Event Tracking Basics for SaaS Metrics

Event tracking helps SaaS businesses understand user behavior and improve engagement, retention, and revenue. It goes beyond basic analytics by capturing specific user actions like clicks, sign-ups, and feature usage. Here’s why it matters:

• Understand user behavior: Identify what drives conversions, where users struggle, and what leads to churn.

• Boost engagement and retention: Track feature adoption and onboarding to refine user experiences.

• Improve revenue: Analyze actions tied to upgrades, renewals, and cancellations.

Key Event Types to Track:

1. Onboarding Events: Sign-ups, logins, and tutorial completions to optimize the first user experience.

2. Feature Usage: Monitor how users interact with features to guide product improvements.

3. Conversion Events: Track trial starts, upgrades, and cancellations to enhance customer lifecycle.

Best Practices:

• Use clear naming conventions (e.g., click_signup_button).

• Regularly audit and optimize your tracking system.

• Focus on events tied to business outcomes.

Event tracking isn’t just data collection - it’s about making smarter, data-driven decisions to grow your SaaS business.

Complete guide to event tracking - PostHog tutorial

Core Event Types to Track in SaaS

Focusing on events that directly influence business outcomes is essential for SaaS companies. By prioritizing specific types of user interactions, you can uncover actionable insights into behavior and product performance.

"Tracking everything is not a cost-effective solution. You need to plan and control what data you collect. Countly provides data governance tools where you can see all the data you are collecting and manipulate it, like edit, delete, block, redact, or mask it from some users." - Arturs Sosins, CTO @ Countly

Successful SaaS businesses monitor events that highlight user engagement, pinpoint areas of friction, and identify drop-off points. These events generally fall into three key categories, each offering a unique perspective on your customer experience.

User Authentication and Onboarding Events

The onboarding process is your first opportunity to make a lasting impression. Tracking authentication and onboarding events lets you spot where users encounter obstacles and refine their initial experience with your product.

Keep an eye on basic authentication activities - sign-ups, logins, and password resets - along with every step of the onboarding journey. This helps you identify where users lose momentum.

The benefits of optimizing onboarding are clear. A well-designed onboarding process can improve customer retention by 50% and boost user activation by as much as 71%. On the flip side, 21% of users abandon an app after just one use.

Take Airbnb, for example. By tracking user interactions during onboarding, they revamped their process to include clear instructions and personalized recommendations. This led to higher engagement and better retention rates. Similarly, Guru leveraged detailed event tracking to customize their onboarding, achieving up to a 71% increase in user activation.

To get the most out of onboarding data, track events like account creation, email verification, profile setup, tutorial completions, and the first successful action users take on your platform. These insights can help you identify your users' "aha" moment and streamline their path to reaching it.

"Aligning onboarding with the customer's definition of success is paramount." - Mark Roberge, former CRO of HubSpot

Once users are onboarded, the next step is to understand how they engage with your product's features.

Feature Usage Events

Tracking feature usage is key to understanding how your product delivers value. These events reveal which features resonate most with users and which might require adjustments or better visibility.

Monitor metrics like feature trials, repeat usage, and session durations. This data can guide product enhancements, improve user experiences, and support retention strategies.

To measure feature usage, use this formula:
(Number of unique feature users / Total number of unique product users) × 100.
For instance, if 1,000 users interact with a feature out of 5,000 total users, the feature usage rate is 20%.

Feature usage data sheds light on how users interact with your product, helping you identify areas for improvement or simplification. Focus on tracking events like first-time feature activation, frequency of use, session durations within features, points where users abandon features, and navigation patterns between features. These insights can help you refine how features are presented and utilized.

Understanding feature usage also sets the foundation for analyzing conversion behaviors and revenue trends.

Conversion and Revenue-Related Events

Revenue events tie user behavior directly to business outcomes. By tracking the entire conversion funnel - from initial interest to payment - you can gather insights into your pricing strategy, product value, and overall customer satisfaction.

