Behind the question of whether a billing system can help your SaaS business grow is the question of what it means for a SaaS business to grow. This guide tackles both — it creates a model you can use to approach SaaS growth and a 360-degree view of how your billing system fits into it. Read More >
Not long ago, a stranded traveller had to seek the help of another person for directions.
Then came the maps which made people self-reliant.
Then the GPS took the world by storm. Now, every other smartphone comes with a built-in GPS sensor.
A business without analytics and tracking, would function just like a traveller without a GPS (or a map, for that matter) - wandering about in a foreign place, with no sense of direction.
“Without big data analytics, companies are blind and deaf, wandering out onto the Web like deer on a freeway.” ~ Geoffrey Moore, Author of Crossing the Chasm & Inside the Tornado
But unlike GPS devices, the same analytics tools and tests can’t be employed for all businesses alike.
Customization is the key.
What matters to Amazon (an E-commerce firm) might be insignificant to Dropbox (a SaaS firm), simply because their respective business models are completely different.
The fundamental difference between the two arises from the fact that a subscription based company thrives on recurring revenue, (aims at building a base of customers who would pay constantly), while the other is dependent on one-off payments (aims at acquiring new customer). This difference translates into a difference in the kind of metrics that these two businesses must follow.
So when an E-commerce company focuses on its monthly revenue, a SaaS company on the other hand, has to concentrate on what is called “Monthly Recurring Revenue”.
Also, a non-recurring revenue business will have the “cost to acquire a customer” as a percentage of the sales revenue (they’ve one-off sales, so this makes sense). But the same cannot be applied to a subscription business. They need to consider the “months to recover” the cost instead.
So how does this difference in the metrics affect the way these two business models approach analytics?
About 70% of E-commerce companies have an Acquisition model, which is why they must track the Checkout rates and must strive to reduce their Customer Acquisition Costs.
On the contrary, Retention is the core principle for subscription commerce companies. So they’ll have to work on factors like Churn rate, Customer funnel, Feature utilization/neglect, etc.
Coming to the monetary part - the primary source of revenue for a non-recurring revenue business would be the transactions while for a recurring revenue business the primary sources are the number of active users.
Hence the former must measure the Transaction value in their analytics and the latter should assess the Lifetime value and the Upselling conversion rate. (To dig deeper into this topic, read this book.)
So yes, you get the drift.
Analytics and Tracking are crucial for a business to function efficiently and are distinctive for a subscription business.
In the online business, each and every one of your competitors is making a smarter decision and making a better plan to drive traffic and serve his/her customers better, by using the best possible GPS devices for their business, A.K.A analytics and tracking tools.
Wouldn’t you want to stay updated and make use of those powerful tools?
So your next question is quite obvious.
Where can I find a suitable GPS device for my subscription business?
We’ve prepared a comprehensive list of tools that are used by up-and-coming SaaS and subscription based E-commerce companies (source: our very own customers) to track the behaviour of their customers, to know what’s working and what is not, and to get a sense of direction.
1. Google Universal Analytics:
According to Google, “Google Analytics shows you how people found your site, how they explored it, and how you can enhance their visitor experience. With this information, you can improve your website return on investment, increase conversions, and make more money on the web.”
They provide a complete set of metrics for tracking and analysing your audience, the traffic sources, your website content and the conversion rates/paths.
Universal Analytics proved to be the icing on the cake, which introduced additional features such as user-ID, cross device reports, options to create custom dimensions and metrics, and so on.
Now what sets GA apart is the fact that the standard version is free, and the reports provided by them would suffice for most of the website owners.
Check this out if you are on the lookout for ways to make the best use of this tool.
It’s difficult to track individual users (because the visits, and not the visitors are measured), and elaborate customization and coding is necessary in order to achieve the same.
2. Crazy Egg:
So with Google Analytics you will be able to answer the question of what is happening in your website. Round One - clear.
Time for Round Two.
How is it happening?
Crazy Egg will help you figure this out.
They offer four tools to “visually” represent the behaviour of your users:
- Heat maps (the more the number of clicks, the “hotter” is the area on your website)
- Scrollmaps (to know how far the visitors are scrolling down before leaving your page)
- Overlay (the number of clicks made on specific page elements)
- Confetti (the clicks mapped with specific factors like referral sources, search terms, etc.)
The unique perk of using this tool is that, you can track the user’s activities not just on links (GA’s In-page analytics can anyway do this), but on non-links as well - making it an ideal platform for A/B Split testing your new campaign or landing page design.
In other tracking tools, the longer you collect data, the more insightful your analysis becomes. For the heat maps, on the other hand - an increase in the data quantity would only make the results less distinguishable (with blue blots everywhere).
