Countless businesses across the globe use software to run their operations. However, gut-wrenchingly expensive lifetime licenses seem to be plaguing companies at scale. Most companies have recognized the need for Software as a Service (SaaS) to handle their operations effectively without breaking the bank.
What is SaaS?
SaaS is one of the three primary categories os cloud computing along with Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). It is a software distribution model wherein there exists a third-party provider that hosts applications and offers them to potential customers on the internet.
Key Benefits of SaaS
- The flexibility of payments. You can pay for this service every month as opposed to the conventional way of purchasing and then installing the software.
- Automatic and periodic updates. You can expect the software to take care of its updates automatically, thereby reducing the in-house staff’s burden of doing the same.
- Easy access to the software. Given how SaaS applications run on the internet, you can access them from your computer or mobile devices as long as they are connected to the internet.
Customer Relationship Management (CRM)
CRM software is an example of a widely used SaaS. CRM is used to manage all your company’s relationships and interactions with your current customers and potential customers. Ultimately, CRM software is used to improve business relationships. However, if you are running a CRM software, you ought to know how to find developers who can rectify errors and keep the software running flawlessly.
Advantages of using CRM software
- Improved Relationship with Clients
The more information you have on your clients (or customers) and remember, the more obvious it is to your clients that you care about them. This makes forging a stronger connection and a deeper relationship with your clients infinitely simpler.
- Increase in revenue and profitability
When everyone gets a grasp of the CRM software, the CRM productivity increase, and you can provide additional products and services to the clients, thereby increasing client satisfaction.
- Improved efficiency in serving clients
Knowing more about your clients helps you better serve your clients.
If you have everyone using the CRM to record their customer interactions, serving clients based on what they want should not be a problem.
- Increase in staff satisfaction
Once the members of your team know how to use the CRM, they are bound to be more engaged. Having an updated version of the CRM that everyone can use helps employees effectively rectify issues with their clients.`
SaaS Metrics to Look out for
Any SaaS company that is aiming to achieve substantial growth has to look at the following metrics for SaaS reporting. Customer Lifetime Value (CLV)
Customer lifetime value (CLV) is defined as the average amount of money that your customers pay throughout their subscription to your company. Your CLV is an accurate representation of your business’ progress.
To determine your CLV, use a CLV calculator. Use the following formula to calculate your CLV:
(Annual revenue per customer * Customer relationship in years) – Customer acquisition costRevenue Churn
Revenue Churn is an accurate measure of the amount of revenue you have lost. Measuring revenue churn and customer churn enables you to determine and evaluate the external effect that some of your customers may have over your other customers.
Customer Churn Rate
Customer churn rate measures the amount of business you have lost over a specified period. It is, without a doubt, one of the most important metrics you ought to consider while tracking the daily vitality of your business. It is vital to retain your current customers as it is to acquire new customers.
If you want to track your churn rate on a monthly or quarterly basis, be sure to dig deeper for factors besides your customer count. Doing so can do you wonders. It can help you recognize why some of your customers seem to avoid renewing their subscriptions.
Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) is an accurate display of how much it costs to get new customers and a measure of the value they bring to your company. When you combine this with your CLV, CAC helps you confirm that the business model you have in place is feasible.
To calculate CAC, divide your total sales and marketing expenditure by the total number of new customers you acquire over a specified period. Customer acquisition needs to be an area of prime focus for new companies.
Months to Recover CAC
This parameter enables you to determine how fast a customer begins to generate Return on interest (ROI) for your business. This number will go down as your company grows.
To calculate the number of months to recover CAC, divide CAC by the product of Monthly Recurring Revenue (MRR) and your Gross margin (i.e., Gross revenue – Cost of sales). This is the formula:
CAC / MRR x GM
Leads by Lifecycle Stage
A lead is defined as a prospect who has begun to do their research.
To find out where they are in the buying process, you can slot the leads you get into sub-categories. These are the sub-categories you can slot them in.
Marketing qualified lead (MQL)
MQL is the term given to a prospect who has begun to dig deep research extensively. Indicators of such analysis are downloading ebooks and revisiting your website.
Sales qualified lead (SQL)
An SQL is a prospect who is probably looking up numerous vendors and is perhaps ready to make a decision.