Which Metrics to Follow for a SaaS Start-Up?

Which Metrics to Follow for a SaaS Start-Up

Hind Chtibia

Business Analyst

9 November 2023

In the domain of SaaS start-ups, possessing a profound comprehension and unwavering surveillance of the appropriate metrics is an imperative stride toward accomplishment. These invaluable metrics furnish enlightening data regarding the vitality of your business, its trajectory of expansion, and its prospects. With many metrics to contemplate, the question arises: which metrics to follow for a SaaS start-up? In this comprehensive manual, we will explore 21 indispensable metrics that should demand the attention of every SaaS start-up.

Section 1: Fundraising Metrics

Fundraising is a pivotal aspect of any start-up, and certain metrics can make this process more attractive to potential investors. We are going to start by responding to the question of which metrics to follow for a SaaS start-up. That is by naming some Key metrics in this category include:

  1. Monthly Recurring Revenue (MRR): This represents the consistent and predictable revenue you generate from your subscription.
  2. Customer Acquisition Cost (CAC): Gaining insight into how much you invest in acquiring new customers is a key component when assessing the profitability of your business.
  3. Lifetime Customer Value (LCV): This metric helps you understand the total revenue a customer can expect to earn throughout their relationship with your business.
  4. churn rate: The rate at which customers stop subscribing, providing important insights into customer satisfaction and product value.
  5. Burn Rate: Measures how quickly a company spends money, which is critical for sustainability and future planning.
Which Metrics to Follow for a SaaS Start-Up

Section 2: Growth Metrics

To effectively evaluate the growth of your SaaS start-up and to know which metrics to follow for a SaaS start-up. You should focus on the following metrics:

  1. Average Revenue per Customer: This metric provides insight into the financial value of each customer.
  2. Total Contract Value (TCV): TCV takes into account the total revenue from each customer contract, including one-time fees and upsells.
  3. Annual Contract Value (ACV): This metric provides a snapshot of the value of an average contract over an annual period.
  4. Number of Active Users: A measure of the number of active users can provide insight into the level of customer loyalty and satisfaction with your product.
  5. Number of Registered Users: This helps track the size of your user base and your potential market.
  6. Month to Month Growth (MoM): This metric measures your growth rate compared to the previous month and provides insights into your growth momentum.
  7. Total Sales/Revenue: Measures your total sales for a specific period and paints a clear picture of your financial position.
  8. Gross Profit: This metric evaluates the profitability of your revenue streams relative to the associated costs.
  9. Gross Margin: Measures total revenue minus the cost of goods sold and provides insight into operating expenses.
  10. Product Usage/Engagement: Monitoring product usage and engagement can provide valuable insights into customer satisfaction and potential issues.

Section 3: Acquisition Metrics

Customer acquisition is an important part of a SaaS startup. Basic acquisition metrics include:

  1. Net Promoter Score: This metric measures customer satisfaction and loyalty and provides insight into customer relationships.
  2. Total Addressable Market: Helps evaluate the potential revenue opportunity of a product or service.
  3. Sources of Traffic: Understanding where your traffic is coming from will help you optimize your marketing strategy.
  4. New and returning website visitors: Understanding the ratio of new and returning visitors provides insight into the effectiveness of your site and inbound strategy.
  5. Number of new trial signups (or free accounts): Helps determine your visitor-to-signup conversion rate.
  6. Free to paid customer conversion rate: This metric can highlight the effectiveness of your onboarding process and indicate potential adoption issues.

By carefully monitoring these essential metrics, you now have the answer to which metrics to follow for a SaaS start-up. You can extract valuable insights regarding the performance and future prospects of your SaaS start-up. This will enable you to make informed decisions based on data, effectively guiding your business towards triumph.

If you are seeking effective guidance to expand your understanding of which metrics to follow for a SaaS start-up, it would be prudent to form a collaboration with Altcode Solutions. Our proficiency lies in providing customized strategies that empower businesses, such as yours, to flourish in the highly competitive realm of the technology sector. Should you require additional details, please feel free to reach out to us.

Hind Chtibia

Business Analyst

À lire aussi…

Types of SaaS Software

Types of SaaS Software

Introduction Due to the growing embrace of the Software-as-a-Service (SaaS) model in the software industry, there has...