Trind Ventures invests in companies with a consumer or community component. A lot of these companies are Software as Service (SaaS) companies. When we look at SaaS companies, it is essential to see metrics: We use those to assess the case, and the founders’ can use those to drive and scale the company. This blog post looks at a startup’s key SaaS metrics.
SaaS has become a popular business model for many companies, offering businesses a convenient and cost-effective way to access and use software applications. As a result, tracking the right metrics is crucial for the success of a SaaS business.
Which SaaS metrics to follow?
Several key SaaS metrics can provide valuable insights into the performance of your business and help you identify areas for improvement. Which SaaS metrics to follow varies case-by-case and depends on e.g. your business model, industry, and customers; however, some of the most important metrics to track include:
- Monthly Recurring Revenue (MRR): This metric shows the revenue generated monthly from your recurring subscriptions. It is a vital indicator of the overall health of your business and can help you forecast future revenue.
- Customer Acquisition Cost (CAC): This metric shows the cost of acquiring a new customer. It is essential to track this metric because it can help you understand the efficiency of your sales and marketing efforts and identify areas for improvement.
- Customer Lifetime Value (CLTV): This metric shows the total value of a customer over the entire time they remain a customer. It is essential to track this metric because it can help you understand the importance of retaining customers and the potential return on investment from acquiring new ones.
- Churn Rate: This metric shows the percentage of customers who cancel their subscriptions or stop using your service over time. It is essential to track this metric because it can help you identify the reasons for customer churn and implement strategies to reduce it.
- Customer retention rate and user activity (e.g., monthly active users, MAU) can help you understand the effectiveness of your retention strategies and the engagement and usage of your service.
“Quite often, we see startups focusing heavily on customer acquisition and paying less attention to customer retention. However, customer retention may be more important for us as a metric. It tells us the lifetime of your customers, and at the same time, is an important indicator of the quality of your product: If the retention rate is low, the customers do not see value in your product.”
Liis Hiie, Investment Associate at Trind
Tracking SaaS metrics
When tracking these metrics, monitoring and analyzing them to understand your business’s performance comprehensively is essential. Tracking can help you identify trends and patterns and make informed decisions to drive growth and success.
One way to track and analyze your SaaS metrics is by using a SaaS dashboard. A SaaS dashboard visually represents your key metrics, making them easy to monitor and analyze. It can also provide alerts and notifications when specific metrics reach a pre-determined threshold, allowing you to promptly address any issues or opportunities.
Another critical factor in tracking SaaS metrics is setting goals and benchmarks. By setting goals and benchmarks for your metrics, you can establish a baseline for performance and measure your progress over time. This approach can help you identify areas for improvement and track the impact of any changes or adjustments you make to your business.
Summary
In conclusion, tracking the right SaaS metrics is essential for the success of your business. These metrics can provide valuable insights into your business’s performance and help you identify areas for improvement. By regularly monitoring and analyzing your metrics, you can make informed decisions to drive growth and success.
Do you have the next data-driven SaaS startup with great metrics and are looking for seed funding? If yes, we would love to hear from you.