Key SaaS Metrics that SaaS Founders & Teams Must Know

SaaS Metrics

Every SaaS business has some of the most challenging questions, like how profitable our customers are. Or how much can we readjust our customer acquisition strategy? The answers to these come from SaaS metrics.

Most SaaS businesses understand the importance of metrics, but the biggest challenge, and mistake in most cases, is tracking the critical metrics. This can worsen if they overlook the right KPIs for their businesses.

Their obsession with tracking performance is understandable, and to help them understand which metrics are essential, here is an ultimate SaaS metrics list that gives the right idea about all SaaS metrics.

With this knowledge, your biggest challenge can become your ladder to growth because it is important to track the right metrics for SaaS growth.

SaaS Metrics

You will find four categories below, in which the associated metrics are listed and briefly described. To make things easier and more effective for you, a downloadable cheat sheet will help you calculate some of the most critical metrics for your business in a matter of seconds.

Now, let’s get started with our SaaS metrics list!

Marketing Metrics for SaaS Metrics

Marketing Metrics

1. Unique website visitors

One of the fundamental SaaS metrics concerned with marketing is unique website visitors. Unique visitors visit your website for the first time in a particular duration (usually a month). They can vary from people who visit your site out of curiosity to those who are ready to buy from you. It helps in knowing the user type and the purpose of visiting your website.

2. Email subscribers

Those visitors who sign up on your site to get your blog updates and newsletters or to be a part of your mailing list are your email subscribers. They have yet to show interest in your SaaS product or intention to buy, but they like your content and wish to receive updates about it which is why they are not leads.

3. Leads

One of the vital SaaS metrics that you should know of is Leads. These visitors fill out their details, which are more than just an email address, to download a free resource. They willingly fill out their details to get the help you offer, which makes them qualified to be a leader.

4. Marketing Qualified Lead (MQL)

The leads that show interest in your solution by viewing and engaging with some product-focused web pages on your site and fit the demographics of a customer are the Marketing Qualified Leads.

5. Sales qualified lead (SQL)

Those leads that meet the criteria to be an MQL and demonstrate sales intent by requesting a demo or live sales call or conversation are known as the Sales Qualified Leads.

6. Opportunities

Those SQLs which have been transferred to the sales team to initiate the sales process are the opportunities.

7. Paying Customers

Paying customers is included in the list of SaaS metrics that concerns marketing. All the leads who dish out their money to get your product and commit to it for any specific period are your paying customers. Although it is more of a sales metric, it can help SaaS marketers know how many MQLs have been converted into paying customers.

8. Free Trial and Demo Requests

Not all SaaS products are premium only. Many products offer free trials to engage potential buyers, aka leads.

Those users who avail of the free trials are commonly counted as the MQLs because they intend to wait to buy your product, and a free trial demands a very low level of commitment.

Similarly, some SaaS products are very complex to set up and require customization before use. So for such products, live demos are offered.

9. Conversion Rate

The conversion rate is the rate at which a visitor converts into a lead and a lead converts into a customer. While acquiring new visitors is a priority to gain more customers, improving conversion rates can also help the business to gain more customers at a low cost. Thereby, it is one of the integral SaaS metrics for marketing purposes.

10. Visitor to Lead

The visitor-to-lead conversion rate is one of the essential SaaS metrics. It is the rate at which a visitor converts into a lead. Pop-ups, landing pages, email subscriptions, etc., are great ways to convert visitors into identifiable leads. It can be calculated from the following formula:

Visitor to Lead conversion rate = Number of Leads/Number of Visitors

11. Lead to Customer

Lead to customer is another essential marketing metric for SaaS growth. It is the rate at which your leads are converting into paying customers. It helps in analyzing the quality of the leads which are being generated. It can be calculated using the following formula.

Lead to Customer conversion rate = Number of Customers/Number of Leads

12. MQL to SQL

It is the rate at which your MQLs are converting into SQLs. It also gives great insights into the lead quality and performance. It can be calculated as follows:

MQL to SQL conversion rate = Number of SQLs/Number of MQLs

13. Free Trial to Paid Customer

It is the rate at which the free trial users convert into paying customers. Optimizing this can return a good amount of revenue to the business. It can be calculated using the following formula:

Free trial to Paid Customers conversion rate = Number of customers/Number of free trials

14. Marketing Spend: Average/Annual Contract Value

Marketing spend is one of the essential SaaS metrics, which is the ratio of marketing expenditure to the Annual Contract Value (explained in the Sales metrics). It helps in finding the ratio to the marketing spending with the sales revenue generated.

