Key SaaS Metrics That Matter for Your Business Growth
“One accurate measurement is worth a thousand expert opinions.”
SaaS is evolving…
SaaS is gaining popularity…
SaaS is changing the way people do business…
You have landed on our website which means you have something to do
with SaaS. Probably you are a CEO or marketing manager of a SaaS
company and you want to get to grips with SaaS metrics like the back of
your hand.
What to expect from our SaaS-focused content? You will learn what makes
the SaaS business model different from the traditional one, how to
calculate SaaS metrics, why tracking them is important for your business
growth and what SaaS KPIs you should care about the most.
Stay with us to stay in the loop and let’s get started.
SaaS-y trends: Not the same as in other industries
The subscription model has conquered the SaaS industry and nowadays
almost all SaaS companies operate with a subscription-based pricing
model. In the case of a typical non-SaaS business, a customer pays a
one-time fee and gets the product forever.
Another thing that makes SaaS stand out – it takes time to get your
investment and cash money back. And the faster you want to grow, the
bigger your losses will be in the beginning. Sounds paradoxical. Let’s be
clear. You invested $2500 and acquired 5 customers, your CAC is $500.
Your customers subscribed to a $90 monthly plan and will pay back that
$500 in 5.5 months, not immediately. So you will recover your CAC
gradually and after 5.5 months, the longer your customer continues his
plan, the more your net profit will be.
In the SaaS industry, a customer buys a subscription package, not a
product. And that product (software) is available as long as the customer
continues to pay the subscription fee. Of course, you can find software for
which you pay a fixed price and use it for a lifetime but it’s more an
exception than a rule.
-What are SaaS metrics and why is it worth tracking them?
-They’re proof of your SaaS business health. Read further:
we have more for you!
At first glance MRR, ARR, CAC, LTV and stuff like that seem a bunch of
letters and acronyms but then you discover the power inside them.
Your recurring revenue is reflected in just 3 letters – MRR (or ARR), your main
marketing spendings are embodied in another 3 letters – CAC or you can
measure the profitability of your customers with 1 more acronym – CLV.
That’s not the end as metrics like NPS, LVR and Churn rate and others are
not less valuable to measure and analyze.
You know your CLV, you know how much to invest in customer acquisition.
Your NPS is a negative number, that means your customers have a painful
experience with you (hope that’s not your case).
Your Churn rate is low, you know your product and team perform great
(hope that’s your case).
And the list goes on…
With key SaaS KPIs at your disposal, data tells you what’s your current
the situation, what’s missing and what to do next – that’s when you should
make your SaaS-saving or SaaS-improving decisions.
If
- 1. Your LTV to CAC ratio is less than 3
Or - 2. You recover your CAC in more than 12 months
Then
YOU NEED TO MAKE IMPROVEMENTS!
Without further ado, let’s move forward to discovering every SaaS metric
separately. From each of our publication, you’ll know
-the definition of that particular metric,
-how to measure it and what’s the formula,
-how to improve its performance with practical tips,
-other sections relevant only to a separate metric…
We are sure you’ll walk away with a bundle of SaaS knowledge and a
sense of spending quality time.
Happy reading!
