Marketing Funnel KPIs: How To Define Success at Every Stage of the Funnel in SaaS?

How can you use marketing funnel KPIs to ensure success at every stage of the funnel?

SaaS business models depend on repeat purchases to grow revenue and meet profit goals. This makes it crucial for them to map their marketing efforts based on the customer journey and grow the business efficiently.

So let’s find out how you can leverage data to streamline your product marketing decisions and secure a steady route to success.

TL;DR

• A marketing funnel is a visualization of a customer’s journey with your business, from acquiring them to turning them into loyal brand advocates.
• A marketing funnel helps you understand your customers in-depth and develop effective marketing strategies. It is created to attract potential leads and convert them to paying customers quickly.
• On the contrary, the sales funnel drives the marketing-qualified leads from the marketing stage to conversion.
• There are 5 main stages in the marketing funnel: awareness, consideration, conversion, retention, and loyalty.
• Key awareness stage KPIs are ad clicks, blog post views, and SEO rankings.
• Key consideration stage KPIs are pricing page clicks, case study views, and the number of demos requested.
• Key conversion stage KPIs include marketing qualified leads: product qualified leads conversion rate, product qualified leads: sales qualified leads conversion rate and a free trial to paid conversion rate.
• Key retention stage KPIs are customer retention rate, customer lifetime value, customer satisfaction score, and customer churn rate.
• Key loyalty stage KPIs are net promoter score and the number of reviews or recommendations given.
• With Userpilot, you can track marketing funnel KPIs by creating welcome screens to collect user data, tracking in-app user interactions, using custom goals to analyze the customer journey, and sending microsurveys to gather customer feedback.

What is a marketing funnel?

A marketing funnel is the illustration of the journey of a customer through your business, from acquisition to advocacy. The model encompasses multiple layers of user engagement with your company.

Why are marketing funnels important for an effective marketing strategy?

The marketing funnel allows businesses to understand customers’ needs at every stage, optimize their product marketing campaign, and drive more revenue. Here’s how it can help you create an effective marketing strategy.

As mentioned in the definition, marketing funnels give you an overview of the customer journey from initial awareness all the way through conversion.

This also helps you gain a deeper understanding of customers, such as their perceived value of your brand, purchasing behavior, and favorite product or service features.

Furthermore, the marketing funnel provides a valuable framework that you can use to analyze your company and identify its areas of improvement. You can also discover friction points and eliminate bottlenecks to increase customer satisfaction and engagement.

Marketing funnels are even great for enhancing your brand’s communication with your customers. You can offer relevant information to customers at the right time and across the right communication channels.

Marketing funnel vs Sales funnel

Sales and marketing are closely related since one is heavily impacted by the other. Your marketing efforts ensure growth in sales, making the sales funnel an essential segment of the marketing funnel.

On the one hand, the marketing funnel is developed to quickly draw in potential leads and convert them to paying customers. On the flip side, the sales funnel drives the marketing-qualified leads from the marketing stage to conversion.

However, note that the sales and marketing funnels should be properly aligned with each other.

What are the stages of the SaaS marketing funnel?

As the SaaS model is subscription-based, it’s heavily reliant on customer retention. This distinguishes the SaaS marketing funnel from that of e-commerce businesses.

Marketing funnels consist of five stages: awareness, consideration, conversion, retention, and loyalty. Let’s take a brief look at them.

Awareness stage

The awareness stage is where potential customers get to know about your product for the first time. This stage is thus about brand building.

Your first customer touchpoint at this stage will likely take place via a social media post or a search engine result. Thus, you should focus on your search engine optimization (SEO) strategies and drive potential users to make the first click. You should also think about leveraging paid advertising that sends just the right brand message to attract visitors.

Consideration stage

The consideration stage is users are already aware of the problem they are experiencing and are returning to interact with your SaaS product for the second time. They want to try out your product.

Users can now attend your webinars, request a demo to know more about your product, sign up for your newsletter, or read a case study on your blog.

Conversion stage

The conversion stage is the decision-making stage. After evaluating your product, leads will convert to paying customers if they find your product worth investing in.

