What is SaaS Analytics and Why You Need It

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SaaS analytics is how software-as-a-service companies track their data to make actionable, data-driven decisions. SaaS applications boast tons of growth potential and are rife with technological advances, so it has become a crowded market. Data will almost certainly be used by the companies that disrupt their corner of the SaaS industry to analyze the landscape and carve out their niche. 

Because SaaS companies are competing in a crowded ecosystem, they depend on being able to understand, analyze, and hit their KPIs. As SaaS companies grow rapidly in terms of users and workers, SaaS data analytics systems must handle enormous volumes of data and be scalable enough to handle these needs when querying and reporting!

Data analytics systems should be able to perform complex maneuvers while still being simple enough for non-technical users to use. In addition, the app and software should be agile and flexible enough to allow end-users to customize their reports and come up with their own insights. 


How SaaS analytics helps you grow

The SaaS industry is constantly optimizing itself. Many companies fail to recognize the importance of internal data sources for growth. Sadly, SaaS companies don't proactively analyze their own business intelligence for actionable insights. These five data points will help you make the most of your data analytics - so pay attention to them. 

  1. Uncovering churn

    Your worst churn can be uncovered in real-time with SaaS analytics tools. Most analytics tools provide basic insight into churn, but SaaS-specific analytics allow you to dig deeper. When you know the cause of your churn, you can stop it at the source and even automate certain processes to increase customer retention

  2. Lower Costs

    By measuring your data accurately through SaaS business intelligence, you can keep your operations as lean as possible. Knowing what works and what doesn't will prevent you from wasting time and resources on the wrong paths.

    The results of what worked in January won't necessarily hold up in June, so you need to monitor these results closely and fine-tune them to ensure your "experiments" are short and sweet - and all your campaigns are successful. 

  3. See the Future 

    Investing in a top-tier SaaS embedded BI tool like Toucan will give you access to features like data storytelling that will enable you to understand important market trends and fine-tune how your company responds to them. You can use these features to project revenue from each customer segment (including things like their churn timeline) and take preventative measures. Even when unexpected circumstances arise (like most of 2020), data analytics tools can help your company survive and even prosper.

  4. Customer Segmentation

    Customer segmentation is more valuable than most people realize. You can better understand user behavior when you segment customers based on their industry, MRR, LTV, or even churn rate, and then begin to optimize your audience and customer targeting and user experience. As a result of customer segmentation, customers will receive a more personalized experience, boosting revenue and customer loyalty. 

    Customers with the highest LTV will be the most profitable. Your SaaS analytics platform can tell you which customers have the highest LTV, so you can find out what makes them so valuable and why they choose to stay. This information will help you with other and/or future customers.

    Marketers on your team can use this information to fuel their efforts. How? By building brand messaging around an existing power user's favorite product features, they can now effectively market your business. By doing this, you'll attract customers with similar profiles and set everyone up for long-term success.

  5. Monitor campaigns

    You may be running an email marketing campaign that sends out dunning emails to customers who are close to churning. To properly attribute performance to each of your campaigns, you need to be able to track them. Were they successful? Were there any areas for improvement? Are they worth repeating? In order to answer these questions meaningfully, tracking and reporting are vital.

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SaaS metrics & KPIs to track

We've discussed what to look for in your data and SaaS analytics tools that can help you, now let's discuss the key metrics that every SaaS business should track.

  1. Churn Rate

    Churn is a key indicator of business health and stickiness. The churn rate is the percentage of customers who leave your service over a given period of time divided by the total number of remaining customers.

    Keeping track of your churn rate is important because it is an indication of how valuable your product is to your customers. It is imperative for your company to optimize its product constantly to reduce churn.

  2. ARR  

    The annual recurring revenue (ARR) and the monthly recurring revenue (MRR) are two other metrics related to growth that should be monitored. Monthly recurring revenue is the sum of all recurring items in a subscription. ARR is calculated by multiplying the MRR by 12, which accounts for the annual revenue. You can plan for the long term and short term by tracking monthly and annual recurring revenue metrics. 

  3. Customer LTV

    A customer's lifetime value is the total amount of money you can expect to receive from them over the course of their account. Rather than relying solely on metrics such as conversion rate, LTV enables you to accurately predict your business's revenue and profit over time. You are losing money if your LTV is not greater than your customer acquisition costs (CAC). 

  4. Average Revenue per User

    The average revenue per user (ARPU) is simply the amount of revenue you receive from a user on a monthly basis. This metric is often viewed as a vanity metric, but it can be used to identify trends in a group of customers booked within a given month against different cohorts and segments. By tracking ARPU, you can identify trends and make improvements to your business that can lead to a larger pool of SaaS profits. 

  5. Metrics for Executive

    Once C-level executives see that they can access all their data in one place, it will be easier to convince them of the value of SaaS analytics. The tool will provide company leaders and team managers with instant access to all the KPIs critical to the success of SaaS businesses, such as profit and loss, new versus recurring customers, open-to-sales ratio, and more.

    After empowering your entire workspace with insights from your data, the logical next step is to empower your customers. Embedding analytics into your mobile app or product will delight your customers with innovative, valuable, and seamless experiences. With Toucan, you get a zero code, easy-to-embed customer-facing analytics solution so you and your customers can easily visualize large volumes of complex data. 


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