In the practice of vendors, the cost of a license provided under the SaaS scheme is 3 years of installment from the cost of the “boxed” licensing scheme, excluding server costs and 5 years with them. In the Quickme practice, we made the cost of an email box such that it was within the ARPU understanding of our potential partners – cloud providers, hosting providers, telecom companies and did not differ much from their worldview. When you have nothing to compare with and you are making a new product, such as Dental-Cloud, a niche service for automating dental clinics, you can be guided by the logic of “we skim the cream” and make the cost of the service higher.
The cost of attracting a client – unfortunately, it is high and not much different from the cost of attracting a “boxed” client. You need to live with this and understand that the profit from the client will happen a few months after the fact of the sale.
Sale period – for SaaS it is several months, including the trial period, and you can reduce it only by playing with free access, for example, by reducing it to two weeks.
In customer retention:
Service usage period — the time that the client uses the service. In practice, a period of one and a half years can be considered a good one. If the service closes places that are critical for business, then I will assume that the terms can be up to 3 years – this is exactly the cycle in which the company either rethinks its IT strategy, or organically grows to the next level requiring software replacement – it scales (opens branches, for example). The bad news is that in 5 years 50 percent of small businesses will close, and in this scenario, exactly half of your customers will remain with you.
The percentage of customers who abandoned the service – the lower the indicator, the better. In the practice of successful projects, this is 2-4% in a cohort – a sample of customers who bought the service in one period of time.
The percentage of returning customers – well, forgive them, but without a discount this time and I believe that the percentage will always be small – dragging data from application to application is too complicated and costly. As a result, 99 percent of your customers will be lost forever. On the other hand, it is high time for SaaS developers to learn how to do normal data uploading – this is a good argument for increasing trust in the cloud and, hypothetically, the reverse path to your service.
Like others (niche of Internet services for business)
I am not a big project specialist from the segment and therefore turned to my colleagues with a request to share their experience. To understand the situation, I ask questions about the use of metrics to specialists from the Witget.com widget creation service and the Usability Factory website usability testing service.
СEO “Usability Factory” Maxim Kozlov
— For me, generally accepted metrics of Internet stories are important — MAO, CTR, CPA, CAC, because my landing page sales strategy. The service itself is not complicated and I implemented the work with testing tools as simply as possible – creating tests, conducting tests with the ability to record results, the function of working with the site during testing, convenient work with reports.
Witget CEO Vyacheslav Davidenko
Witget is a service that uses widgets to increase website conversions. The client creates an account in our service, then installs the code on his site, after that he selects a widget to display on his site and activates it.
In addition, our service is not yet monetized, so at the moment we do not track all the parameters that are associated with the first payment, repurchase, etc.
We are currently interested in the following metrics:
– CPA – the cost of a click in advertising and the cost of registering in the service,
– ARPU and ARPPU – we need to determine the average income per user. This is an important metric for us, especially at the stage of implementing monetization, when we need to understand whether the revenue per user covers the cost of attracting him.
– Retention – most SaaS is built on a subscription model. This means that every possible effort must be made to ensure that the client pays for the second month, for the third, and so on.
– Life Time Value, showing what income we expect to receive on average from a client for the entire time of using our service.
— Also, due to the specifics of the business, the time from the moment of registration on the site to the moment of activation of the product and the start of its use is important for us. If registration takes longer, then there is a high probability of losing a client at one of the steps. Therefore, in the case of a long-term activation of the client, it is necessary to improve the service and simplify the work with it so that the client quickly moves from an interested user to an active user.
— the average daily number of widget impressions on client sites — the more widgets a client uses, the greater their engagement.
Acquisition cost is a less important metric for SaaS, since the costs are associated only with the content of the programming team.
As we can see, different metrics are important for different SaaS segments, and their choice is directly influenced by the service promotion strategy and their purpose.