These events help identify behaviors that predict long-term value. For example, analyzing actions that lead to upgrades or renewals can shape your product development and marketing strategies.

Key events to monitor include trial starts and completions, subscription plan changes (upgrades or downgrades), payment successes and failures, billing interactions, and cancellation requests (along with user feedback). Together, these data points provide a comprehensive view of the customer lifecycle and uncover opportunities to improve customer lifetime value.

Context matters, too. Pay attention to which features users engage with before upgrading, how long they interact with your product before converting, and what might trigger cancellations. Often, these contextual details are as informative as the revenue-related events themselves, enabling you to make strategic adjustments that fuel growth.

"What are the biggest mistakes companies make when setting up event tracking? Not documenting what they track. Tracking things they do not need. Not having a scheme for naming data. Not preparing questions they want the data to answer." - Arturs Sosins, CTO @ Countly

Building an Event Tracking System

Creating an effective SaaS analytics setup starts with a solid event tracking system. Even the most advanced tools can't deliver meaningful insights without a well-planned approach to data collection.

To build a reliable system, focus on three key areas: defining a clear event taxonomy, choosing tools that align with your business goals, and designing efficient data pipelines. Let’s break these down.

Defining an Event Taxonomy

Think of your event taxonomy as the blueprint for your tracking system. This framework ensures your data is well-organized and easy to use for analysis.

"A proper naming convention or taxonomy is what makes good data stand out from bad data and enables stakeholders to understand what they are looking at." - Arpit Choudhury, Founder, astorik

Start by aligning your taxonomy with your business goals and key performance indicators (KPIs). Identify the events that provide insights into user behavior and their journey toward activation. Instead of tracking every click or interaction, focus on the actions that matter most for your SaaS metrics.

For consistency, define the data type for every property - whether it's text, numbers, dates, or boolean values. This step simplifies the implementation process and helps maintain data quality over time.

Document your taxonomy in a centralized, accessible format for all stakeholders. Include event names, descriptions, properties, and examples of when each event should trigger. Regularly review and update this document as your business needs evolve.

The benefits of a well-structured taxonomy go beyond organization. For example, in March 2023, Level Nine Sports saw a 23.4% boost in conversion rates and a 42% increase in time spent on their site after implementing a structured product taxonomy. Similarly, HD Supply reported a 16% revenue increase from search and a 4% rise in add-to-cart rates by organizing their data structure effectively.

Choosing the Right Tools

Picking the right analytics tools is about matching your needs with the platform’s capabilities. Consider your budget, technical requirements, and team expertise.

Decide whether you need tools for app tracking, website tracking, or both. While many SaaS companies benefit from platforms that handle both, understanding your primary use case will help narrow your options.

Look for features such as code-free event tagging, custom event creation, real-time data processing, and seamless integration with your existing tech stack. Prioritize tools that align with your specific goals. For instance, if real-time data is essential for triggering surveys or user guidance, platforms like Userpilot are a better fit than those with data delays. On the other hand, Amplitude and Mixpanel are excellent choices for in-depth analytics like funnel analysis.

"The price of light is less than the cost of darkness." - Arthur C. Nielsen, Founder, Nielsen Corporation

Once you’ve selected the right tools, the next step is to ensure your data flows smoothly through well-designed pipelines.

Data Pipelines and Flow

Data pipelines transform raw user interactions into actionable insights, making them a crucial part of your event tracking system.

"A data pipeline can be thought of as the flow of logic that results in an organization being able to answer a specific question or questions on that data." - Benjamin Kennady, Cloud Solutions Architect at Striim

When designing your pipeline architecture, focus on scalability, performance, and fault tolerance. Map out dependencies to avoid bottlenecks and ensure a smooth flow of data. Depending on your needs, you might use ETL (extract, transform, load) or ELT (extract, load, transform) processes.

Make your pipelines idempotent, meaning repeated operations won’t create duplicate data. This approach ensures consistent and reliable metrics.

