How to track CAC CLTV and payback period for SaaS profitability

SaaS Marketers, Are You Ignoring the Metrics That Matter for Profitability?

 

Unleash SaaS Profitability

 

While SaaS marketing teams typically focus on top-of-funnel metrics such as website traffic and lead generation, it’s important to also consider the bottom-of-funnel metrics that directly impact revenue and SaaS profitability. These metrics include customer acquisition cost (CAC), customer lifetime value (CLTV), and payback period. By understanding and optimizing these metrics, SaaS companies can achieve sustainable growth and profitability.

As a SaaS marketer, it’s critical to understand the financial metrics that drive your company’s success. While top-of-funnel metrics like website traffic and lead generation are important, you also need to pay attention to bottom-of-funnel metrics that impact your company’s profitability. In fact, ignoring these metrics could put your company’s financial health at risk.

Key metrics to track for SaaS profitability:

  1. Customer Acquisition Cost (CAC) Your CAC is the cost of acquiring a new customer. According to ProfitWell, the average CAC for a SaaS company is $1.18, but this can vary depending on your industry and business model. To optimize your CAC, focus on attracting high-quality leads and reducing sales and marketing costs.
  2. Customer Lifetime Value (CLTV) Your CLTV is the total value a customer brings to your company over their lifetime. According to HubSpot, the average CLTV for a SaaS company is $3,000, but this can also vary depending on your industry and business model. To increase CLTV, focus on providing excellent customer service and delivering value through your product.
  3. Payback Period Your payback period is how long it takes to recoup the cost of acquiring a new customer. According to OpenView, the average payback period for a SaaS company is 12 months. To reduce payback period, focus on improving your sales process and increasing customer retention.

By the way, HubSpot offers a free tool that can assist you in assessing various SaaS retention techniques. This tool enables you to calculate and evaluate important metrics such as customer retention rate, customer lifetime value, net promoter score, and churn rates.

The relationship between marketing and finance departments is critical to optimizing SaaS profitability. According to a study by Gartner, by 2025, “90% of marketing organizations will collaborate closely with finance to connect their activities to financial outcomes.” By working together, marketing and finance teams can ensure that they’re measuring the right metrics and driving sustainable growth and profitability.

Here are some other statistics that highlight the importance of this relationship:

  1. 65% of CFOs say that marketing is a key strategic partner in achieving growth and profitability, according to a study by Deloitte.
  2. Companies that align their sales and marketing teams achieve 36% higher customer retention rates and 38% higher sales win rates, according to a study by Marketing Profit.
  3. Companies that adopt a data-driven approach to marketing and sales achieve 19% faster revenue growth and 15% higher profitability, according to a study by McKinsey.

By tracking and optimizing these metrics, SaaS companies can achieve sustainable growth and profitability. Don’t ignore the metrics that matter – focus on SaaS profitability to ensure the long-term success of your company.

 

Silos Mentality Reduction

Silos Mentality Reduction

Achieving perfect SaaS profitability requires a holistic approach that involves all departments of a company. The success of a SaaS company is not just the responsibility of the marketing department or the finance department; it requires collaboration and alignment between different departments to optimize the key metrics that drive profitability. Here are some steps that SaaS companies can take to achieve perfect SaaS profitability:

Establish clear goals and KPIs: The first step to achieving perfect SaaS profitability is to establish clear goals and key performance indicators (KPIs) for each department. For marketing, this could mean focusing on lead quality instead of lead quantity, while for finance, this could mean optimizing revenue and profit margins. Having clear goals and KPIs will help each department focus on the metrics that drive profitability.

Promote cross-functional collaboration:

To optimize the key metrics that drive profitability, it’s essential for different departments to work together. For example, marketing and sales teams should work together to attract high-quality leads that are more likely to convert, while finance and customer success teams should work together to optimize customer retention and CLTV.

Leverage data to make informed decisions:

A data-driven approach to decision-making is essential for achieving perfect SaaS profitability. By analyzing data, SaaS companies can identify trends, optimize processes, and make informed decisions that drive profitability. For example, by analyzing customer data, companies can identify which customer segments are most profitable and focus on acquiring more customers like them.

