SaaS Product Metrics to access the Growth of your Product

Alien - UX Design Agency
7 min readOct 2, 2021

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SaaS Product Metrics to access the growth of your product

What are KPIs?

A quantitative or qualitative, outcome-based unit of measurement that indicates how well a brand/product is performing in achieving its business objectives is known as a Key Performing Indicator (KPI). KPIs vary vastly based on the goals and other factors of the business.

Why is choosing metrics essential?

Choosing the right KPI not only lets you assess the product’s success but also will help you strategize to attain it. While having a user-friendly SaaS product is one thing, it is essential to choose what to do with the data it provides to achieve growth and success. To understand the various metrics available and to choose the most suitable one, Let us classify the metrics based on the data acquired at various stages of users, coming down the buyer funnel.

User Acquisition Data:

Some of the key product metrics that need to be focused on to access the user acquisition efforts that have been put forward are listed below:

1. Customer Acquisition Cost (CAC):

The amount of money spent via various campaigns/sources to acquire a customer is what we call Customer Acquisition Cost. There is no particular formula to determine how much you need to spend to acquire each customer. It varies with each business based on how much they can afford to spend on customer acquisition. The scarcity principle also helps in increasing your conversion and reducing your CAC.

However, it is always recommended to maintain a CAC ratio of 3:1, i.e., you should be able to generate 3 times the amount of money from every user you spend your money acquiring.

2. Retention Rate:

The number of customers who have been retained from the ones acquired, over a period of time, is known as the retention rate. While acquiring a customer seems like a success, retaining them is actually the bigger deal. Also, budget-wise, it helps you in the long run too. Guess why? Because acquiring a new customer costs 7 times more than retaining one!

Learn more about how you can retain all your users!

In order to calculate the user retention of your product, use the formula given below:

how to calculate customer retention rate

3. Churn Rate:

In one way, it is fair to say that the Churn rate is the opposite of the Retention rate. The rate at which the users stop associating with your product within a given period of time. Unlike the retention rate, it is important to keep the churn rate on the lower side. An ideal churn rate would be 0% which is not possible in practicality. So, a good churn rate would vary with each business model based on their various factors. Here’s how you calculate the churn rate:

How to calculate churn rate

User Engagement Data:

After acquiring users as a result of strategic planning and implementation, you might want to track how well the users are engaging with your product and the following are the key metrics that do just that:

1. Product Engagement Score:

The score that determines the ultimate engageability of the product is known as the Product Engagement Score (PES). This metric is calculated by the combination of three factors that will judge user engagement- Adoption, Stickiness, and Growth. PES is used as one of the easiest yet efficient ways to see how a product is performing.

  • Adoption: The percentage that determines the number of users adopting your main features.
  • Stickiness: The percentage that depicts how often the users engage with your product known as stickiness
  • Growth: The growth of the user associated with your product over a period of time.

The combination of these three factors will result in giving us the Product Engagement Score.

2. Activation Rate:

When the user performs the action that has been set as the success factor for your product, it is known as activation. The action can be anything that makes the user continue using the product. The rate at which activation takes place among your users is known as the Activation rate.

From the activation rate, it is possible to infer if the product is perceived to be useful by the user. A good activation rate suggests that the users like the UX and are, therefore, providing value to the customer.

The number of users who performed the action successfully per the total number of users who signed up gives us the answer to the activation rate of the product.

3. Conversion rate

For example, for every 100 users if you are getting 50 users signing up then the conversion rate would be 50%. The goal can be anything like completing a particular action signup./ join the newspaper/buying products. It is basically the number of people taking an action from the number of people who had an opportunity to take it.

4. Task success rate

The number of people successfully completing the task by the total number of people who tried out (Attempts) the task gives us a task success rate. It is helpful to understand how effective is the task and gives us an opportunity either to enhance it or validate it.

5. Time on Task

It is basically how long does a user takes to complete a particular task. The lower the person takes time the more effective the experience. Multiple factors can be a reason like loading speed, the number of screens the user needs to go through, or getting confused or lost. Calculate the average time it takes by doing testing/averaging the time taken by the set of users.

User Satisfaction Data:

The ultimate purpose of any product would be to provide value to the user in the most seamless way possible. And to ensure that it is happening, feedback from the users is a great resource that will help. Below given are some of the commonly used user satisfaction metrics.

1. Net Promoter Score:

Net Promoter Score is a simple metric that allows us to see how loyal the customers are to the product/brand, by measuring their satisfaction. The process of collecting this data is rather simple and could be done at any phase of the customer lifecycle. It is done by asking users how satisfied they are with the product on a scale of 0–10, 10 being the score for the most satisfying experience.

Based on the response of the user, they can be classified into Detractors, Passive, and Promoters which is explained in detail below:

How to calculate net promoter score

2. Customer Satisfaction Score:

As the name suggests, CSAT is the direct indicator of customer satisfaction. This score indicates how satisfied the customers are with the product or even specific features of it. CSAT is generally expressed in percentage and this data can be acquired by asking users questions about how satisfied they are with the product.

Right from a single question to any number of questions can be asked to the users and the score is taken generally on a scale of 1–5 or 1–10. These results are averaged out and when expressed in percentage, 100% indicates total customer satisfaction and 0% indicates the exact opposite.

Formula for satisfied customers for my business

3. Feature Fit Index:

When updates are made for the product, it is necessary to track if it is received well by the users. Feature Fit Index is an interesting KPI that helps us understand how well the new feature of the product is perceived by the user.

The process of collecting this data is quite simple. However, this cannot be asked right away after the launch of the update. A time period of at least a month is recommended for the users to resonate with the new feature and for them to decide if they like it or not.

Their answer to the question if they would be disappointed if the feature was removed lets us calculate the FFI score. The total number of respondents who said they would be disappointed upon new feature removal / total number of survey participants give us the FFI score.

A score of above 40% is suggested to be a good FFI and it means that the feature is after all welcomed by the users.

These are some of the key product KPIs that we recommend to include in your product management plan. Choose your metrics wisely for they are the ones that will predict the performance and the future of your product

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Alien - UX Design Agency

Product and Webflow design agency for startups and enterprises. Clients - HDFC, Aditya Birla, TVS, Cavin Kare, IIFL, etc. Awwwards, CSS Winner, FWA awards.