Real-world examples highlight the importance of well-built pipelines. Druva, for instance, uses AWS Glue and Redshift to manage 250 tables across more than 12 data stores. Their system processes over 1 billion records daily, handling 60 million records (about 45GB) of reporting data in just 40 minutes. JetBlue combines tools like Snowflake Tasks, FiveTran, and dbt to manage data from multiple sources, supporting both operational reporting and machine learning tasks.

Set clear service level agreements (SLAs) for your pipelines based on use cases. Some metrics may need real-time updates, while others work fine with daily batch processing. Knowing these requirements helps you design cost-effective solutions.

"The capability of a company to make the best decisions is partly dictated by its data pipeline. The more accurate and timely the data pipelines are set up allows an organization to more quickly and accurately make the right decisions." - Benjamin Kennady, Cloud Solutions Architect at Striim

Keep your pipelines efficient by monitoring and optimizing them regularly. Implement data governance and security measures to protect sensitive information, and review costs to ensure your system scales effectively as your data grows.

Key SaaS Engagement Metrics

Keeping an eye on the right engagement metrics can provide a clear picture of customer health and fuel growth. Knowing what to track and how to interpret those numbers can turn reactive decisions into proactive strategies. Below, we’ll dive into some essential metrics that can transform your event tracking into actionable growth plans for SaaS businesses.

Activation Rate and User Retention

The activation rate shows how many users complete specific actions that prove they’re finding value in your product. For example, actions like starting a project or connecting a data source are common indicators of activation. A boost in activation can have a major impact - just a 25% increase can drive a 34% rise in monthly recurring revenue (MRR) over a year.

To measure activation, use event tracking to monitor each step in the process and calculate the percentage of users who activate within 7 to 30 days after signing up. On average, SaaS companies see a 37.5% activation rate.

Retention, on the other hand, measures how well your product keeps users engaged over time. For instance, the average 1-month retention rate across 83 analyzed companies is 46.9%. To track retention, focus on meaningful user behaviors like logins or feature usage. Event data can also help identify where users drop off early, which often correlates with lower long-term retention.

Next, let’s explore how session depth provides even more insight into user engagement.

Session Depth and Feature Interaction

Session depth digs deeper into how users interact with your product during each visit. Instead of just looking at time spent or pages viewed, this metric highlights specific actions that reflect active engagement.

For example, tracking events like feature clicks, document creation, or data uploads can help gauge how users interact with your product. On average, SaaS companies report a 24.5% core feature adoption rate.

Another valuable metric is the ratio of daily active users (DAU) to monthly active users (MAU). A DAU:MAU ratio of 0.5 is considered ideal, meaning half of your monthly users are active daily. Event tracking can also help you understand how users interact with new features, showing whether they’re gaining traction or need more promotion. Additionally, analyzing feature usage often uncovers opportunities for cross-selling or upselling. For instance, users who frequently engage with core features may be ready for premium upgrades.

Churn Prediction Using Event Data

Event data is a powerful tool for spotting early signs of churn, allowing you to take action before customers leave. High churn rates can cost SaaS companies up to 30% of their annual revenue, with average monthly churn rates ranging from 3% to 8%. And since acquiring a new customer costs 6–7 times more than retaining an existing one, reducing churn is critical.

Here are some key behaviors to monitor for churn risks:

• Usage frequency drops: A decline in weekly or monthly usage often indicates disengagement.

• Feature stagnation: If users stop adopting new features, it’s a red flag.

• Support ticket patterns: Repeated unresolved issues can signal frustration, increasing the likelihood of churn.

Real-world examples show how event tracking can help combat churn. HubSpot, for instance, uses predictive analytics to identify customers at risk of leaving. When users stop engaging with key CRM features, their team steps in with tailored support, reducing churn while improving the overall experience. Similarly, Slack tracks metrics like messages sent per team and usage frequency. If they notice a decline, they send educational emails or schedule meetings to help users get more out of the platform.

