How to Leverage Data for Sustainable SaaS Growth

According to Statista.com, the software as a service (SaaS) market is booming and projected to reach US$390bn in 2025. Unfortunately, such rapid growth means the market is also extremely crowded. That’s why startups and small businesses are on the lookout for ways to stand out. Many find that the answer is data, and lots of it.

The right data-driven insights can propel the growth of your SaaS business. But why is data so important and how can it be used to grow your business? Let’s find out!

The importance of data in SaaS growth

Data is the lifeblood of successful SaaS businesses, saas content marketing informing everything from marketing and sales to product development.. Modern businesses are expected to know their audience down to a tee. This includes the likes, dislikes, and forms of messaging that appeal to individual customers.

Data is the only way to achieve this depth of knowledge, and with the right data analytics tools, you can unlock detailed audience insights, such as their demographic, location, and interests. All this information is like gold dust to SaaS businesses as it helps you reach customers in smarter, more targeted ways than ever.

Of course, data is also valuable for internal growth. You can spot bottlenecks more easily and boost business performance. Ultimately, this means your teams will work more efficiently and complete their goals more quickly.

SaaS businesses can gather data from many different sources, including:

Product usage
Website interactions
Conversations with customer support
Interactions with marketing and sales materials
Customer surveys and questionnaires
Prospect contact data

Key metrics to measure

Benchmarking is one of the most valuable aspects of data collection. You can monitor SaaS growth as you carry out your strategies.

Unsure which metrics to keep an eye on? Consider some of the following growth-related KPIs.

1. Customer acquisition costs (CAC)

This refers to the cost of acquiring a new customer. And, as you gain a stronger understanding of your audience and reach customers more directly, the CPC should reduce.

To calculate CPC divide the total cost of sales and marketing during a specific period by the number of customers acquired.

2. Annual contract value (ACV)

The average revenue from customers over a year. ACV is an essential metric for measuring the long-term growth of your business.

To calculate ACV divide the total annual contract value of customers by the total number of customers.

3. Customer churn rate

The percentage of customers who unsubscribe from your service each year. A data-driven approach should help you build products that better satisfy customers, resulting in a reduction in churn rate.

To measure customer churn rate, divide the number of lost customers during a specific period by the number of customers at the start of the period. Multiply this number by 100.

4. Customer monthly growth rate (CMGR)

The rate at which your business adds new customers each month. A consistent increase in CMGR indicates sustainable growth.

To calculate CMGR, divide the number of new customers within a specific month by the number of customers at the start of the month. Then, multiply by 100.

5. Net promoter score (NPS)

Helps you determine whether customers are loyal to your brand. Part of achieving sustainable long-term growth is cultivating loyal customers, making NPS an essential metric to monitor.

To gather your NPS, you’ll need to collect feedback from your customers using a survey app. Many businesses rely on NPS software to automate survey distribution, track responses, and calculate scores efficiently. Ask ‘How likely would you be to recommend us to friends or family?’ and respondents will assign a score between one and ten. They will then be placed into one of three groups:

Promoters – Scores of either 9 or 10.
Passive – Scores of 7 or 8.
Detractors – Scores of 6 or lower.

To calculate NPS, subtract the percentage of detractors from the percentage of promoters. Scores zero or above are generally seen as positive NPS.

How to use data for SaaS growth

There’s no denying that data is a valuable resource. But how can you implement a data-driven strategy for SaaS growth?

Stick to the following tips to give a data-fueled boost to your business.

1. Enhance customer acquisition

Acquiring new customers can be expensive and time-consuming for SaaS businesses. It can also be a process of trial and error. You might spend too long chasing the wrong sorts of leads and waste valuable resources. Accurate and clean data helps to cut out the guesswork and speed up the acquisition process.

Gather as much information as you can about your customers. Use these insights to build detailed buyer personas and gain a full picture of your ideal customer. You can tailor your marketing and sales activities to appeal to these personas and pull in more customers.

You’ll need to gather the following information about your customers to create a persona,

Their demographic: The age and gender of your customer. Where do they live, what industry do they work in, and what is their average income?
Their character traits: The interests and hobbies of your customer. You may also consider their values and lifestyle choices.
Their pain points: What does a customer struggle with, and how can you help them overcome their difficulties?
Their preferred communication channel: Different customer groups utilize different communication channels. Does your customer prefer email, SMS, social media, or phone calls?

3. Reduce customer churn

What do customers think about your brand? Which aspects do they find most difficult? Answering these questions is key to reducing customer churn.

Luckily, there are many ways you gather data to understand customer complaints. As mentioned, tracking your Net Promoter Score can help you identify ‘detractors’ in your audience. You can target these audience members with further questions to understand their complaints.

You can also leverage product data to uncover customer pain points. In which areas is your product providing lower levels of user experience? Let’s say that a certain button is difficult to select. You can quickly change its size or position to enable an easier experience.

Remember: This form of data collection often requires permission from users. Make sure you have the appropriate tools to gather consent, such as a consent management platform.

4. Optimize pricing models

You need to aim for a fine balance when pricing your SaaS product. You should charge an amount that will guarantee healthy revenue while making sure customers feel they’re getting a good deal. To achieve this, you’ll need to create pricing models that fit the needs of different types of customers. Data can help you dig deep and understand customer needs.

For instance, by segmenting product usage data, you can understand how different groups utilize your product. For instance, some users might use more features than others. You can then create pricing tiers that better reflect what different customers want.

You can also conduct ‘sales analysis’, where you’ll collect as much sales data as possible to gain useful insights. Through this process, you may find there’s more demand for your product during certain periods. You can add a price increase for new customers during these times.

5. Effective product development

To stand out from the crowd, your SaaS products need to provide a perfect user experience. What’s more, they must be better than what your competitors are offering. Data is key to understanding customer wants and pain points and adapting accordingly.

Product data, customer surveys, and online comments are all useful sources for getting inside the customer’s head. This information can be used to improve your offering by addressing common complaints. Your increased customer knowledge can also be brought into future development, ensuring new products hit the ground running.

Remember, don’t just focus on internal data. What are potential customers saying about your competitors? These insights can help you outshine the competition, turning their product pain points against them.

6. Long-term financial growth

Your business might be financially healthy now, but what about in a year? Part of running a successful SaaS business is planning for the future. Strong, reliable data makes the process of financial planning much easier.

Of course, you need the right software to paint an accurate financial picture. With SaaS subscription software you gain real-time insights into your data. This includes full visibility with complete reports and forecasts, and insights into CLTV, CAC, churn, and other important SaaS metrics.

In this way, data provides SaaS businesses with greater financial stability. You can plan more accurately and ensure business finances align with your growth plans. What’s more, you can anticipate market changes ahead of time. This way, you can be more prepared for new market trends.

Key Takeaway

There’s no escaping the fact that if you run a SaaS business, you need data. It’s the key to knowing your audience inside out. You’ll be able to create more targeted marketing and sales materials, accurate financial projections, and bolster your internal processes. But having data isn’t enough; you need accurate and clean data, the right strategy, and a way to measure your success.

In this article, we’ve explored some essential metrics for SaaS growth. Be sure to bear these in mind as you carry out your strategy. We’ve also shared some tips for using data effectively. Whether it’s for product development, pricing, or reducing churn, make sure to use data to its fullest potential.

With the right strategy, you can build an effective SaaS business and stand out from competitors. So, why not get started?