Focus on customer success:

A focus on customer success is critical for achieving perfect SaaS profitability. By delivering value to customers, companies can increase customer retention, CLTV, and reduce churn rates. To achieve this, SaaS companies should prioritize customer service, respond to customer feedback, and continually improve their product to meet the needs of their customers.

Invest in employee training and development:

To achieve perfect SaaS profitability, it’s essential to invest in the development of employees in each department. By providing training and development opportunities, companies can empower employees to make informed decisions, optimize processes, and drive profitability.

In summary, achieving perfect SaaS profitability requires a collaborative effort between all departments of a company. By establishing clear goals and KPIs, promoting cross-functional collaboration, leveraging data, focusing on customer success, and investing in employee training and development, SaaS companies can optimize the key metrics that drive profitability and achieve long-term success.

To learn more about achieving perfect SaaS profitability, get in touch with our team today. Let us help you unlock the full potential of your SaaS business!

e-commerce sales

One of the biggest differences between an online shop and a brick-and-mortar one is the checkout and e-commerce sales strategies and e-commerce growth process involved.

Marketplaces have been around for a while. Starting with the one near cities and towns, you will always find very interesting “small shops” where you can find absolutely anything. It seems obvious that bigger markets draw more customer visits than compact, single-source websites.

Checkout is the most important step for marketplaces and every other online channel. Should you have your own Marketplace just like Alibaba, Shopee, Rakuten, Etsy, Upwork, RapNet, Mercado Libre, Marktplaats, Taobao, Pinduoduo, Wayfair, eBay, or Amazon?

Two main characteristics define an online marketplace:

  • The same website is used by a large number of buyers and vendors.
  • Customers may buy things without leaving the app or website.

According to Statista, around 5.2 trillion dollars worldwide were spent on retail online shopping e-commerce in 2021. It is anticipated that this amount will increase over the coming years by 56%, reaching 8.1 trillion dollars e-commerce growth by 2026, making up over 24.6% of all consumer spending worldwide.

Marketplace models may be used for both B2C and B2B. Based on this Think with Google’s remark, if the e-commerce sales checkout experience is not tailor-made to meet the buyer’s expectations, the final transaction will never happen. In order to provide your customers with the most significant possible payment and shipping choices, you must streamline your checkout process as a good online shopping experience.

Here are some tips on how to optimize your checkout process and leverage marketplaces for maximum results:

Streamline the checkout process:
The checkout process is the most critical aspect of any e-commerce website. Ensure that the process is quick and easy, with as few steps as possible and by displaying a check-out progress bar. Consider offering guest checkout options, saving customer information for future purchases, and clearly displaying shipping and tax information.  27% of people who would have abandoned their online cart otherwise are persuaded to complete their purchase by a quick checkout process.

E-commerce Approaches

Offer multiple payment options:
According to Shopify, multiple payment options are always worth pondering as a key tactic. If customers are unable to use their preferred method of payment on the website, about 7% of them will abandon the checkout process. Offer as many payment options as possible to accommodate the needs and preferences of your customers. This can include credit/debit cards, PayPal, Apple Pay, Google Pay, and others.

digital marketing strategiesOptimize for mobile:
With the growing number of people shopping on their mobile devices, it’s essential to ensure that your checkout process is optimized for mobile. This includes having a responsive design and clear, easy-to-use buttons.

A practical example, the majority of shoppers use coupons, with email being the most popular source for finding them. The statistics also highlight that most people are attracted to discounts of 20% or more, however, according to Shopify, customers might abandon the purchase process once they see a discount code field.

Consider hiding the discount code field behind a dropdown to prevent potential customers from exiting the checkout flow to find a coupon. This makes it available for those with a promo code while not being off-putting to others purchasing without one.

Maximize Social Media Reach:
In the contemporary digital landscape, a multitude of social media platforms offer seamless e-commerce integration, with features such as in-app purchasing, shoppable posts, and prominent “Buy Now” buttons leading customers directly to a brand’s product page. This allows users to effortlessly share products they are interested in with their network, thus increasing the chances of them making a purchase.