"Data is a critical resource, but only when used intelligently." – Foster Provost and Tom Fawcett

The financial benefits of better retention are huge. A 5% increase in retention rates can boost profits by up to 95%. Plus, selling to an existing customer is far easier, with a success rate of 60–70%, compared to just 5–20% for new prospects. To tackle churn effectively, use cohort analysis to identify patterns and segment users by characteristics like subscription tiers or acquisition channels. This allows you to create targeted retention campaigns and make smarter product improvements.

Best Practices for Event Tracking

Even the most advanced tracking systems can fall short if the data they collect is inconsistent or unreliable. To create a strong foundation for event tracking, it’s essential to follow best practices, which are outlined in the sections below.

Establish Clear Naming Conventions

A well-thought-out naming convention is your first line of defense against data chaos. It also plays a key role in scaling your analytics efforts effectively. Start with a descriptive structure, like the [action]_[object] format. For example, instead of using vague names like "signup", opt for "click_signup_button." Similarly, replace "page_view" with something more specific, such as "view_product_page".

Heap, a leading analytics platform, suggests using prefixes like "Location" and "Action" to cover your product comprehensively. For instance:

• Locations: These could be "website", "app", or "help_center."

• Actions: Common actions include "view", "click", "submit", or "change."

Consistency is key. Stick to lowercase letters since many tools automatically convert names. Choose a standard style (e.g., snake_case, camelCase, or kebab-case) and apply it across all events. To ensure everyone is on the same page, create an internal naming guide. This document should include examples, approved action verbs, and instructions for handling edge cases. A clear naming system helps create a seamless narrative from the first user interaction to conversion.

Here’s an example of how you might structure your event tracking:

Once you establish naming standards, implementing version control becomes the next critical step to maintain tracking integrity.

Version Control and Documentation

As your event schema evolves, version control becomes a necessity. Well-documented systems can significantly improve team productivity. According to Joan Honig, Content Marketing Manager at DocuWare:

"Version control tracks changes made to each version of a document. It is a tool that organizes, labels, and preserves each draft until a final version is completed." – Joan Honig, Content Marketing Manager at DocuWare

Use a clear and standardized naming format for your documents, such as "EventSchema_TrackingPlan_V1", to make it easier for team members to identify the content and version. This approach helps avoid unnecessary document duplication.

Version control ensures your event tracking remains consistent and reliable. For every update to your tracking setup, write clear commit messages that explain what changed and why. This creates a valuable audit trail for resolving future issues. Store all tracking documentation in a centralized system, always create new versions instead of overwriting older ones, and apply role-based permissions to restrict changes to authorized personnel. To keep everything running smoothly, schedule quarterly reviews of your version control practices to gather feedback and refine processes.

Regular Audits and Optimization

Regular audits are essential for maintaining the quality and reliability of your event tracking system. High-quality data ensures you can make decisions based on accurate insights into user behavior.

Set up automated alerts and conduct routine checks to identify gaps or anomalies in your tracking. These alerts can flag issues like sudden drops in event volume, unexpected spikes, or missing data from certain user segments. Reviewing audit logs frequently can help detect bugs, suspicious activity, or system errors.

Analyzing user funnels can also highlight inconsistencies. For example, if mobile users behave differently from desktop users, it might point to a tracking issue on one platform.

To make insights more actionable, build visual dashboards that display key metrics alongside data quality indicators like event completion rates, property fill rates, and data freshness. Keep your event tracking schema up-to-date and maintain clear communication between teams. This ensures that when marketing launches a new campaign or a product introduces a new feature, the tracking plan is updated promptly. Lastly, focus on collecting data that aligns with your business goals, and periodically review tracked events to remove any that create noise or slow down your system.

Conclusion: Growing Your SaaS with Event Tracking

Event tracking goes beyond just gathering data - it’s about building a strong foundation for long-term growth. Done right, it reshapes how you understand your users and guides smarter decisions about your product's development.