Marketing Spend: Annual Contract Value

15. Month-On-Month MQL Growth Rate

It is the growth rate at which the MQLs are growing each month. It can be calculated in the following way.

Month-on-Month MQL Growth Rate = {(MQLs of This Month – MQLs of Last Month)/ MQLs of Last Month} * 100

16. Month-On-Month SQL Growth Rate

It is the growth rate at which the SQLs are growing each month. It can be calculated in the following way.

Month-on-Month MQL Growth Rate = {(SQLs of This Month – SQLs of Last Month)/ SQLs of Last Month} * 100

17. ROI per Marketing Program

It has been commonly seen that many marketing programs initially provide more leads at the minimum cost and eventually start to provide a low amount of leads at a high amount of money invested in them. ROI is one of the critical SaaS metrics for businesses, and it is a good idea to keep an eye on the ROI (Return on Investment) of each Marketing program.

18. Customer Type

It is the categorization of customers who share similar attributes. Having different customer types is a good idea as it helps in knowing the most profitable customer type for your business to target such customers in your marketing programs.

19. Inbound Qualified Lead Velocity

The inbound qualified lead velocity is the rate at which your inbound leads are growing every month. It is the key to measuring organic growth in acquiring qualified leads for your business.

20. Customer Engagement Score

The inbound qualified lead velocity is the rate at which your inbound leads are growing every month. It is the key to measuring organic growth in acquiring qualified leads for your business.

It can be created by knowing the answers to questions like how many times a customer logs in daily. Are they using the service daily? What are they using it for? Which features are they using more than others? Etc.

21. Qualified Marketing Traffic

The tracking of those users who are not your customers but who are returning users is your qualified marketing traffic. Focusing on this group can help you get more leads.

Sales Metrics for SaaS Growth

 Sales Metrics

1. Annual Contract Value (ACV)

One of the fundamental SaaS Metrics for sales is ACV. Here’s an example to understand it. The ACV gives you the value of a customer’s contract over a year. Suppose a customer pays $50000 for a 2-year warranty. This will generate $2083.33 Monthly Recurring Revenue (MRR discussed in Growth Metrics), and this ACV would be $25000.

2. Total Contract Value (TCV)

TVC is a crucial sales metric, the total value of a customer’s contract. If we continue our previous example, then the TVC of that customer is $50000.

3. Average Revenue Per Account (ARPA)

ARPA helps in knowing the revenue generated on a per-unit basis. It is the revenue generated by an “average” customer or account a month. You can calculate by:

ARPA = MRR/Number of Active Accounts

4. Average Selling Price (ASP)

The Average Selling Price or ASP tells you the average initial price paid by the customer at the time of a sales conversion. It is calculated in the following way.

ASP = Total Deal Revenue/Number of all deals

5. Customer Acquisition Cost (CAC)

CAC, or Customer Acquisition Cost, is the amount required to acquire a new customer for your business. It gives the idea of spending to get new customers for the business. Usually, the cost of marketing and sales is generally considered the total cost of acquiring new customers. It is always calculated for a specific time duration.

CAC = Cost of Sales and Marketing/New Customers

6. CAC Payback Period or Months to recover CAC

If the acquisition cost of a customer is less than the revenue they have generated, it is profitable for the business. So, it is essential to know the period in which a customer generates enough revenue that surpasses the acquisition of cost. This is called the CAC Payback Period or Months to recover CAC. It is calculated as follows:

CAC Payback Period = CAC/MRR per customer

7. Gross Margin Adjusted Payback Period

This gives a more accurate CAC payback period as it considers the COGs. It is calculated in the following way.

Gross Margin Adjusted CAC Payback Period = CAC/(MRR per customer *Gross Margin)

8. Customer Lifetime Value (CLTV)

The Customer Lifetime Value, CLTV (or simply CLV), is included in the list of important SaaS metrics. It is the revenue a customer has contributed to their overall subscription lifetime. This gives the user’s true value and contribution to the overall revenue.