Social media platforms such as Facebook, Instagram, and Twitter have emerged as powerful influencers in the e-commerce world, providing customers with the opportunity to discover and make purchases based on recommendations from trusted sources like friends, peers, and even popular influencers.

Utilize marketplaces:
Marketplaces like Amazon, eBay, and Etsy can provide significant exposure for your products and help drive sales. Make sure to fully utilize the features and tools provided by these platforms to optimize your product listings and increase visibility.

Provide clear shipping information:
Be transparent about shipping times, costs, and policies. This will help reduce the number of abandoned carts and increase customer satisfaction. Also, the smooth process of just entering their billing and shipping addresses into the system is important. The longer a person is in the checkout line, the longer they have to change their mind.

Use Google Autocomplete to expedite the process. It saves customers time by 20% and minimizes mobile errors by prefilling their billing and shipping addresses as they type them in.

Make use of customer reviews:
Encourage customers to leave reviews on your website and on marketplaces. This can help build trust and credibility, leading to increased sales. The use of trust signals has been growing exponentially, due to their efficacy in boosting trust.

Invest in customer service:
Provide excellent customer service, responding to inquiries and resolving issues promptly. This can help build customer loyalty and increase the likelihood of repeat purchases.

By getting in touch with us and scheduling a free-of-charge consultation, we will help you optimize your digital marketing strategies, and e-commerce sales for long-term success and the best conversion rate optimization. We’ll also demonstrate the advantages of incorporating your own Marketplace into your e-commerce plan and assist you in streamlining the checkout process.

Digital Sales Transformation

In today’s rapidly evolving business landscape, companies are embracing digital sales transformation and facing the challenge of reinventing their B2B sales processes in order to stay competitive. The mismatch between buyers’ needs and sellers’ processes is significant, with over 80% of the buying journey taking place without sellers’ involvement. This highlights the need for a digital sales transformation strategy that takes into account the changing dynamics of B2B transactions.

As the world continues to embrace the digital age, it is imperative for businesses to stay ahead of the curve and adapt their B2B sales processes accordingly.

Understanding the Need for Digital Sales Empowerment

To understand the challenges facing B2B sales, one must first examine the current state of the market. According to research conducted by Gartner, over 80% of the buying journey is now done without the involvement of sellers. Additionally, a survey conducted by McKinsey found that buyers now require an omnichannel experience across 10 or more channels. These findings highlight the growing disconnect between the needs of buyers and the practices of sellers.

Overcoming the Challenges of Digital Sales Transformation

Despite these challenges, the digital age has also presented new opportunities for businesses to reach and engage with their target audience. According to a report by DHL Research, 80% of all B2B transactions are estimated to be digital by 2025. This presents a unique opportunity for businesses to reach a wider audience, streamline their sales processes, and reduce costs.

In order to take advantage of these opportunities and succeed in the digital age, businesses must be proactive in adapting their sales processes. This process should be guided by the following principles:

Digitalization: Businesses should embrace digital technologies to reach and engage with their target audience. This includes the use of digital channels such as social media, email, and websites, as well as the integration of digital tools into their sales process.

Automation: Automation can help businesses streamline their sales processes, reduce costs, and increase efficiency. By automating routine tasks such as lead generation, qualification, and follow-up, businesses can free up their sales team to focus on higher-value activities.

Scaling: To reach a wider audience and increase their sales potential, businesses must be able to scale their sales process efficiently. This requires a focus on process optimization, data management, and the effective use of digital tools.

Customer-centricity: According to this recent research by McKinsey, the shift in B2B sales towards digital channels and customer-centricity, emphasizes the need for B2B sales organizations to embrace digital transformation, develop new skills and capabilities, and provide value to customers through data analysis and insights. The article also stresses the importance of creating a seamless customer experience and adopting new metrics to measure success in the digital world.

Harnessing the Power of Digital Sales Transformation

Digital Sales Transformation


Digital sales empowerment services offer a range of benefits to companies, including increased efficiency, reduced costs, and improved customer satisfaction. By leveraging cutting-edge technologies and best practices, digital sales empowerment services can help companies streamline their sales processes, optimize their customer journeys, and drive growth.

