If you’re in early stages of your SaaS business, finding a way to compartmentalize, monitor, and track your core elements is crucial to your success. Many experts have likened a SaaS business to a simple funnel with 3 core components, and that’s what we’re going to focus on here.
Marketing → Sales → Customer Success → Revenue
The top flow of your funnel is your marketing. This is where your traffic becomes leads. Leads move into the sales process, and either convert or don’t. Once a sale is made, the goal is to ensure customer success with your product. Finally, you’re going to experience some revenue!
Let’s break down each section and look at some tips and tricks to monitor, measure, and track.
Stage 1 = Marketing
Your marketing represents the very top of your funnel. This is where you start attracting potential customers to your business and attempt to lead them down your funnel. It’s essential that you’ve validated your product market fit at this stage, and continue to do so on a regular basis throughout.
The most basic explanation I can give you about ensuring you’ve nailed your product market fit (PMF) is to ensure you’re tackling a burning issue that people are actively seeking a solution for - and you need to be able to identify who these people are. Next, you need to create a minimum viable product and have that same group of people test and validate your idea. You do this before building a final product, as you’ll need their feedback to help ensure you create the best possible product. We’ll dig deeper into this concept in another blog post.
With your marketing, there are some key things you need to monitor to ensure you’re nailing the product market fit.
If your PMF is on track, you will see:
Most of your signups will come from organic, non-paid sources. Your registrations will grow consistently month to month.
If you’ve missed the mark, you’ll find that the bulk of your signups are coming from paid sources.
Ideally, you should see at least 3-5% conversions from prospects who visit your website.
If you’re only getting around 1% of people converting, that’s not a good sign.
You should have at least 5-10% of users who opted-in for your free trial transition into paid customers.
If you’re only getting 2-3% of people converting, or less, it’s a strong sign your product market fit is off.
You experience a steady increase of high-quality inbound leads, but you’re also able to generate leads through outbound marketing.
If all of your customers come from outbound marketing, and most of them know each other, this signifies a problem.
If you’re not seeing the numbers you should be, the easiest place to start is with tackling the conversion rates. Ensure your messaging is clear, simple, and powerful. Do the work to ensure you’re targeting the right customer segment, and see what you can change to get your customers to their ideal outcome faster.
All leads are not created equal
Once you’ve clearly defined and understood your main metrics, it’s time to consider your sales channels. You’ll need to create a system to calculate and monitor your sales-qualified lead (SQL) cost per acquisition channel.
When you’re in the seed stages of your business, it’s advised to focus on ONE paid channel that’s both scalable and delivering the lowest cost of acquisition. Unpaid acquisition should remain your top priority channel, and you want to start writing content to grow your inbound acquisition as early as possible.
Once you’ve got your marketing figured out, it’s time to focus on your sales process.
This topic is a big one, so we’ll continue tomorrow with the last two sections: sales and customer success.