Product benchmarking is an essential tool for evaluating the performance of SaaS (cloud-based) products or services. In an ever-changing digital landscape, benchmarking provides critical insight for continuous improvement and maintaining a competitive advantage for SaaS platforms. By conducting a study based on internal and external benchmarks, SaaS companies can refine their strategies, optimize the user experience, and stay in line with the demands of the digital market.
Created in 1980 by the Xerox company, benchmarking is a technique increasingly used by companies developing SaaS products. Performance benchmarks are synonymous with key indicators that measure the quality and performance of an organization’s products, services, or processes compared to those of partners or competitors. There are two types of benchmarking.
Internal benchmark is a way to identify the information a company needs to better organize itself. Since it is carried out by internal research teams, it is easier because the information is accessible and correct. The team responsible for the study obtains information from employees and measures what has been accomplished in order to define areas for progress. Comparisons are made based on internal project history.
External benchmarking is based on competition. In order to make strategic and useful changes for your marketing, you identify successful competitors. You then try to understand the practical methods and strategies they put in place in order to develop a relevant action plan.
Benchmarks are essential tools for comparing the performance of your product and guiding strategic decisions. They allow you to identify the criteria that promote performance and success in your market.
For SaaS companies, product performance benchmarks are essential indicators that are part of a process improvement approach. They make it possible to achieve several objectives:
- customer satisfaction
- improvement of user experience
- increase in retention rate
Comparative analysis of the performance of your products compared to internal and external references gives you the opportunity to set more realistic objectives, review your processes and operations, readjust your costs and optimize your competitiveness. For example, if benchmarking allows you to see that your competitors have a better customer satisfaction rate, you can seek to identify possible reasons. Then, you set relevant goals:
- improve the product
- optimize customer management
- increase the satisfaction rate by a certain percentage in a given period
Benchmarking also provides a key perspective to aid user retention, as it helps identify the strengths and weaknesses of what the organization offers. It is a strategic tool that allows you to obtain valuable data. Translating this data into relevant and actionable information helps adopt a policy of continuous improvement to remain competitive in the market.
Main performance indicators for benchmarking?
Many performance indicators are essential for effective benchmarking. They provide a detailed view of the value and impact of a product. Here are the five main indicators to consider for your benchmark:
Feature Adoption
Feature adoption measures how users interact with new features. This metric is vital for assessing product value and user satisfaction. For feature adoption analysis, use the following criteria:
- scale of adoption
- depth of adoption
- adoption deadline
- duration of adoption
A good analysis of these parameters allows you to make improvements if necessary to increase the adoption rate.
User Retention
User retention rate is a KPI (key performance Indicator) that measures the long-term value of a product. It defines the number of users who remain loyal over a given period, offering a clear vision of the producer’s ability to retain its customers. Measuring retention rates through benchmarking provides insight into the effectiveness of retention efforts and helps identify areas for improvement for another project.
NPS is an indicator of customer loyalty. It offers valuable insights into overall satisfaction and helps predict future business growth. It is used to measure the probability of recommendation of a product, service, or brand by its customers. The NPS (Net Promoter Score = % Promoters — % Detractors) formula indicates whether customers are satisfied and likely to recommend the products to others.
Stickiness or Adhesion
Measuring the frequency and consistency of user engagement, called stickiness, reflects the usefulness of a SaaS product. A “sticky” offer keeps users engaged on a regular basis, which can lead to increased loyalty and long-term usage. Measuring the stickiness rate allows you to know if your offer is useful enough for its users to come back and ask for it.
Product Activation
This KPI is part of a matrix called AARRR (acquisition, activation, retention, reference, revenue). Product activation evaluates the effectiveness of onboarding processes and the initial user experience. The activation rate is calculated by the following formula: prospects who are activated/total number of prospects.
How to improve benchmarking?
Due to its importance, benchmarking is an optimization method that you must implement and which you must also seek to continually improve. Some tips can help you.
Optimized data capture
Establish effective data collection systems, for example using advanced analytical tools to capture product performance. The quality of the data retrieved internally or externally determines the success of benchmarking.
Setting clear objectives
Establish clear objectives for benchmarking by precisely defining what to measure (user experience or number of users, etc.). Having clear objectives allows benchmarking to be completed as quickly as possible, the results to be analyzed more easily and relevant improvement policies to be implemented.
Use of internal and external benchmarks
Combine internal and external benchmarks to get a complete view of performance. Internal benchmarks help track the product’s evolution over time, while external benchmarks provide comparison with leaders in your industry. It’s a practical way to guide refining offerings and improving user engagement.
We can remember that product benchmarking is a keystone technique for SaaS companies. It promotes continuous improvement, ensures the competitiveness of platforms, and guides towards success in an increasingly competitive landscape. Integrating performance benchmarks into your strategy is a step towards the success of your products on the market.
