The most important metrics in Saas
Through these 10 metrics, you will lead your business to success. Learn the main method for leveraging your Saas or Startup.
With entrepreneurship on the rise, every day new businesses appear with a common characteristic: bringing an innovation to the market, whether in a new product or in a service that no one has thought of offering until now.
And these ventures often opt for a common business model: Startups and Saas. This can happen due to its ease and also due to its new status.
Let’s remember what is the difference between a Startup and a Saas?
An emerging company, usually focused on technology. Because they are not quite ready, Startups are open to outsiders, as investors with capital or labor. In addition, a Startup does not have to be physical either.
A Software as a Service, is called so when it becomes, in a way, a type of solution aimed at facilitating the management of those who operate it. The most famous examples of SaaS are Netflix streaming services (for movies, series, documentaries and shows) and Spotify (for music).
Now, how do I know how my business is doing?
It is a fact that every company needs to monitor its metrics, but with so many numbers and KPI’s (Key Performance Indicator), it is difficult to know which indicator to take into account when measuring the success of your business.
So we’ve listed for you the 10 most important metrics for SaaS
1 – Lead Conversion Rate (LRC)
Responsible for calculating the conversion of your leads, through this metric it is possible to understand the effectiveness of your marketing strategies, validating if the leads that are arriving are really the ideal for your business.
2 – Lead Velocity Rate (LVR)
The lead generation speed meter is a metric that helps you determine strategies for the short or long term, in addition to indicating how your company is growing.
It is also possible to monitor the performance of your commercial team, to assist you in defining future business strategies.
3 – Cost and Acquisition (CAC)
A SaaS company needs to understand what it costs to acquire new customers. Thus, this is one of the metrics that contributes a lot to the projections of expenses and alignment with your company’s strategies.
The idea is to optimize your CAC, so always measure it for the channel used by your business.
4 – Monthly recurring revenue (MRR)
It is a KPI for SaaS that helps in the sustainable construction of your business. Through it you will know your monthly recurring revenue. Therefore, it is important to follow it monthly, in order to be able to follow the evolution of the health of your business.
5 – Average revenue per account (ARPA)
Based on ARPA and MRR, you can create strategies to increase your average revenue, in addition to seeing new possibilities to win new customers, since you will always be engaged to achieve your business goals thanks to the monitoring metric.
6 – Annual recurring revenue (ARR)
Calculates the company’s annual recurring revenue, taking into account new sales and cancellations. This metric is very important for your company’s financial health to check its performance over the years.
7 – Average ticket
Average amount that each customer spends on purchases with your business. This data is important for your company’s cash planning.
8 – Customer lifetime value (CLV)
One of the SaaS metrics that presents the value of each customer to the company, measuring the purchase potential that he has during the relationship with your business.
9 – Churn rate
Metric that helps measure the number of customers who are no longer part of your base. This is a great way to measure customer retention for your business.
10 – Net Promoter Score (NPS)
Metric to measure the level of customer satisfaction with your company, which can be classified into:
Promoters – satisfied customers who will advertise your brand
Passives – had no bad experience, but also had nothing surprising
Detractors – had a very bad experience with your product and do not recommend the brand
OK! It’s great to know these definitions, right? But you must be asking yourself: what do I need to do to apply these metrics in my business?
If you are just starting out, or if you are having difficulty using very complex softwares, be sure to read this text until the end!
You will know where to apply, interpret and create the plans that will make your Startup take off.
Here is a tool designed to help you use the key metrics that are essential in optimizing any SaaS or Startup:
Saas Metrics Dashboard Template 2.0 is a powerful Excel Spreadsheet Template that takes the place of bulky and expensive software packages. It has as main characteristics:
- Measure the success of your business
- Provide actionable insights
- Consolidate all information in one place
- Keep your team informed
- Share information with investors
Simple and professional, this is the solution that allows you to stop wasting so much time trying to read the KPIs of your business, and start writing your success story.
To access the spreadsheet and see all the details, just click the link below: