The SaaS market is evolving fast, adopting advanced technologies and promising huge growth potential. Because of the high competition in the field, SaaS companies have to be focused and creative to not get lost and die in the overcrowded ecosystem. Instead of hoping for pure luck and making decisions based on intuition, they need solid data to rely on. And this is where SaaS analytics come into play.
In simple words, SaaS analytics is how software-as-a-service companies track data in order to make data-driven decisions that help them grow and scale. To succeed, companies need to know everything about their SaaS business — from how it functions to where it fails.
Below in this article, you will learn four main reasons why SaaS businesses need data analytics.
Find growth blockers
A huge benefit of setting up a SaaS data analytics system that stores historical data from multiple sources is that you can find bottlenecks that stifle growth opportunities. Can you do this with the help of an analytical dashboard? You can if it displays proper metrics.
It’s important to not only select metrics, but also track their correlation and act on the results. For example, customer support tickets can provide you with many insights on how you can improve your SaaS product: enhanced features, additional functionalities, revamped UI, etc. However, this information is not directly connected to analytics. In this example, active user metrics as a part of SaaS analytics can give more valuable insights. When you see that usage is dropping on a particular feature, it signals there’s been a failure on your part that needs improvement.
Finding out what correlates with higher sales helps focus resources on improving aspects of your business that may lead to faster growth.
Therefore, the dashboard itself is not a magic pill. Not least important is the ability to read the data in the right way. That’s not a beginner-friendly task, so you may have to use the help of data experts.
Track growth dynamics
One of the most important things a business owner can do for their business is to monitor its growth. Month-over-month growth figures across the most important business metrics can show how well your business is doing or signal that a change in strategy is needed.
A well-managed SaaS analytics system turns gigabytes of sales and marketing data into a handy SaaS dashboard that shows all the important metrics.
You want to track the year-over-year and month-over-month change in revenue, sales volume, customer growth, and churn rate. The change in these is a strong indicator of how well a business is doing.
It’s even better if you can view these metrics in the quarterly or monthly form to see the change more clearly. Learn more details about what SaaS metrics you should track here.
See how well new strategies perform
Analytics for SaaS allows business owners and CEOs to not only monitor how the business is doing overall over long periods of time but also track the performance of specific business decisions.
You can track performance on select email campaigns in comparison with the ones you employ regularly. This can be done easily by comparing the number of conversions from different campaigns in a dashboard.
Or you can compare sales performance after you’ve implemented a new sales or marketing strategy. That would be a bit more complicated — you’d have to look not just for growth, but for month-over-month growth larger than in previous periods. This way, you’re checking if the new strategy is more effective than the previous one.
Forecast revenue potential
A feature of data analytics that is important for any business, and is of utmost importance for startups, is the ability to predict future revenue. You can do a rough estimate by going with the current average month-over-month revenue growth to see what the revenue is likely to be in six to twelve months.
Knowing that allows you to budget for the future — when to increase spending and when to cut it.
Of course, any prediction based on historical data is only a projection. There are multiple factors at play when it comes to the functioning of a business. You can arrive at a more accurate picture of the future if you run prediction calculations with different key metrics.
This allows you to figure out how much the sales increase or customer churn can change before it affects the bottom line significantly.
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