Best Metrics to Monitor Customer Activity in a SaaS Company

Tracking your customers’ activity is fundamental to grow your business. Your customers’ engagement with the product you are offering can be tracked through several metrics. In this tutorial, we will focus on four metrics to track your customers’ activity within a SaaS company.

1. Active Users

The metric name says it already. Active users are people who are actively using your product. This metric determines the health of a customer base in a SaaS company.

It is difficult to define an overall “good” number of active users. Each SaaS company defines what it means to be an active user. The difference is in-between the usage of key features in each software. Each SaaS company can define active users based on points such as the usage of specific features or the time frame of the feature use.

Active users can be divided into Daily Active Users (DAU), Weekly Active Users (WAU) or Monthly Active Users (MAU). These measurements show the number of active users in a specific time period. Important to mention here is that each user, whether it is daily, weekly, or monthly, are unique counts. That means that a daily user cannot be a monthly user at the same time. DAU and MAU combined can show you how “sticky” your product is. “Sticky” refers to product usage — specifically — how many users stay using your product.

  • The stickiness ratio is calculated as follows: Daily Active Users / Monthly Active Users

An average ratio is 50% which means that your customers return in 15 out of 30 days in a month. The percentage increases as more customers use your software.

2. Activity Time

This metric shows you how much time your users actively interact with your product. Idle time, which is when the user is not actively using your software, is excluded from the activity time.

Are your customers using the product on a daily basis but only for a few hours? Or more on a sporadic basis e.g. for several hours per day? Tracking activity time helps you learn about your customer’s behavior. If the product is not used as expected, you have to find out why. One reason could be the lack of education and knowledge about the product. You can improve this by interacting with your customers and getting them to understand what is available in the product. Educating your customers about your product and features can lead to a longer use of the product and ultimately an overall improvement in customer engagement.

3. Visit Frequency

Visit frequency shows you how often your product is used during a specific time. It is more impactful to measure that work together with activity time. It helps to learn about the users’ needs of the product. How often is the product used per day, per week, per month? Is there an increase or decrease in the use of your product? If so, what can be the causes for that? Visit frequency combined with activity time can identify your key users. Key users are important to your business due to a more frequent use of your product. It is important to focus on the right target customer to improve their engagement with the product. This will also lead to a reduction in customer churn. Analytics softwares such as Google Analytics or Heap Analytics are focused on tracking customer activity metrics such as activity time and visit frequency.

4. Key User Actions

With this metric you will track the number of key user actions per session. To track this metric, you have to predefine the key actions a user has to use in your software. Once the key user actions are predefined you can track them per customer segment and over time to see the development. Over time tracking helps you to see the customer engagement fluctuation.

Looking at churned and retained customers in this value, key user actions can help increase customer engagement and reduce churn.

  • Number of key actions per user per session = Median value of key actions per session

5. Customer Retention Rate

The Customer Retention Rate (CRR) shows you what percentage of your customers don’t cancel the use of your product in a specific time period. You can calculate it by looking at the number of customers that remain at the end of a specific time period excluding number of new customers during the same time period.

CRR is calculated as follows: # of customers at the end of period – # of new customers acquired during period/# of customers at the start of period

A percentage closer to 100% is a good retention rate. Average retention rate in SaaS is between 89% – 95% depending on your average contract value. An increase in CRR shows the health and growth of your business.

Monitoring these metrics among others shows you how engaged your customers are with your product. Your business intelligence tool such as Chartio helps you to visualize your data. You can easily summarize all metrics in a dashboard, which gives you an overview of your customers’ activity.

As you can see in the dashboard overview, it is important to track the above mentioned metrics all together. These metrics help you understand your customers’ behavior. Customer activity metrics are of high value when it comes to customer base extension.

Zoé Meckbach

About Zoé Meckbach