September 2011Survey ResultsSaaS BusinessesMetrics
Table of ContentMethodology 3Analysis & Insights 5Survey Data 9
About TotangoTotango is real time platform that allow Software-as-a-Service (SaaS) companies to betterunderstand their customers.Totango analyzes in real time customerengagement and intention within SaaS applicationsto help you grow your business.
Totango surveyed 522 of executives at SaaS companies, trying tounderstand how they use metrics to run their business.We aimed to get an industry perspective on questions such as: - Which metrics are most important for SaaS executives? - How satisfied are they with the tools & methodology their organization uses to monitor metrics?
Majority (87%) of SaaS executives regularly track “CAC related”1 metrics, with a large percentage (58%) adding or planning to add tracking of “CLTV related” metrics in the next year.Executives at SaaS companies regularly monitor the following metrics: 59% 54% 56% 56% 44% CAC Related CLTV Related Website Unique New Signups Conversion Rate Life Time Value Churn Rates Visitors (Trial to Paying)Plan to track in the next 12 month: 58% 19% CAC Related CLTV Related
Insights:• Following metrics related to customer-acquisition is a common practice by SaaS executives, with growing demand for life-time vale (LTV) measurement• As it pertains to CAC, most SaaS organization have a clear view of what and how to measure metrics (practices & tools). But for LTV, there is less industry knowledge.• Similarly, there is a lack of quality tools for “LTV measurements”, where as most SaaS executives feel CAC related metrics are well covered with existing tools
2 As SaaS businesses grow and mature, executives increasingly rely on metrics for strategy and analysisPercentage of executives that use metrics for strategic decision makingand analysis: 79% 21% Upstart Company Mature Company
Insights:• As a SaaS business grow, complexity grows and so does the need to rely on metrics and data for strategic analysis and decision making. Hence mature companies are willing to invest to incorporate metrics into their strategic processes.• In order to reach maturity faster, upstart companies should aspire to monitor metrics and use them to build a “data aware strategic framework”
Majority of executives (54%) are not satisfied with the “state of3 metrics” in their organization, with this trend being particularly strong at “upstart” companiesHow SaaS executives feel about the quality and accessibility ofthe metrics their organization collects Not satisfied Upstart Companies 59% I can live with it Satisfied 54% 7% 34% 15% Mature Companies 24% 42% 11% 47%
Insights:• Most SaaS businesses struggle with home-grown implementations yet lack comprehensive off the shelves tools.
OverviewThe survey was taken online by hundreds of world wide executives of SaaSbusinesses and reflects different aspects of measuring key metrics for onlineservices.Respondents hail from a range of businesses sizes, departments and roles andanswered questions about important metrics measuring habits.Who are our Respondents? (figure 1-3)Our respondents are executive level individuals, who work for ProductManagement / Marketing / Sales departments (72%) and their companies offerFree Trial subscription (58%) or Freemium Service (32%).
What are They Measuring? (figure 4)Most of the survey respondent are measuring 4 main metrics:• Conversion rates from free to paying customers (59%)• Number of new trial signups or free accounts (56%)• Web site unique visitors (54%)• Paying customers churn rate (56%)Fewer are measuring:• Social media mentions (31%)• Account activation rate (31%)• Upgrade & downgrade rates (21%)How often? (figure 5)Most of the survey respondent measure their metrics weekly (36%) or daily (36%)
What are the reasons for measuring? (figure 6)Metrics are usually used as a tactical tool to identify areas to focus on or toimprove (72%)The respondents use metrics less to help validating strategic decisions and plans(51%)Are they happy with their metrics? (figure 7)Most survey respondent are not satisfied with their executive metricsmeasurement and would like to improve it if they could (34%)
Figure 1 Break Down by Role 39% 32% 29% CEO/GM VP Director
Figure 2 Break Down by Department 30% 23% 21% 18% 8% Sales Marketing Customer Product Other Success Management
Figure 3 Break Down by Business Model Free Trial 58% Freemium 32% Enterprise Sales 10%
Figure 4 Metrics that are measured in SaaS businesses Upgrade & downgrade rates 21% Account usage statistics 51% Account activation rate 31% Lift Time Value 44% Churn rates (of paying customers) 56% Conversion rates (free to paying) 59%Number of new trial/freemium signups 56% Social Media mentions 31% Web site unique visitors 54% * Percentage are more than 100% because of multiple choice option
Figure 5 Metrics Frequency Review It varies 5% Quarterly 4% Monthly 9% Weekly 36%Daily (or more) 36% Never 10%
Figure 6 Break Down by Metrics Usage Validate strategic decisions and plans 51%Tactical tool to identify areas to focus / improve 72% Monitor the business and its growth 69% * Percentage are more than 100% because of multiple choice option
Figure 7 Satisfaction of existing metric usageNot satisfied and learned to live with it 27%Not satisfied and invest on improving it 34% Good enough 24% Very pleased 15%