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3rd Annual SaaS Metrics Report: Underscoring the need for Customer Success

As 2013 comes to a close, we wanted to leave you with the results of our 3rd annual SaaS metrics survey on the key performance indicators used by SaaS companies to run their business.

This year our survey brought in responses from 257 executives at SaaS companies ranging in size from early-stage startups to established businesses with over $100M in revenue.

Check out the report here.  There’s some good food-for-thought inside as you prepare for 2014 and make plans on how you’d like to measure the performance of your business moving forward.

The big take-away from this year’s survey underscores the importance of customer success in the SaaS business model – and why it is imperative for SaaS companies to be relentlessly focused on delivering recurring value to customers.  There is clear indication that the fastest growing companies in SaaS are the ones that have mastered controlling churn and driving upsell within their customer base.  When we grouped respondents by annual growth rate, the companies growing more than 75% YoY had, on average, significantly lower churn and higher upsell than slower growing companies.

The survey also shows that SaaS companies are still heavily focused on tracking metrics around new customer acquisition vs. existing customers.  In general, there is a lower level of maturity when it comes to managing and monetizing existing customers.

But there is a growing recognition among SaaS executives on the need and importance of tracking metrics on existing customers. This is reflected in some of the top metrics that companies plan to begin tracking including customer health, customer lifetime value, and product usage statistics.

Another interesting finding relates to how companies look at churn.  Though more companies said they tracked churn in 2013 compared to 2012, most SaaS businesses are still predominantly looking at churn at an aggregate level (i.e. as a percentage of overall customers and associated revenue lost).  Only a few companies specifically track and monitor product downgrades or a reduction in users/licenses within accounts.

For a deeper look at our findings, check out the full report.

We’d like to thank the participants of our 3rd annual SaaS metrics survey.  And we’d love to hear from more of you on the kind of metrics you’re currently focusing on, the challenges you face in monitoring your business, and what more you’d like to see in our next SaaS metrics survey in 2014.

Kaiser Mulla-Feroze

I'm the CMO at Totango. I love the challenge of bringing new products to market. Before Totango, I spent over 12 years at salesforce.com across products, marketing, and business development. I had the most fun there during the early days when we were establishing salesforce's product leadership position. I'm looking forward to doing the same at Totango.

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