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4th Annual SaaS Metrics Report: Disconnect between intentions and reality?

We’re happy to release the results of our annual SaaS Metrics Survey. This year we received over 500 responses, a 100% increase from last year – in itself a sign that the topic of metrics and key performance indicators is top-of-mind for a lot of SaaS professionals. The survey covered SaaS companies ranging in size from early-stage startups to established businesses with over $100M in revenue.

View the full report here.

This is the fourth year we’ve conducted this survey, giving us some unique insights into SaaS trends. Here are the key takeaways from this year’s report:

SaaS metrics shifting focus toward existing customers

While SaaS companies are still focusing on new customer acquisition metrics, as compared to metrics on existing customers, the gap is gradually narrowing. This year more companies than ever are looking at metrics such as customer lifetime value, revenue per user, product adoption, and customer health. What’s even more promising is that a growing number of companies are actively working on improving how they measure these metrics so we can expect this trend to continue.

Companies still place priority on new customer acquisition

Despite a shift in the metrics companies are tracking, the executive priority and funding that SaaS companies give renewals and upsells, as compared to new customer acquisition, has remained effectively steady over the last year. This is interesting given the broader awareness within SaaS companies of the importance of growing revenue from existing customers. What this suggests is that despite companies’ best efforts and intentions to focus on monetizing existing customers, day-to-day business realities make it difficult for companies to shift priority and funding.

Increased retention and upsell leads to faster growth

The survey results clearly indicate, for a second year in a row, that growth for SaaS companies is significantly impacted by customer retention rates and upsell. Companies that are doing a good job of controlling churn and driving new revenue from existing customers are on the whole growing substantially faster than their peers.

Decline in free trial and freemium offerings

Another interesting trend that the survey uncovers relates to the use of free trials and freemium offerings. Over the last four years, there has been a drop in the percentage of companies depending on free trials or freemium offerings to acquire new customers. This is not entirely surprising as SaaS companies are increasingly adopting more traditional enterprise sales models. That being said, a majority of companies who do offer free trials and freemium offerings derive more than 25% of new business through these channels.

As 2014 draws to a close and you begin planning for next year, we hope this report gives you some ideas on how you’d like to measure and monitor your business in the coming year.  To read all the survey results, check out the full report.

We’d like to thank the 500+ participants who contributed to this survey and would love to hear what else you’d like this annual survey to include next year.

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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