics can make it much easier to track changes in your business and beyond, signaling with radar-like precision the various pitfalls and open opportunities hidden just beneath the surface of a sea of digital intel. Following are a few key SaaS metrics benchmarks you should track and assess on a regular basis.
1. SaaS marketing metric benchmark: Conversion rates
Not all metrics matter to up-and-coming SaaS companies. Among the SaaS marketing metric benchmarks that make the cut are options like conversion rates. Conversion rates are always important to keep track of as they can help indicate whether your entire marketing strategy is actually yielding the kinds of results that your business depends on to survive and grow. However, industry conversion rate benchmarks offer you a clear perspective on the real-world performance of your competitor’s strategies—invaluable information you can utilize to improve your own business processes. Here are a few interesting benchmarks to consider:
- The median conversion rate across all SaaS niches is 3%.
- The median conversion rate for SaaS offerings in the apps/devices space is 6.2%.
2. SaaS startups metric benchmark: Churn rates
Startups have a lot of things on their plate as is. It can be intimidating to consider managing too many metrics upfront—especially when you’re still trying to sink your teeth into the initial challenges of carving out market share for your company. Yet, the minute you begin to pay attention to the right metrics and can benchmark your business’s achievements against the industry at large, you’ll likely find it easier to envision your growth trajectory and plan for it accordingly. One particularly eye-opening metric benchmark for startup leaders to look into is churn.
Churn comes in multiple varieties, including net revenue churn and gross revenue churn, both of which are particularly useful for businesses operating on a subscription sales model. If your SaaS company sells subscriptions, then the industry benchmarks for both of these forms of churn should be particularly useful for gauging the effectiveness of your existing business model. Here are a few numbers for you to mull over:
- Across the entire SaaS industry, net churn rates range between 5% and 7% per year.
- For SaaS startups, a 10% or even 15% churn rate is considered acceptable and expected.
3. B2B SaaS benchmark: Sales funnel conversions
For SaaS companies that cater to other businesses with services designed to complement professional users’ needs, there are numerous data points worth tracking to gain a full-picture perspective of their performance. However, one of the most important metrics to keep in mind is definitely the success rate of your sales funnel. In many cases, you will have more than a single sales funnel functioning at a time, and each one will need careful monitoring to make it work better.
Although SaaS organizations with enterprise customers are likely to use customized sales processes for high-value prospects, their success rate with each approach is still worth keeping track of for best results. Here are a few industry benchmarks for B2B SaaS sales funnel conversions that you should probably know about:
- 2.1% of website visitors gained via SEO efforts progress to the next stage of the sales funnel.
- Just 0.7% of visitors acquired through pay-per-click advertising reach the next stage of the sales funnel.
4. SaaS industry benchmark: Annual recurring revenue (ARR)
Revenue growth is a powerful metric to track in any industry: It can help companies hone in on opportunities and adjust development objectives to match the industry’s potential as a whole. Although this metric is immensely useful, it needs to be assessed correctly for best results. For instance, annual recurring revenue across the entire SaaS industry would be a bit misleading for budding companies to compare themselves to.
Instead, look to the numbers put up by companies at the same stage of growth as your own. These companies’ revenue readings will paint a better picture of what your business should be aiming for, allowing your team to relax if your figures can’t quite compare to the public behemoths in the industry. Here are the annual recurring revenue benchmarks you should know about:
- The median growth rate by ARR for SaaS companies with less than $1 million in revenue is 68%.
- The median growth rate by ARR for SaaS companies with anywhere from $3 to $5 million in revenue is just 35%.
Master your SaaS metrics with VeryCreatives
Getting your SaaS business up to speed can be a challenge at the best of times. Expert guidance from a dedicated partner you can trust can give you the edge needed to net new customers and reach each milestone you lay out.
Our team at VeryCreatives can help at any stage of designing and developing your digital product, providing hands-on insider expertise along the way. Book a call to learn more about what we can do to help you succeed.