LTV = ARPA/Customer Churn Rate

9. LTV:CAC

The ratio of LTV to CAC is crucial in knowing the correlation between the cost you bear to acquire a customer and the returns a single customer is giving to your SaaS business.

10. Win Rate

The win rate is one of the most critical SaaS metrics for sales. It is usually calculated by seeing the total deals won in contrast with exclusive deals (won and lost both). It provides a more straightforward look at the efficiency of your sales team.

11. Revenue Per Lead

If you are a SaaS founder, your business’s revenue per lead is a crucial metric. This helps forecast or estimate the revenue your leads are likely to contribute. It is calculated using the following formula.

Revenue per Lead = ACV/Number of Leads

12. Lead Velocity Rate

In the simplest terms, it is the rate at which your leads are growing per month. The formula to find lead velocity rate is:

Lead Velocity Rate = {(Qualified Leads This Month – Qualified Leads Last Month) Qualified Leads Last Month}*100

One Of The Important SaaS Metrics

 Customer Success Metrics

1. Daily Active Users (DAU)

One of the most crucial SaaS metrics for customer success  is DAU. This customer success metric tells the total number of active users on a single day. Although it is a good metric to see the active users, it does not mean anything about how engaged those customers are.

Only some of the customers have logged in to use the service, and some may be active in contacting support or deleting their data.

2. Monthly Active Users (MAU)

Like DAU, MAU gives you the total number of active users in a month.

3. Net Promoter Score (NPS)

It is a tool that helps businesses to know the percentage of customers who are their promoters. It utilized the referral scale, usually asking a straightforward question that almost everyone has seen, i.e., “how likely are you to recommend (SaaS product) to a colleague or a friend?” followed by a satisfaction scale.

The percentage of Detractors is then subtracted from the allocation of promoters, giving you the NPS.

4. Customer Satisfaction Score (CSAT)

The customer satisfaction score also utilizes the survey method by asking a simple question i.e., “how would you rate your overall satisfaction with our service?” followed by a scale from 1 to 5. This is followed by averaging out the responses to see the CSAT.

CSAT = (Sum of Customer Responses/5*Number of respondents) * 100

5. Upsell & Cross-sell Rate

Another metric included in the list of top SaaS metrics is Upsell and Cross-sell rate. Upsell rate is the calculation of the percentage of revenue generated in a particular period by upselling.

Upsell Rate = ACV of Upsells/Total ACV

Same is the case with cross-sell rate.

Cross-sell Rate = ACV of Cross-sells/Total ACV

6. Viral Coefficient

If you are a SaaS founder, viral coefficient is a metric that you should consider. The viral coefficient tells the growth of your customer base that has taken place through successful customer referrals. It gives you the number of new users your existing users are referring to your business.

Viral Coefficient = (Number of Users*Average number of referrals*Referral Conversion Rate)/Number of Users

7. Referral Revenue

Referral Revenue is one of the important customer success metrics for SaaS growth. It is the total revenue that is generated by successful referrals in a specific period. Customer referral is a great way of development and does not require a lot of cost. So measuring the referral revenue helps understand the value referrals add to your business.

8. Referral Return on Investment (ROI)

It is the advanced measurement of referral revenue, in which you compare the amount that is spent on customer referrals with the total revenue that is generated by those referrals over the customer lifetime.

Referral ROI = (LTV-Referral Incentive)/Referral Incentive

9. Viral Referral ROI

Adding the Viral Coefficient to the equation can help improve your referral ROI. Using the following equation where the average at which existing users generate new users by referrals is added, you can find the Viral Referral ROI.

Viral Referral ROI = ((LTV*(1+Viral Coefficient))-Referral Incentive)/Referral Incentive

Growth Metrics for SaaS Team

Growth Metrics

1. Monthly Recurring Revenue (MRR)

As a SaaS founder, MRR is a metric that would definitely be of help for your SaaS business. MRR is the sum of recurring revenue that customers generate in any specific month. It helps in knowing the monthly revenue growth of your SaaS business. It is calculated by seeing the recurring amount made by customers in a month.

