Tracking and analyzing data is the key to checking how well your business is performing and what you can do to improve it. However, collecting data from different metrics can be overwhelming. Various metrics are relevant to subscription-based SaaS company.
You should choose SaaS performance metrics that align with your objectives and you can easily calculate and analyze them. In this post, we will tell you about the top ten reporting metrics that every subscription-based SaaS company must track.
10 Most Important Metrics for a SaaS Company
The following are top 10 metrics that you should track as a subscription-based SaaS company owner.
Trial Conversion Rate
When you own a subscription-based SaaS company, you often have to offer free trials to the customers. The number of clients who opted for a paid subscription after a free trial is the trial conversion rate.
A high trial rate indicates that your business is doing good. However, if itโs low, it means your customers donโt like your product or they consider paid subscriptions expensive. Analyzing this metric will help you find the reasons behind it and you can develop strategies to improve this rate.
New Trial Sign-Ups
This metric tells about the number of new customers who registered for a free trial of your product or platform. Itโs good to have a high conversion rate. However, if you donโt have enough customers signing up for trials, the number of paid customers will automatically be low.
In such a case, you need to invest more in attracting new customers. Developing new marketing strategies can help you with this.
Number of Active Users
Itโs the number of customers who are actively using your application within a specific time. Number of monthly active users (MAU) indicates the success of your business. Low MAU means customers are churning or you arenโt getting new ones. Analyzing it will help you understand what customers stick longer around your business.
Churn Rate
Itโs one of the most important SaaS metrics for any business. Itโs the number of customers who cancel subscriptions in a specific duration. A high churn rate means that your platform isnโt capable of keeping customers around for a long time. Churn is inevitable. You cannot achieve a zero churn rate. However, trying different strategies such as talking with churned customers, improving products, etc. can help in reducing it.
Monthly Recurring Revenue
Itโs arguably the best metric to track the success and growth of your SaaS business over time. It represents the total recurring revenue of a month. To analyze it, you can compare it with recurring revenues of other months. Without comparing it, monthly recurring revenue will only be a number that doesnโt offer any insights.
Annual Recurring Revenue
Itโs similar to monthly recurring revenue. However, itโs calculated for the whole year, not a specific month. Based on this metric, you can estimate how much revenue your business will generate at the end of the year. Itโs based on year-long or multiple-year contracts. The actual revenue may vary from the estimated annual recurring revenue.
Customer Acquisition Cost
Itโs one of the most vital SaaS performance metrics. Itโs the amount you have to spend on acquiring new customers. CAC includes all the marketing or advertising costs you spend on acquiring new customers. You can link it with other SaaS metrics to get valuable insights. For instance, CAC must be lower than the LTV for a specific customer. CLTV/CAC must be higher than 3. If itโs below 3, it means you are spending a lot on acquiring new customers. If you spend too much on acquiring customers, you will not be able to generate good revenues.
Customer Lifetime Value (CLTV)
Itโs the estimated revenue a customer will add throughout the relationship with your business. It indicates how much value a customer can add to the total revenue. Based on this, you can decide how much you can spend on acquiring them. The acquisition cost must be lower than the customer’s lifetime value.
Customer Retention Rate
Itโs the opposite of the churn rate. Customer retention rate is the percentage of customers who stay with you during a specific period. They donโt cancel their subscriptions and remain as paying customers.
A high retention rate indicates the stability and success of your business. As a SaaS company owner, you should invest in retaining customers as itโs easier and more affordable than acquiring new ones. You can offer discounts, plan upgrades, and use other similar strategies to retain customers.
Cancellation Reason
When your customers churn you need to know the reasons behind it. Though itโs not a specific metric itself, it can help in improving other metrics. For example, you can contact customers to know why they cancel subscriptions. Based on this information, you can find trends and try to improve to reduce the churn rate. It will ultimately help you generate good revenues and grow your subscription-based SaaS company.
You can use Baremetrics to get cancellation insights. It will help you collect customer feedback and then analyze it to find trends. The best thing you can do regarding this is to create customizable cancellation forms. By doing so, you will make customers fill out the form before canceling subscriptions. You can include questions or some sections in the form that can give you I sights into why customers are cancelling. You can try to win them back by improving your platform and sending automated emails to them.
Baremetrics โ Your Trusted Partner to Track These Metrics
You can leverage Baremetrics to track all the aforementioned metrics and get valuable insights. It not only helps in tracking them but also provides lines of action to improve them. You can use its smart dashboards to track and analyze the metrics most relevant to your business.
Baremetrics can help you calculate more than 26 SaaS metrics at the same time. Moreover, it offers data augmentation as well. You can use this feature to merge external data with Baremetrics records to get more valuable insights. Register now to get a free trial of this advanced software system and track the growth of your SaaS business.
Also Read: Techydaily.co.uk
