6 Metrics SaaS Companies and ISVs Should Track When Offering Payment Services

So, you’re a SaaS company that’s starting to implement payment monetization—great! Having payments as a service or feature within your software opens up several potential benefits, including higher annual revenue per user (ARPU), increased customer satisfaction, and faster business growth.

That being said, in order to fully unlock these advantages, you need to ensure that your payment initiatives are successful.

Part of doing that lies in measuring certain KPIs. If you’re offering payments, there are a number of metrics that can shed light on the performance of your initiatives. They can tell you if your efforts are successful or if you need to correct course.

Let’s take a look at some of the top metrics SaaS companies and ISVs should track when providing payment services to software users.

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1. Payment Attachment Rate

One of the fundamental metrics you should monitor is your attachment rate. This is the percentage of users that signed up for your payment offerings. A high attachment rate means that a good amount of your customers have payments as part of their contract, while a low figure could mean that not enough people are signing up.

Tracking this metric can give you an indication of how successful your sales and marketing efforts are when it comes to payments.

If you’re dealing a low attachment rate, you could consider:

  • Increasing the visibility of your payment offerings on your marketing channels
  • Incentivizing your sales team to include payments when selling your software
  • Encouraging your customer success team to convert existing software users onto your payment offerings

Whatever the case, the first step to improving your attachment rate is to track it, so keep this KPI top of mind at all times.

2. Number of Users Who are Actually Processing

Already have a good payment attachment rate? If so, the next question to ask is, are the users who CAN process payments actually doing it?

After all, it’s one thing to get your customers to sign up for payments, but the effort will have little impact on the business if people aren’t processing transactions. If you see that you have users who aren’t taking advantage of payments, it’s worth prodding them to do so.

“Typically, we find that if we can get the customer (i.e., the submerchant) to process somewhere between five to seven times, you’re going to get the most value you could ever get out of them,” explains Richard Dunbar, Senior Director of Partner Success at Stax.

“So if their maximum potential is 70% in credit card volume and you can get them to process five to seven times, you’re much more likely to get that 70%.”

Simply put, you will get more value per user faster by encouraging them to use your payment services. That’s why it’s important to encourage your customers to keep processing through your platform.

3. Payment User Penetration

Looking at your user penetration rates when it comes to payments will help you forecast the payment revenue you can get from each customer.

As Richard explains, “If a merchant does a million dollars a month in volume, and your average penetration rate is 50%, then you know you’re going to get 500K from that merchant in volume.”

It’s a good way to set benchmarks and goals for your payment initiatives. For instance, if your goal is to hit $50,000 in monthly recurring revenue through payments, you can work backwards to determine your ideal user penetration and use that figure as your goal.

Just bear in mind that payment penetration needs to be separated into two groups:

  • Net new penetration
  • Existing user penetration

These segments will have distinctly different payment journeys and your efforts will vary depending on who you’re trying to convert.

As Richard puts it, “When you give me a penetration number, my first question is going to be, ‘Is that your net new or is that your existing book of business?’ Getting a current user to sign up for payments calls for a very different conversation path than when you’re talking to a potential new customer.”

4. Initial Payment Volume

Depending on your payment processor and application process, your users may be approved for a certain payment volume amount for individual tickets or invoices. For example, a retailer selling T-shirts may have a typical ticket amount of $40 per order, while a manufacturer of medical equipment could have ticket values north of $10,000.

It’s worth paying attention to the approved payment volume amount versus how much they’re actually processing. If there’s a large discrepancy between the two figures, then there might be issues with the account and you need to look into it.

5. Payment Processing Velocity

It’s also worth looking at the velocity at which your users process payments, as this can open up conversations about the growth of their business.

As Richard points out, “If a customer is processing 10 invoices a month, and then they’re doing 15, and then 20—it’s a good idea to reach out to that customer to have a health check. You can say something along the lines of, ‘We noticed your business is growing. Anything we can do to help you?’”

“It can be a great indicator of business growth,” he adds.

Starting those conversations can lead to opportunities to talk about other software offerings. If a user’s business is scaling rapidly, for example, you could potentially upsell them on a larger plan.

6. Percentage of Invoices That Include a Payments Link

By now you know the importance of monitoring payment processing adoption and volume to see if customers are actively using your services.

Aside from the above-mentioned tactics, you can get a further glimpse of your customers’ payment-related activities by checking if they’re adding payment links or embedding payments into their invoices. If you find that your users aren’t doing it yet, remind them about the importance of enabling payments in their invoices.

Educate them on the fact that adding a payment link improves the experience of their customers and allows them to get paid faster—a win-win.

RELATED: Here’s What to Look for in an ISV Payments Partner

Final Words

Successfully offering payments isn’t just about putting your programs out there and hoping users will sign up. You need to actively market your payment offerings and find ways to improve your attachment rate.

On top of that, it’s also essential to ensure that users who signed up are taking full advantage of  your payment services.

Taking the steps above will allow you to maximize your payment revenues and ultimately boost your bottom line.

Here at Stax Connect, we collaborate closely with SaaS companies to ensure their payments initiatives are thriving. When you team up with us, you’re not just getting a service provider; you’re gaining a partner who’s committed to your success. We’ll provide you with the guidance, resources, and support you need to market your payment programs, onboard users, and ensure you and your customers are well taken care of.

Get in touch with Stax Connect today and discover how we can help you better monetize payments.