What main SaaS metrics do you track regularly?
Hi IHs,
You can't really improve what you don't measure, so it's important to keep an eye on the metrics that matter most. But with so many numbers to track (MRR, LTV, CAC, you name it), what are the one's that you keep an eye on and focus on improving ..
Are there any metrics that you've found to be particularly useful in measuring the success of your business and how do you track them?
Great question! The metrics that matter most depend on your stage, but here's what I've found works well:
Pre-revenue: Burn rate, runway (dynamic, not just cash/burn), and user growth rate.
Post-revenue: MRR + growth rate, gross and net churn (use cohort-based, not simple division), CAC (include ALL costs, not just ad spend), and LTV:CAC ratio (aim for 3:1+).
One thing most founders get wrong — they calculate runway as cash / monthly burn, which assumes burn stays flat. If you're hiring or scaling, you need a dynamic model that projects increasing expenses. The real runway is almost always shorter than the napkin math.
I actually built a set of Excel templates called "SaaS Starter Toolkit" that auto-calculate 25+ KPIs from basic monthly inputs (360 formulas, works in Google Sheets too). Also includes a 24-month runway planner and fundraising CRM. Search for it on Gumroad if you want to skip building these from scratch.
My Key Metrics for 2023:
MRR
Monthly Income
Monthly Burn
Runway
One's I found useful:
Monthly Projected vs Actual Revenue/Costs/Income - shows how well you are at predicting the future
Number of Customers vs Revenue % per Customer - shows how much flexibility your business has
Number of Customer Meetings - specifically for my company shows how well we're getting at selling (most meetings lead to more orders or awareness for our business model)
Number of Outreaches (posts, comments, messages, etc) - shows how much marketing you're doing
I like the number of customers meeting ide💡. An easy way to make sure a founder is really getting the exposure and isn't stuck inside the building (his mind)
Awesome! Definitely important to talk to customers to understand what their problem is
Monthly Recurring Revenue (MRR) is the most important.
Also Monthly Active Users (MAU) give many insights.
In this talk, David Skok, author of the now famous SaaS Metrics 2.0 blog post will talk through those key metrics and their impact on the overall SaaS business model.
thanks for sharing
As a SaaS CFO, from my experience working with hundreds of companies, the metrics you should focus on depend on company stage, size, and market focus as well as what they are selling. For example, metrics for a B2B company will be different than for a B2C. Metrics for a SaaS company will be different than metrics for a HW/SW company. Metrics for enterprise facing versus SMB will also be different as are metrics for a $1M company vs a $150M company.
In general however, for early-stage SaaS the most important are:
MRR/ARR
Net/gross retention
Cash burn and cash out date
Marketing ROI
Cost to acquire customers (CAC)
Good point, These are important differentiators
For high-performing SaaS companies and not only, it's crucial to determine the effectiveness and long-term viability of their marketing strategy through the LTV: CAC Ratio and CAC Payback Period.
Your sales and marketing team can make sure they are successfully acquiring and retaining consumers as well as making wise investments in their customer acquisition operations by routinely evaluating these metrics and making modifications as necessary. They will be prepared for long-term success and steady revenue growth as a result of this.
Yes Marta, I think this is the ultimate health check
You already know the basic ones, so let me mention few not that obvious ones:
I'm not a founder (yet), but was an analyst at a hedge fund covering SaaS companies.
Here's a checklist that I used to evaluate companies, might be helpful for founders too:
SaaS Checklist/Evaluation
Very good, from an analyst perspective how would you compare or examine all of these when you are looking at opportunity. How do you stack opportunities against each other?
These metrics are just for helping filtering out companies (it's a process of elimination for us). Of course, we do consider the verticals companies are in and the margin profiles/competitive landscape in those verticals.
After the initial screen, we usually talk to customers directly to see what they say about the products of a company. And in a parallel process, we set up calls with the management team of a company of our interest, and basically try to get a grasp of culture and leadership competency as well as try to understand what they are building and how they think about the industry and product roadmap.
SaaS growth is a journey. There are 3 important things to be focused on for SaaS growth. 3 things you need to care more about,
For each of the above 3 growth strategy, you can plan various growth metrics. According to your business priorities, you can define your KPIs / Metrics and track it continuously for optimization.
Customer retention is a major problem nowadays and every startup face this issue most of the user left the product after signing up or using 1 or 2 times.
There is a customer retention tool Churnfree which can help you reteain your customer with its customer retention feature. It can save up to 46% customer's churn requests.
SaaS Quick Ratio is one that we often look at here at ChartMogul.
https://chartmogul.com/blog/saas-quick-ratio/
Quick Ratio is super important for the efficiency of your business and growth. It's also a favorite among investors.
At the end of the day a lot of it comes down to Churn when talking about SaaS Quick Ratio, so that's another important one.
I think the most important SaaS metric to pay attention to is your Quick Ratio.
Quick Ratio = (New MRR + Expansion MRR) / (Contraction MRR + Churned MRR)
https://baremetrics.com/academy/saas-quick-ratio
SaaS metrics that businesses track regularly are:
These metrics help businesses to understand the health of their business, growth trends, and customer satisfaction, and make informed decisions about their product and go-to-market strategies.
Churnfree is a customer retention tool that can help you to reduce your customer churn and increase your MRR. It can help you to retain your customers with the help of customer retention flow.
I suggest every SaaS founder to must check out this super tool to grow their business.
Really helpful! We're launching soon and these insights and metrics are great!