So if you want an effective heat map analysis, then go for a limited dataset.
If you are not contented with a General Medical Practitioner who just diagnoses the overall health of your website, and you need a Medical Specialist who can pinpoint on the specific “holes” in your system - specifically in your “Conversion Funnel” - then we would recommend Dr. KISSMetrics!
Here the visitors are tracked, rather than the page visits and views. This makes it possible for you to track an individual user’s behaviour across multiple sessions and devices.
And how do we track an event (or a person)?
By just adding a UTM parameter to a link (or by entering an identity like the Email address) - as simple as that!
Their ‘Path Report’ - as the name clearly signifies - traces the most common path(s) followed by the customers within your website.
Who knows? You might even run into a successful funnel that you didn’t have a clue about till then.
To conclude, with KISSMetrics you can effectively record your customers’ journeys, get a clear picture of how they are using your product, and identify where they are falling out of your funnel.
The path is traced only for 5 steps (first 5 or last 5 events) and not more than that, which might be a bit of a concern for businesses seeking more number of events.
KISSMetrics tracks only those events that have been predefined by you. It doesn’t provide out-of-the-box reports, and you may need a developer’s assistance if you require customization, unlike Google Analytics which tracks almost everything on your website and lets you decide what to focus on thereafter.
In this time-sensitive Internet era, a few seconds could make or break your business. An information/insight would simply lose its value if it is out of time. Real-time data analytics has never been more important.
And for that, Mixpanel is the go-to tool!
“Actions speak louder than page views”, says Mixpanel.
Not just any action, but real-time action.
And they provide to-the-second live information on your users’ actions - from purchasing your product to marking a tweet as a favourite.
If that data is not sufficient, don’t worry - you can conduct an in-app survey to gather further insights.
Another feature that distinguishes Mixpanel from the rest of the tools is that they can automatically send in-app notifications or email messages to customers - all you have to do is just tell them what to send to whom, and when to send it (event triggers).
One more addition to the tool’s strong points is their Retention report - this shows how frequently your customers are engaging with your app and what features are being used more often than the others.
With their automated messaging capabilities, Mixpanel appears to have become a hybrid tool - analytics and tracking clubbed with marketing automation!
It’s not possible to track and evaluate your site’s traffic. They also don’t provide a sandbox - which means that if you want to test an event, you’ll have to use up the data points from your monthly plan.
They also don’t merge anonymous data to an authenticated user data, which means that only when a user has logged in, will the data be accurate.
Agreed. It is important to know how many people are using your website/app and how they are using it.
But what is equally vital is to understand what kind of people are using your website. To complete the picture, what we also need is the “human element” - the customer personas.
Over to Quantcast.
The app consists of two segments - Quantcast Measure and Quantcast Advertise.
The former is used to understand the demographic, lifestyle, and geographic profiles of your website (and your competitors’) and mobile app users, while the latter uses that data to map your ideal customers (predictive intelligence) and provides advertising solutions to reach them through real-time, tailor-made campaigns.
We’re however not going to focus on Quantcast Advertise in this post - let’s stick to analytics and tracking for now.
Quantcast basically uncovers your traffic sources and the nature of your audience - age, gender, children, income, education, ethnicity, topics of interest, sites visited, and so on .
You can also learn about the businesses/industries to which they belong and their engagement and retention across multiple platforms.
Exhaustive is the word.
And, it’s for free.
Quantcast says that it can get accurate data only for those “quantified” websites which have signed up with them (and use the tracking code) while for the other websites (non-quantified) on their list, the data provided are just rough estimates.
So if you’re just looking for a ballpark figure of where you stand with respect to your competitors and an overall picture of your audience, then Quantcast is the ideal tool. For accuracy, you might want to resort to a paid service.
Online tools for Analytics and Tracking are available in abundance, in all possible shapes and sizes.
But choosing the right tool for your business is a very critical decision, which requires a lot of strategic thinking. Several aspects must be considered and assessed before making the final call.
Another major point to keep in mind - employing a state-of-the-art Analytics tool alone is not going to help you in any way, unless and until you have the right person to use the tool. Avinash Kaushik’s 10/90 rule would shed more light on this matter.
The price of light is less than the cost of darkness. ~ Arthur C. Nielsen, Founder, Nielsen Corporation.
Now that you have a pretty good idea of how to choose the right GPS device for your subscription business, the next task would be to learn to make the most of these tools.
We’re going to talk about that in detail in the subsequent posts - to help you get a deeper understanding of how you can best leverage these tools to achieve business growth.
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