Your SaaS Metrics Are Wrong if You Include These Customers

customer-user-definitionA user is someone that uses your SaaS product, right? Or is it someone that signed-up? Or someone that’s active? Or someone that logged-in a few times? Hmm.

Okay, so maybe defining a user is hard, but defining a customer is easy, right?

A customer is someone that pays you for your product or service. Even if they’re still within the legal timeframe for a refund? Or a contractual “cooling off” period? Or if they’re within the 90-day “stick period” (if they make it past 90-days they’ll stick around for a long time)? Or…

Wow, so even defining a customer isn’t as straightforward as it might have seemed.

And it gets even messier if you’re in a market with a more transient customer base (i.e. the level of real unavoidable churn is high), if you offer a completely free or freemium product, if you just launched with a lot of early adopter interest (i.e. the “Product Hunt effect”), etc.

To get honest about what’s going on in your company, you need to modify the customer (or user) definition, which is the main input into how you calculate the core metrics of your SaaS business.

Let’s explore this a bit…

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Active Users are a Vanity Metric

vanity-metricsActive customers churn. And when they do we’re shocked and confused.

How can this happen? Your customer was very active, logging-in several times in the last month.

I think it’s fair to say that if Active customers churn, then “active” – as a customer “state” – clearly doesn’t equate to success.

So if it doesn’t mean your customer is successful, what exactly does “active” mean?

Let’s explore this a bit further…

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CAC Strategy is the Key to Scaling your SaaS Company

aaron bird bizible

Starting a SaaS company and scaling a SaaS company are two very different things.The same is true for "scaling" a SaaS company in the very early days vs. scaling a SaaS company through the growth phase.And since every company is different and … [Continue reading]

Let Your Customers Write Your Marketing Copy

sujan-patel-when-i-work

I spend a lot of time talking to SaaS companies about how they should identify their Ideal Customers, understand how they operate, know what their Desired Outcome is, listen to what they say, etc. etc.Whether it's a focus on acquiring new … [Continue reading]

Exposed! A Top-Secret “Enterprise Pricing” Growth Hack

enterprise-lead

When it comes to SaaS, you basically have two sales models: high-touch and self-service. Small, bootstrapped SaaS companies often like to go the low-touch, self-service way.Large, venture-backed startups often like to take the high-touch, … [Continue reading]

The Only 3 Acceptable Pricing Page Discount Tactics

discounts

I get this question from time to time:"Lincoln, is it okay to offer discounts right on your pricing page?"Short answer: No.The longer answer, with some nuanced yesses thrown in,  along with some tactics that you can employ, is below... … [Continue reading]

Engaging at Scale: The Secret to Automating Personal Emails

Customer Success bot

About a year ago I shared my super top-secret way to automate personal emails more effectively - called the "Customer Success bot" method - with the awesome folks on my mailing list.Since then, I've come up with several new uses for this … [Continue reading]

5 Growth Hacks to Supercharge your Invite or Referral System

invite-a-friend-or-7

When was the last time you referred your friends or invited co-workers into an app after you just signed-up for the free trial?When was the last time you imported your address book right after you opened an app for the first time?Right.So … [Continue reading]

The Myth of Unavoidable Churn

unavoidable-churn-jar

When it comes to customer churn, there are two kinds: avoidable and unavoidable.But I guarantee that the amount you label as "unavoidable" is actually much smaller than you think.I know, but..."Most of our churn is out of our control, so … [Continue reading]

Understanding Your Customer’s Desired Outcome

Desired Outcome - try again

So... what does Success look like for your customer? That's the question that's at the base of my wildly popular "The Secret to Successful Customer Onboarding" article.But it's not actually a very good question. What does "success" look like for … [Continue reading]