The SaaS industry is evolving rapidly and facing a lot of competition. The global SaaS market is expected to grow to $1.23 trillion by 2032. In B2B SaaS marketing, it is important to clearly understand your performance if you want to achieve sustainable growth.
However, there are several metrics at your disposal, and that can be overwhelming. Here is where benchmarks play a vital role by acting as guideposts and helping you compare your performance against industry averages and identify areas for improvement.
This blog post discusses the ten most essential B2B SaaS marketing benchmarks you need to be tracking. Let’s look into it.
Marketing benchmarks are reference points that allow you to compare your marketing efforts against competitor performance or your own past performance. They provide a valuable perspective on how your marketing activities are measuring up.
Marketing benchmarks are important because they allow you to set achievable yet ambitious goals. Moreover, they expose areas where your marketing might be underperforming, and you can track your progress and identify trends.
There are three main types of marketing benchmarks.
These benchmarks compare your performance against the average metrics for your specific industry. They are widely available through research reports and marketing data platforms. Industry benchmarks provide a general understanding of how your marketing efforts stack up against your industry peers.
Marketing is diverse. What works in one industry may not work in another. For example, a B2B SaaS company that sells marketing automation software may not have the same strategy as a business that offers accounting solutions. Industry-specific benchmarks account for the unique factors (like customer behavior and pricing models) that influence marketing performance within a specific sector.
Furthermore, you can compare your performance against industry averages for your specific section to gain a more accurate picture of your strengths and weaknesses.
The process of comparing the marketing performance of your company against your direct competitors is called competitive benchmarking. It includes identifying their strengths and weaknesses and marketing strategies and using these to refine your own approach. You can set more realistic and achievable goals for your own marketing campaigns.
Here are the main steps for conducting competitive benchmarking.
Identify three to five of your direct competitors.
Find out your share of the market’s web traffic.
Analyze the specific website traffic numbers for each marketing channel.
Look at your and your competitors’ social media followers on different platforms to evaluate the audience.
Compare your keyword rankings with your competitors
Check your share of voice to see how prominent your brand is in comparison to others.
You can use tools like SEMrush, Brandwatch, Sprout Social, Ahrefs, and Google Analytics for tracking.
Historical benchmarking is the process of comparing your current marketing performance against your own past performance data. You can analyze trends and changes over time if you want to gain a better understanding of the effectiveness of your marketing strategies and identify areas where they may yield positive results.
The most useful benchmarks are always found within your organization. Historical data allows three Rs of benchmarking - relevance, reliability, and realism. You can use the data to factor in anomalies such as surpluses and budgets and improve them for your later tasks.
Investors can use the following strategies for historical benchmarking and to improve their estimates.
Define the scope and objectives of benchmarking.
Gather and examine historical data from similar projects.
Cleanse and organize the data
Identify key performance indicators (KPI).
Compare and adjust your estimates with the benchmarks. Take these benchmarks from other projects or industry standards.
Identify opportunities for improvements
Effective marketing relies mainly on measuring and analyzing your performance. Here is a breakdown of some of the most important marketing metrics to benchmarks.
Customer acquisition cost represents the average cost associated with acquiring a new customer. It includes all marketing and sales expenses that may have been incurred during customer acquisition.
Here is how you can calculate it.
CAC = Total Customer Acquisition Costs / Number of Customers Acquired in a Specific Period.
A healthy CAC should be lower than your Customer Lifetime Value (CLTV).
2. Customer Lifetime Value (CLV)
CLTV is the total revenue that a customer is expected to generate for your business over their entire relationship with your company. There are different methods to calculate it, but a common approach is:
CLTV = Average Customer Revenue Per Year * Average Customer Lifespan
A higher CLTV means that you have a sustainable business model. CLTV benchmarks are highly industry-specific. Generally, your CLTV should be at least 3 times your CAC.
Churn rate is the measure of the percentage of customers who cancel their subscriptions or stop using your product or service within a timeframe. If you have a low churn rate, it means you have a healthy customer base. Here is how you can measure it.