However, the definition of conversion differs from business to business. Your conversion target could be a free trial to paid conversions, marketing-qualified lead to product-qualified lead conversion, or product-qualified lead to sales-qualified lead conversion.

Retention stage

This stage is about meeting and even exceeding customer expectations. This is where you provide continuous value to users, so they stick to your product. Moreover, the retention stage presents an excellent opportunity for expanding your monthly recurring revenue through upsells and cross-sells.

Loyalty stage

Going beyond retention, this stage is where your customers find so much value in your product that they start actively advocating for it. They refer your product to others through word-of-mouth or online reviews and bring in a crowd of new users or visitors.

The loyalty stage thus consists of your power users. It is critical for you to appreciate your loyal customers and help them in spreading the positive word about your product.

What are the key marketing funnel metrics and KPIs to measure success?

Now let’s see which marketing funnel KPIs are the most important at each stage.

Awareness stage key performance indicators

Are you looking for metrics to measure to check whether you are attracting your target market?

Ad clicks

Your ads won’t be effective if it’s not relevant to your target audience. When they use the ad, your brand message should resonate with them and help them see how your product can be worth their money.

The number of ad clicks lets you see how many users are interested in the ads, thus helping you improve your awareness strategy.

Blog post views

If your website has a blog, that’s another means of marketing your product to visitors. A visitor may come across one of your blog posts while looking for a solution. And who knows, they may even realize the value of your product along the way.

This makes it crucial for your blog posts to cover all the relevant points about a particular topic so that readers find it helpful. Moreover, they are a great way of branding yourself as the best solution for readers’ particular pain points.

SEO rankings

Search engine optimization is a powerful means of potential users organically. The keywords you use for your ads or blog posts should rank high on search results, so potential users don’t miss out on them.

SEO rankings help you see how good your organic marketing efforts are. The keywords used should accurately capture your product, solution, and brand best.

Consideration stage key performance indicators

How will you know whether visitors have shown interest in your product? Here are three metrics to track this.

Pricing page clicks

If someone considers using your product, they will check the pricing page to know how much they have to pay for it. Thus, you should keep track of the number of pricing page clicks and identify the subscription plan with the highest number of clicks.

It’s better to have more than one pricing package to let your users choose the one that would suit their needs the best. Plus, you should attach relevant calls-to-action with each plan so interested prospects can know how to contact you.

Userpilot pricing

Case study views

An interested visitor is likely to check out any case study on your website. This is because case studies are detailed accounts of a customer’s success stories with your business.

The more visitors read your case studies, the more likely they are to develop a good perceived value of your product and convert to a user in the next stage.

Number of demos requested

Another way prospects show interest is by asking your sales team to show the product in action. More demo requests mean you have more opportunities to highlight the core features of your product and how they can help users achieve their goals.

Conversion stage key performance indicators

How successful are your marketing and sales efforts at converting prospects into customers?

Marketing Qualified Leads to Product Qualified Leads conversion rate

Your marketing-qualified leads (MQLs) are prospects or leads who have only interacted with your marketing efforts. They have shown some interest in your marketing activities but might not be interested in your product yet.

On the other hand, product-qualified leads (PQLs) are the users who have tried out your product and gained value from it. Keeping a high MQL to PQL conversion rate increases the likelihood of leads becoming paying customers.

To measure the rate, divide the number of MQLs by that of PQLs, and multiply the ratio by 100%.

Product Qualified Leads to Sales Qualified Leads Conversion rate

Now, what are sales-qualified leads (SQLs)? They are the leads who are interested enough in your product so that you can convince them to make a purchase. A high PQL to SQL conversion rate suggests your sales and marketing efforts have paid off.

To calculate the rate, divide the number of PQLs by that of SQLs, and multiply the result by 100%.

Free Trial to Paid conversion rate

Another metric for tracking conversion is the free trial to paid conversion rate. Your free trial users are PQLs and are much easier to convert than MQLs. The higher the trial-to-paid conversion rate, the lower your customer acquisition cost.

To measure the rate, divide the number of trial users who became paying customers by the total number of trial users during a specific period and multiply the value by 100.

