There are hundreds of metrics that many businesses monitor, but not all of them are relevant to SaaS businesses. Even the list of metrics that SaaS businesses can use is frequently too long to be useful.
Consequently, every business ought to select metrics that are in line with their business objectives. You will be able to delve deeper into the data and actually take action on it if you steer clear of the mistake of tracking an excessive number of SaaS metrics.
Ten Essential Metrics for SaaS and Subscription Businesses
Now that we’ve talked about why it’s important to focus your analysis and reporting efforts on the most pertinent data, here are ten metrics that the majority of SaaS and subscription businesses should keep track of.
1. Trial Conversion Rate
The number of free trial users who sign up for a paid subscription within a predetermined time frame is referred to as the trial conversion rate.
If your trial conversion rate is low, it often means that customers aren’t happy with your product or don’t think it’s worth the price of a full subscription. If you examine your trial conversion rate more closely, you can identify these issues and enhance the trial and platform experience.
2. New Trial Sign-Ups
Another important metric for figuring out how well your trials are doing is the number of people who sign up for free trials. It’s perfect if your trial conversion rate is high, but a low number of actual trials in general can still be an issue.
Therefore, SaaS companies may need to increase their marketing and sales efforts related to their free trial program if they see a low number of new trial sign-ups.
3. Number of Active Users
Month to month Active Users reveal the general wellbeing of your business. Stickiness, or the number of customers who frequently return to your product, can also be measured by comparing the ratio of daily active users to monthly active users.
4. Churn Rate
The number of customers or the amount of revenue lost during a given time period is known as the churn rate. Since it has a significant impact on business expansion, churn is an important metric to monitor and reduce because it affects every company in some way.
5. Monthly Recurring Revenue (MRR)
This metric looks at the sum of all recurring revenue that is normalized into a monthly figure so that SaaS businesses can then track it over time.
Since changes in this metric are crucial indicators of a company’s health and growth, it is arguably the most important SaaS metric.
This measurement is generally founded on long term contracts, however the calculations can shift for various organizations.
ARR is useful for understanding the present status of a subscription business as well as its expected performance going forward.
7. Customer Acquisition Cost
The average amount spent on marketing, advertising, sales, and other costs to acquire a new customer is known as the customer acquisition cost (CAC).
When compared to the customer lifetime value metric, this metric is helpful for SaaS companies in determining how much they should invest in acquiring new customers.
Customer Lifetime Value (CLTV) refers to the amount of revenue generated by a customer throughout their relationship with a business.
SaaS organizations ought to follow the lifetime worth of their clients and guarantee it’s higher than their typical client acquisition costs. Otherwise, a low CAC-CLTV ratio indicates that the amount of money spent on acquiring new clients is hurting the business’s profitability.
9. Customer Retention Rate
The percentage of customers who remain with your company for a predetermined amount of time—the opposite of churn—is known as the customer retention rate.
A SaaS company’s long-term viability depends on a high rate of customer retention because it typically costs more to acquire customers than to keep them. Customer lifetime value increases when customers are kept.
10. Cancellation Reason
For customers who do churn, it’s important to know why they stopped using your service. Their reason isn’t precisely a measurement, yet it’s fundamental for SaaS organizations to track and understand in order to reduce churn.
Track the SaaS Reporting Metrics That Matter With Baremetrics
There’s such a lot of information accessible to SaaS and membership organizations. The best way to see results is to concentrate your subscription analytics on the metrics that matter most to your SaaS business.
By following SaaS measurements with Baremetrics, you’ll have the option to settle on information driven choices that push your business forward. Are you prepared to improve the quality of your SaaS reporting?
Today, sign up for Baremetrics’ free trial.