It takes a team effort to develop a hybrid sales model that is primarily digital. Process redesign, technology implementation, and culture change in sales and marketing organizations are necessary. We think that management teams should concentrate on imperatives in order to divide that task into manageable pieces. Boston Consulting Group, suggests: Building omnichannel experiences, shifting field sales reps to hybrid interactions, improving and expanding inside-sales capabilities, focusing on the long-term customer relationship, not just the initial sale, and integrating marketing and sales operation.

In conclusion, as Deloitte emphasizes in this article the importance of human experience must and will always be there. Empathy and emotional connection in design, as well as incorporating feedback from customers are essential. Although artificial intelligence and technology enhance digital sales transformation processes, the goal is to create meaningful experiences that meet the needs and desires of the customer, while also standing out in a competitive market.

As a B2B growth marketing agency, we offer digital sales empowerment services to help businesses navigate this shift to digital transformation. Whether you’re looking to optimize your sales processes, reduce costs, or improve your customer experience, digital sales empowerment services are the solution you’ve been looking for.

Don’t wait any longer, unlock the full potential of digital sales and achieve your growth goals today.
Let’s chat!

B2B Marketing Agency

Characteristics of a B2B Marketing Agency that Sets it Apart as a Growth Marketing Agency

Growth marketing is a results-oriented, data-focused approach to marketing that concentrates on all aspects of the marketing process, not just the beginning stages. This strategy involves a systematic approach of creating hypotheses, testing them, and adjusting or discarding them as necessary. It is a key aspect of a successful B2B marketing agency.

The term “growth marketing” was first coined as “growth hacking,” to indicate a creative and collaborative approach to problem-solving in marketing. However, the term took on a more negative connotation as marketers began to view it as a “quick fix” solution. To refocus the discipline, “growth marketing” was adopted to emphasize its focus on the entire funnel and its scientific, data-driven approach and following assumptions, however, just like Forbes mentions in this article, successfully executing these type of strategies is not just about proving your assumptions were correct, but rather about uncovering what consumers see as your brand’s strengths and addressing areas they believe need improvement.

Cross-team Collaboration is Key

For traditional marketing, cross-team collaboration is nearly nonexistent, with teams often organized by marketing funnel layers and prioritizing their own metrics over others. A growth marketing team requires a multidisciplinary approach, including a growth lead, product managers, software engineers, marketing experts, data analysts, and product designers.

Data-driven Decision Making

Growth marketing relies heavily on both quantitative data and qualitative research. The growth marketing cycle includes analyzing potential growth areas, ideating solutions, sorting ideas by impact, confidence, and ease of execution (ICE), and testing the chosen solution.

Full Funnel Focus

Unlike traditional marketing tactics that focus only on the top of the funnel, growth marketing delivers value at every stage of the marketing funnel by attracting customers, keeping them interested, and eventually converting them into brand advocates. An effective growth marketing agency is driven by data, constantly testing and iterating, and focused on the entire marketing funnel.

Scaling up with Digital Marketing

Growth marketing, also known as Marketing 2.0, is the future of marketing. It builds upon traditional marketing tactics with additional layers like A/B testing, data-driven email campaigns, SEO optimization, and technical analysis of every aspect of the user experience. The key to success in growth marketing is quickly putting lessons learned into practice.

Differentiating in the Competitive Landscape

In a hyper-competitive environment, brands need to differentiate themselves with an innovative, adaptable, and persuasive marketing plan. Traditional marketing employs “set it and forget it” tactics, while growth marketing delivers value at every stage of the marketing funnel. A successful growth marketing agency is data-driven and constantly testing and iterating.

The Growth Hacking Cycle

Growth marketing teams follow a process known as the growth hacking cycle, which consists of the following steps: analyze, ideate, impact, and test. The team works together to identify potential growth areas, generate ideas, prioritize these ideas based on impact, confidence, and ease of execution, and then test the most promising ones. The cycle then starts over, allowing the team to continually improve their strategies and drive growth.

Key Characteristics of a B2B Growth Marketing Agency

So what sets a growth marketing agency apart from a traditional marketing agency? There are several key characteristics that define a successful growth marketing agency:

Driven by Data: A growth marketing agency understands the importance of data and leverages it to drive its strategies and make informed decisions.