2. Annual Recurring Revenue (ARR)

One of the most important SaaS metrics is ARR. The annual recurring revenue is calculated by multiplying the MRR by 12. It gives the customers the total recurring revenue generated in a whole year.

3. Committed Monthly Recurring Revenue (CMRR)

CMRR is the forecasting of MRR, where you take any guaranteed revenue expansion and anticipated churn into account. Here’s how you can calculate your CMRR:

CMRR = MRR + Guaranteed Expansion MRR – Anticipated Churn

4. New MRR

New MRR is one of the important growth metrics for SaaS business. In simple words, it is the revenue generated by new customers in the month.

5. Expansion MRR

Expansion MRR is the revenue generated in the month by existing customers’ renewals or expanded subscriptions.

6. Churned MRR

Churned MRR is the amount that is not added to the business’s revenue because of cancellations and churns.

7. Contraction MRR

The amount that is lost due to the downgrade or scale back by customers in their current subscriptions in a month.

8. Reactivation MRR

The amount is generated from customers who have returned after canceling their plan.

9. Customer Churn Rate

Customer churn rate is another metric that has made its mark in the list of top SaaS metrics. It is the rate at which your existing customers cancel your service. It is essential for business growth to reduce the churn rate in addition to new customer acquisition.

Customer Churn Rate = Churned Customers/Total Customers at the beginning

10. Revenue Churn

Revenue churn rate, a MRR churn rate, is the churn of revenue caused by the cancellation or downgrades by existing customers.

Revenue Churn Rate = (Last Months MRR – This Month’s MRR)/Last Month’s MRR

11. Bookings

It refers to the total amount acquired by new deals (up-front new payments and recurring combined) in a particular period. It differs from MRR as it considers the whole amount made for a specific month rather than the recurring revenue.

12. MRR Growth Rate

It is the rate at which your MRR grows over a certain period. It is essential to gauge the growth in revenue on a per-month basis. To calculate this:

MRR Growth Rate = ((This Month’s MRR – Last Month’s MRR)/Last Month’s MRR)*100

13. Net New MRR

Most SaaS businesses need to have the actual amount of revenue generated rather than knowing the growth rate of it in percentage form. This is where Net New MRR comes into play. It can be calculated using the following equation.

Net New MRR = New MRR + Expansion MRR – Churn MRR

14. SaaS Quick Ratio

It gives you the ratio of your revenue growth to churn, which is very useful for seeing the health of your revenue growth. It is the comparison of your revenue growth and revenue shrinkage over a particular period.

SaaS Quick Ratio = (New MRR + Expansion MRR)/(Churned MRR + Contraction MRR)

15. Burn Rate

It is the rate at which a company or business utilizes its cash supply over time. It is more advantageous for investors to know or estimate the next round of funding a startup would require at a particular time.

16. Gross Burn Rate

It is the amount of money a SaaS business spends in a month.

17. Net Burn Rate

It is the amount that a company loses in a month. Revenue is subtracted from the spend amount; the difference is referred to as the Net Burn Rate.

18. Zero Cash Date (ZCD)

It is the date on which it is predicted that your business will run out of cash supply based on the burn rate and no new revenue generated.

19. Cost of Goods Sold (COGS)

An important metric for SaaS founders is COGS. The total spending required for the service, from serving customers to delivering/upgrading solutions, is the cost of goods sold in a SaaS business.

20. Gross Margin

It is the percentage of leftover revenue after subtracting the COGs from the total revenue generated.

Gross Margin = (Revenue – COGs)/Revenue

21. Growth

Growth is simply the success and expansion of a business in a given period. It determines the effectiveness of the business in terms of revenue and market share.

22. Cash

Cash is one of the most common and well-known SaaS metrics. This metric is the amount spent on the business. It is essential for startups to keep an eye on this to control their spending and not fall short of cash in less than the projected time.

Best SaaS Metrics Calculator

Final Words

These are all the essential SaaS metrics that every SaaS marketer, founder, and the investor would know about for better growth and effective performance tracking. Learning about these metrics can help you focus on the right KPIs for your business.

Stratigia is a SaaS marketing agency that helps solve the most complex challenges your SaaS business faces. We help to implement scalable marketing strategies to augment the growth of your SaaS business. Explore our website to learn more about the best key SaaS metrics and other strategies to improve your SaaS business.

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