Consider this: 88% of marketers use event data to refine their strategies, and 70% leverage it to improve customer experiences. These numbers highlight how real companies are using detailed user behavior insights to make informed, impactful choices.

To get the most out of event tracking, focus on high-value actions that directly influence growth, revenue, or retention. This means tracking moments that matter - like when users activate key features, complete onboarding, or engage with premium tools. Insights from these actions allow for personalized experiences that can drive both conversion and retention rates. As you collect more data, continuously refining your approach based on these insights is essential.

Event tracking isn’t a one-and-done task; it’s an evolving process. As Arturs Sosins, CTO at Countly, explains:

"What are the biggest mistakes companies make when setting up event tracking? Not documenting what they track. Tracking things they do not need. Not having a scheme for naming data. Not preparing questions they want the data to answer."

Start small by identifying core events, then expand strategically to track actions that reveal how users adopt features, signal churn risks, or face onboarding challenges. It’s worth noting that 67% of marketers use event data for advanced analytics and to enhance business intelligence.

Leading SaaS companies use event data to create targeted user segments and predict trends. Custom event tracking offers a deeper look into user engagement - beyond just knowing that they visited. This clarity helps you identify what’s working, where users lose interest, and how to fine-tune their experience.

At Shalev Agency, we combine strategic design with data-driven methods to help SaaS businesses implement event tracking systems that fuel sustainable success.

The journey to SaaS growth begins with understanding your users - one event at a time.

FAQs

What are the best practices for SaaS companies to decide which user events to track for driving growth and retention?

To figure out which user events to track, SaaS companies should zero in on actions that drive growth and improve retention. Pay close attention to behaviors like completing onboarding, adopting key features, and maintaining regular engagement, as these are strong indicators of user success.

Start by developing a detailed event tracking plan that specifies what to track and the reasons behind it. This plan helps keep teams aligned and ensures the data collected is relevant and actionable. Tools like custom event tracking software can be incredibly helpful for monitoring these critical behaviors and uncovering useful insights. By prioritizing these impactful events, SaaS businesses can make smarter decisions, improve the user experience, and set the stage for long-term growth.

What mistakes should I avoid when setting up event tracking for my SaaS product?

When setting up event tracking for your SaaS product, be mindful of some common mistakes that can muddy your data and limit its usefulness:

• Tracking too many events: Trying to log every single interaction can clutter your data and make it harder to identify meaningful insights. Focus on tracking the events that directly tie to your business goals and user journey.

• Not having a clear tracking plan: Jumping into tracking without a solid plan can lead to inconsistent data and confusion. Lay out a strategy with clear naming conventions for events and properties to make your data easier to analyze.

• Neglecting to update your tracking setup: As your users and business goals change, your tracking system needs to adapt. Regularly review and tweak your setup to ensure it stays aligned with your needs.

By steering clear of these missteps, you can create an event tracking system that delivers actionable insights and helps your SaaS business grow.

How can SaaS businesses use event tracking to predict and prevent customer churn?

Event tracking plays a crucial role in helping SaaS businesses spot and address potential customer churn. By analyzing user behavior and engagement patterns, companies can identify warning signs before customers leave. Metrics like how often key features are used, session duration, and overall engagement levels can highlight users who might be losing interest or struggling with the product.

Armed with this information, businesses can take action. For instance, they might offer personalized support, run targeted re-engagement campaigns, or make improvements to features that aren't being fully utilized. On top of that, historical event tracking data can be used to power predictive models, helping estimate the likelihood of churn. This allows companies to focus retention efforts on users who are most at risk.

By tapping into these insights, SaaS companies can improve customer satisfaction, strengthen loyalty, and keep churn rates in check.

Related posts

• 7 Website Analytics Metrics That Actually Drive Conversions

• How to redesign your SaaS to improve user retention and activation

• How to Map User Flows for SaaS Navigation