What Are The Sales Funnel Metrics That Matter and Grow MRR?
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A sales funnel is an essential tool for understanding your current lead volume and what that means for future return on investment (ROI) on sales and marketing activities. Purpose-built sales funnels will help you to identify the pipelines that are lagging behind in conversions and provide ways of improving the processes within them. For this to happen, there are a set of important metrics, specifically applicable to SaaS, that can help you to monitor and adapt your strategies accordingly.
For SaaS companies looking to benefit from inbound marketing methodology while still achieving high-yielding results with fast turnaround times, this approach to continuous improvement through the study of funnel metrics is key.
Table of contents
What is a sales funnel in B2B SaaS marketing?
A sales funnel in the traditional sense, helps you to identify sales qualified leads and generate more of those. It encompasses the actions that your sales team take, and the tools you use to nudge the buyer along their journey towards the bottom of the funnel where the conversion and sale occurs.
When it comes to marketing your SaaS to other businesses, the purpose of your sales funnel should be to:
- Book more demos and trials.
- Provide insights into which tactics and strategies are working.
- Optimise your conversion rates.
- Extract maximum ROI from your marketing and sales activities.
Within the sales funnel, you should be able to determine the quality of your leads, analyse your conversion rate optimisation (CRO) and monitor your campaigns at every stage of the customer's journey.
Why track sales funnel metrics?
The digitisation of the marketing landscape has allowed businesses to be far more accurate when it comes to measuring the ROI from their sales and promotional efforts around lead generation and conversion. Instead of looking at campaign outcomes on a quarterly or even annual basis, we can now monitor every step of the buyer's journey by looking at the real data surrounding our key performance indicators (KPIs) and the quality of our sales cycle.
SaaS businesses are particularly sensitive to churn and, therefore, must take immediate action when specific metrics indicate a decline in engagement or conversion. By keeping an eye on pipeline sales metrics, you can increase your customer's lifetime value (CLV) and reap the rewards of a long term relationship between your brand and its advocates.
Monthly recurring revenue (MRR) is a significant metric to watch because it tracks the predictable revenue you're expecting to generate every month. Since the success of SaaS businesses is closely tied to their growth potential, understanding how this metric is calculated and what steps you can take within your SaaS sales funnel to optimise it should be a priority.
Companies that track their key conversion points are able to continuously optimise their sales funnel to attract more high-quality leads. In turn, this fills your sales team's schedule with plenty of profitable interactions and phone calls to make.
What are the metrics in the sales funnel?
There's a plethora of important metrics to observe, each providing valuable insights into how your business and its processes are performing. When it comes to the sales funnel, however, there are some notable metrics that every sales and marketing team should keep an eye on.
Conversion rate is worked out by looking at your total number of sales in relation to the total number of leads in a given period.
2.Customer lifetime value (CLV)
CLV helps you to understand how much money your customer will spend on your products and services throughout their relationship with your business.
3.Customer churn rate
Customer churn rate is the number of customers that cancel their subscriptions of free trials.
4.Visitor-to-lead conversion rate
Visitor-to-lead conversion rate shows how many website visitors actually became leads.
5.Lead-to-customer conversion rate
Lead-to-customer conversion rate shows the number of leads that became paying customers in a specific time period.
Win rate refers to the number of opportunities that your sales team has been able to convert into sales.
All of these metrics demonstrate the effectiveness of your conversion path and help you to see whether your sales funnel is bringing you closer to the end goal. To get more in-depth definitions of the metrics discussed above, click here.
What are the best practices for optimising funnel metrics?
Consider your sales funnel as an extra member of the sales team; the impression it makes on a lead will determine the outcome of the interaction. Using blackhat marketing tactics to optimise your sales funnel metrics won't align with your inbound objectives, and, sooner or later, the whole thing will crumble.
For SaaS companies, in particular, finding ways to grow ethically is essential. That includes building you business up as a customer-centric service provider that offers support and reliable information specifically targeted at its buyer personas.
Three easy steps for sales funnel optimisation
- 1. Start by evaluating your current position. Review the effectiveness of your existing content for each stage of the buyer's journey, along with the CTAs you've placed around this.
- 2. Look for ways to improve existing components in your SaaS sales funnel by A/B testing everything from imagery, copy and form length, right through to the ads and emails you're sending out.
- 3. Map out the possible conversion paths a typical user may take throughout your website and assess the conversion metrics on each page where you direct users to. Check for any blockers that are disengaging visitors and causing them to abandon the website.
These basic steps will help to ensure that your marketing content is always addressing your lead's questions throughout the sales cycle. Due to the nature of the SaaS industry, which is continually subject to upgrades and improvement, review and optimisation of content should be a scheduled activity. Because we're always keeping an eye on MRR, you want to ensure that your ads are reaching valid audiences and that you're not applying a set-and-forget approach to your digital advertising.
At Klood, we often talk about the importance of being thorough with your sales funnel formation. Taking a generic approach to growth won't cut it. Each sales funnel is unique, just like your SaaS solution. You should focus on understanding your buyer persona and the pain points that have inspired them to explore your offer. From there, you have to prompt them to take an action – the right action, one that will lead them into your sales funnel where they can sail through your content without any friction.
How do I know which sales funnel metrics will grow my MRR?
Great SaaS companies create lasting fanbases. These are customers that return every single month, pay their subscriptions, and sing your praises. To grow your MRR, however, you need to keep an eye on metrics such as:
- Conversion rate
- Cost of acquisition
- Customer lifetime value (CLV)
The figures extracted from these metrics can be used to get an accurate picture of your sales funnel's performance. You can then use this data to evaluate whether the structure of a specific sales funnel is providing value to your lead and resulting in a conversion at the end. It will also help you to understand the value of that conversion so that you're not basing your assumption on win rates which may not necessarily use evergreen marketing strategies or be an accurate representation of where your business is currently positioned. For example, plenty of top-of-the-funnel action doesn’t guarantee that what trickles through to the end will be worth the money invested in generating those leads.
If you'd like to start getting fast, measurable, and worthwhile results from your sales funnels, grab our One Page Sales Planner. Find out more about what may be causing you setbacks, and learn how to make the metrics in your SaaS sales funnel start working for you.
Do you want to fine tune your existing sales funnel and fill it full of great leads?
You can take home 4 tools to help you plan and deliver the results you need today!