SaaS Metrics Used By Product Marketing Managers

The process of implementing a new product into the market is called product marketing. In the previous decade, product marketing grew exponentially in SaaS based companies but towards the end of the 2010’s, more and more traditional businesses started to embrace this type of marketing. 

Many people associate product marketing with just the initial phase of a product launch. However, the product marketing process starts at the pre-launch stage and goes on to continuously promote and shape the product throughout all the stages of its life cycle. 

Main Differences Between The Types of Marketing 

Online Marketing

Online marketing focuses on digital channels to spread messages about the product or service. Some methods of online marketing are through paid advertisements, uploading social media content, creating emails, blogging content and Search Engine Optimization (SEO).

Product Marketing

Product Marketing focuses on brand messaging, developing positioning in the marketplace, competitive differentiation among rivals and the ability to enable the production sales and marketing teams to work efficiently and generate more opportunities that can increase revenue and growth. 

Product Marketing Management

Product marketing management focuses on the operations that surround the development of a product. They manage the entire building process, the engineering team that integrates product features and the reasons for adding said features to the product. 

Compared to product marketers, they tend to work much more closely with the product developers. Although product marketing management and product marketing overlap in a few key areas, they tackle different marketing issues within the product.

What is the Role of a Product Marketing Manager?

Many people do not know exactly what does a product marketing manager do. Their area of expertise lies at the intersection of the product, sales and marketing. They regularly check where the business stands on the product market fit axis. 

Depending on the type of product marketed, the main objectives of a product marketing manager are as follows.

  • To communicate any product changes to your customers in an uncomplex way.
  • To prepare the pricing strategy and decide on where to position the product.
  • To develop a product strategy and to maintain balance between the team’s vision of the product and the customers needs.
  • To act on customer feedback and consider implementing a list of the most requested features.
  • To conduct interviews with customers and to see what drives them to continue using the product.

The Skills of a Good Product Marketing Manager 

  • Empathy and the ability to connect with customers across different levels.
  • Creative solution and problem solving.
  • Research and analytics skills.
  • Marketing skills (including copywriting).
  • Strategic planning and business skills.

What are the SaaS Metrics for SaaS Businesses?

When it comes to the ‘Software as a Service’ (SaaS) business model, the 3 main areas to succeed in is acquiring customers, retaining existing customers and monetizing all customers. There are 2 main types of kinds of SaaS businesses which are listed below.

  • Primarily monthly contracts, where the main focus is on the Monthly Recurring Revenue (MRR)
  • Primarily annual contracts, where the main focus is on the Annual Recurring Revenue (ARR) and the Annual Contract Value (ACV).

What are the Main SaaS Metrics used for Business? 

For an SaaS business, each investment made in productivity should generally lead to an increase in the payback period. When it comes to sustainable growth, the payback period is needed to be as low as possible. Some of the SaaS metrics businesses use are listed as follows. 

Monthly Recurring Revenue (MRR)

The revenue received from your paying customers is your monthly recurring revenue. Multiply the total number of  paying customers with the average revenue per user (ARPU).

Net New MRR = New MRR + Add On MRR – Churn MRR

  • The net new MRR is the total monthly recurring revenue at the end of the month.
  • The new MRR is the additional revenue generated from new customers.
  • The add on MRR is the revenue generated when existing customers upgrade their pricing plan.
  • Churn MRR is the revenue lost due to customers downgrading their pricing plan or cancelling their service. 

Annual Recurring Revenue (ARR)

The annual recurring revenue is the recurring revenue generated per year. When you have positive retention rates, the ARR will show your yearly revenue generation.

ARR = MRR x 12 Months

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Customer Retention Rate (CRR)

The customer retention rate shows you how many customers have continued to use your services. Calculation of your monthly customer retention rate is listed below.

  • Find out the number of repeat orders from existing customers.
  • Compare the repeat orders with numbers from the previous 2 months.
  • Divide current repeat orders by orders from 2 months ago.

Average Revenue Per Account (ARPA)

To calculate the average revenue per account, divide the MRR with the total number of customers. Measure the ARPA for existing and new customers separately to show your average revenue per account.

ARPA = MRR / Total Number of Customers

Net Promoter Score (NPS)

The net promoter score measures customer satisfaction by using customer surveys. WIth NPS, SaaS businesses can gauge customer satisfaction and loyalty. NPS is calculated on a scale from 0 – 10. 0 signifies that the customer will never recommend your service and 10 signifies that the customer will highly recommend it. NPS is basically an indicator of customer success.

The NPS scores are divided into 3 main categories which are Detractors (score between 0 to 6), Passives (score between 7 to 8) and Promoters (score between 9 to 10).

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