Churn Rate = (Number of Customers Lost in a Period / Total Number of Customers at the Beginning of the Period) * 100
A range of 5-7% monthly churn is considered a good practice for many B2B SaaS businesses.
MRR allows you to calculate the predictable monthly revenue your business generates from subscriptions or recurring payments. A good MRR depends on your target customer market and the size of your own market. Additionally, a healthy MRR should show consistent growth over time and have a sustainable subscription business.
Lead conversion rate measures the percentage of total leads or marketing qualified leads (MQLs) who convert into paying customers. This is how you calculate it:
Conversion Rate = (Number of Converted Leads / Total Number of Leads) * 100
Lead conversion rates can vary significantly based on industry, qualification criteria, and marketing channel.
You can use sales cycle length to measure the average time it takes to convert a lead into a paying customer. Knowing the sales cycle length allows you to work on the sales funnel and its effectiveness, as well as, manage resources properly. It is possible to compare the time it takes to close deals for a specified duration and use an approach such as CRM to manage this activity.
In general, the length of the sales cycle depends on the product or service offering and the target market. However, it should be noted that for long-term effectiveness and success, it is wiser to strive for a shorter and more productive sales cycle and avoid customer leakage.
MQLs are potential customers who have expressed serious interest in a business organization and its products or services and are thought to be prepared for selling. MQLs denote high-quality leads and are likely to become customers since they show a keen interest in the firm’s products. If you know your MQL-to-customer conversion rate, this will help you determine the efficiency of your marketing strategies in producing qualified leads.
CSAT allows you to measure customer satisfaction with a specific interaction, like a product purchase. To gather CSAT scores, you can conduct surveys that ask customers to rate their satisfaction on a scale, such as 1–5 stars.
Although the benchmarks vary, a CSAT score above 70% is considered positive and means that your customer is satisfied.
NPS is a metric that allows you to calculate customer loyalty and satisfaction. It is measured based on how willing a customer is to recommend your product or service to others, typically on a scale of 0-10. The typical ranges include:
Detractors (0-6): Customers are unhappy and unlikely to recommend your product/service.
Passives (7-8): Customers are neutral and might be vocal about your brand.
Promoters (9-10): Customers are loyal and enthusiastic about your product/service and are likely to recommend it to others.
Revenue growth rate measures the percentage increase in the total revenue of your company from one period to another, like month-on-month or year-on-year. It allows you to evaluate the overall success and financial health of the company.
A healthy and sustainable growth rate can range from 10% to 30% annually for established businesses. For startups in hyper-growth markets, even higher rates might be achievable
You have to use the right tools and resources to gather and interpret data. Some of the most common tools include the following:
Google Analytics - provides a detailed insight into website traffic and marketing campaign performance.
Similarweb - allows you to benchmark your website traffic sources and audience demographics against your competitors.
Sprout Social - gives detailed social media analytics for tracking engagement and competitor performance across different platforms.
Brandwatch - helps monitor brand mentions and track industry trends.
SEMrush - offers a suite of SEO tools like keyword research and backlink tracking to benchmark your website’s search engine optimization performance.
Ahrefs - has an SEO toolset that provides insights into competitor keyword rankings and organic traffic sources for benchmarking purposes.
HubSpot Marketing Hub - An all-in-one marketing platform that includes features for website analytics, CRM, social media management, and email marketing automation. HubSpot offers free resources and benchmarks that help you understand industry averages for key marketing metrics.
In summary, benchmarking is essential for B2B SaaS companies to navigate the competitive landscape and achieve sustainable growth. By tracking key metrics like Customer Acquisition Cost, Customer Lifetime Value, and Monthly Recurring Revenue, and using tools such as Google Analytics and HubSpot, you can evaluate your performance against industry standards, identify areas for improvement, and make informed marketing decisions. This approach helps optimize your strategies and stay competitive in the rapidly growing SaaS market.