Experiments-Driven: Growth marketing agencies are constantly experimenting to identify what works best for their clients and are not afraid to try new tactics.

Full-Funnel Focus: Unlike traditional marketing agencies that only focus on the top of the funnel, a growth marketing agency takes a holistic approach, considering the entire funnel from awareness to advocacy.

Multidisciplinary Team: A growth marketing agency has a team of experts from various disciplines, including marketing, product, engineering, and data analysis, working together to drive growth.

Collaborative and Adaptable: A growth marketing agency is highly collaborative, working closely with their clients to understand its goals and adjust their strategies as needed.

Growth marketing is a powerful tool for B2B marketing agencies, providing a comprehensive and data-driven approach to marketing that delivers results at every stage of the funnel. If you’re looking to take your marketing efforts to the next level, consider partnering with a growth marketing agency that has the expertise, experience, and data-driven approach to drive growth for your business.

Discover how we achieved a 13x increase in lead generation for our Neuropsychology medical startup in Finland with a custom-designed, revenue-optimized solution. Read the success story here.

 

 

growth marketing for b2b

Growth Marketing Strategies for B2B Companies look forward to measuring and optimizing the return on investment (ROI) of all your B2B growth marketing strategies. Specifically growth marketing for B2B, it is vital to evaluate and improve the ROI to ensure that the efforts and resources invested are providing the expected results.

In this blog post, we will explore the various methods of measuring ROI and offer strategies for optimizing the effectiveness of growth marketing for B2B. Only in Influencer Marketing strategies, many companies are investing billion of Euros and this is a huge industry In 2022. It has reached already $16.4 billion, as per this report.

Firstly, it’s important to understand that ROI is a measure of the profitability of an investment, calculated as the return (revenue) divided by the cost. In the context of B2B growth marketing, ROI can be measured by comparing the revenue generated from marketing efforts to the cost of those efforts.

One of the most common methods of measuring ROI is through the use of key performance indicators (KPIs). These are quantifiable metrics that can be used to track the performance of marketing campaigns and strategies. Examples of marketing KPIs include website traffic, lead generation, conversion rates, and customer acquisition costs. By regularly monitoring these KPIs, companies can gain a better understanding of which marketing efforts are driving the most return.

Another method of measuring ROI is through the use of attribution modeling. Attribution modeling is a statistical technique that can be used to determine the specific marketing channels and tactics that are driving the most conversions. This can include identifying which channels are driving the most website traffic, leads, or sales, as well as determining which specific tactics, such as social media ads or email campaigns, are most effective.

Once you have identified which marketing efforts are driving the most return, you can begin to optimize your strategies to maximize ROI. One key strategy is to focus on increasing the efficiency of your marketing efforts. This can include reducing the cost of acquiring customers or increasing the lifetime value of those customers. For example, by reducing the cost of customer acquisition, you can increase the profitability of your marketing efforts.

Another strategy for maximizing ROI is to focus on improving the effectiveness of your marketing efforts. This can include testing different messaging, targeting, and creative approaches, as well as optimizing your website and landing pages for conversion. By continually testing and optimizing your marketing efforts, you can identify the strategies that are most effective and scale them accordingly.

In addition, it’s important to consider the use of marketing automation tools. These tools can help to automate repetitive tasks such as lead nurturing, email campaigns, and lead scoring, which can lead to more efficient and effective marketing efforts.

Finally, it’s important to ensure that your marketing and sales teams are working together effectively. By establishing clear lines of communication, setting shared goals, and using a lead management system, you can ensure that your marketing efforts are properly aligned with your sales efforts.

In conclusion, measuring and optimizing the ROI of your B2B growth marketing strategies is crucial for ensuring that your efforts are yielding the desired results. By regularly monitoring key performance indicators, using attribution modeling, focusing on increasing efficiency and effectiveness, implementing marketing automation tools, and ensuring effective alignment between marketing and sales teams, companies can improve their ROI and drive optimal growth.

Contact us today to learn more about how we can help your business thrive with our growth marketing for B2B approaches.