Retention stage key performance indicators

How successful are you at retaining your converted customers?

Customer retention rate

Retention rate is the percentage of users who continue to use your product because of the value they get from it. It’s the ratio of paying customers at the end of a given period by the number of paying customers at the start of that period, multiplied by 100.

Retention is made all the way more important for SaaS businesses, as repeat purchases are a must to make the business sustainable. Thus, your goal here is to prevent churn and increase customer retention.

Customer lifetime value

Customer lifetime value (CLV) is the expected revenue stream your business can generate from one customer over the period they are a paying customer. It’s equal to the ratio of the average revenue per account to the customer churn rate.

Your CLV should be higher than your customer acquisition cost. In fact, the CLV/CAC ratio should be at least 3:1 to maintain a financially healthy business.

Customer satisfaction score

The customer satisfaction score (CSAT) is a measure of a customer’s satisfaction level and experience with a particular feature, product, or interaction. To get this score, send a CSAT survey that simply asks users to rate their experience on a scale, e.g., from 1 to 7.

Track CSAT at various touchpoints in the customer journey to understand the overall level of user satisfaction.

Customer Churn Rate

The churn rate measures the percentage of customers who downgraded or canceled their subscription plan. It’s equal to the number of customers who left during a given period divided by the number of customers present at the start of that period, multiplied by 100.

Churn is on the flip side of retention. Reducing churn will improve your retention rate, which in turn, will increase your CLV.

Loyalty stage key performance indicators

How loyal are your retained customers?

Net Promoter Score

The net promoter score (NPS) is a key metric for measuring user sentiment and loyalty.

You should use an NPS survey that asks users to rate their likelihood of recommending your product to others on a scale from 1 to 10. This gives you three sets of customers, as shown below. The NPS is the difference between the percentage of promoters and detractors.

NPS feedback analysis helps you understand what makes detractors unhappy. You can offer improved, personalized experiences to them and bring them back from the verge of churn.

Number of reviews or recommendations given

Along with measuring the likelihood of a recommendation, you should also track the number of recommendations or reviews actually given. The reviews help you know exactly what users feel about your product.

How to track the marketing funnel KPIs with Userpilot?

Userpilot is a product growth platform that allows tracking and optimizing the metrics at every stage of the customer journey.

Here’s how Userpilot can help you track your marketing funnel KPIs.

Use welcome screens to capture customer data

With Userpilot, you can create welcome screens code-free!

Welcome screens allow you to not only greet new users but also collect their data. You can ask questions like what’s their goal, where they came from, and/or how they heard about your product. This will allow you to personalize the flows and make them relevant.

Here is how Postfity uses welcome screens, created by Userpilot, to capture customer data to use later.

Track in-app user interactions and detect the drivers of retention

Monitor customer interactions inside your product to see what engages them the most. Identify the features that are used frequently and those that are not used at all. The latter could be due to a lack of awareness or a lack of value.

Tracking and analyzing user interactions helps you understand what motivates them to stick to your product or what causes churn.

With Userpilot, you can track not only feature usage but also other in-app interactions such as clicks, hovers, text inputs, etc.

Set up custom goals and analyze the customer journey

You can custom establish goals with Userpilot that users need to do to achieve their jobs to be done. Track progress toward these goals and combine the insights with other analytics to analyze the entire user journey. This helps identify and remove bottlenecks to improve user experience.

Send microsurveys across different stages to collect feedback and measure customer loyalty

Customer feedback is crucial for tracking metrics like NPS and CSAT.

Userpilot lets you create and send microsurveys after major milestones or interactions to measure user satisfaction and loyalty. You can even analyze the responses and categorize feedback based on answers. Then you can use the data to act on the feedback and improve customer experience.

Conclusion

The KPIs discussed in this article will help marketing teams develop well-informed strategies as well as track their own progress at each stage of the marketing funnel.

Keep an eye on the key metrics and compare them with industry benchmarks to see how you’re performing.

Want to start tracking your marketing funnel KPIs and improve those metrics code-free? Get a Userpilot demo and boost your product marketing efforts.