10 Key Metrics Every SaaS Company Should Track

Any type of business can be tedious to manage and grow, but making a SaaS company run efficiently while scaling its size can be especially challenging. More so if you’re not keeping a close look at its performance.

To help your SaaS company succeed, changing your software delivery model into a web-based delivery won’t promise immediate results. It would be best if you were equipped to make calculated, data-driven decisions in terms of your sales, marketing, customer care, as well as your day-to-day operations.

By tracking these ten key metrics, you’ll be able to make business decisions that will affect your company’s performance and success:

Unique Visitors

Simply knowing how many visits you garnered in a timespan isn’t reliable. You see, one person can accidentally account for multiple visits.

Unique Visitors refer to the unique number of people (sort of) who stopped by your website at least once in a reporting period. This number will not change when a person returns to visit your website multiple times.

Google determines the total number of Unique Visits by looking at the IP Address of the device they are using and through cookies. Because some people browse from multiple devices, this might not be very accurate. Even so, this is the closest thing you can get to determine how much unique visits you’re getting.

Churn Rate

At some point, some of your customers will stop using your platform and leave due to plenty of reasons. Collectively, this is referred to as Churn Rate or the number of customers who stopped paying for your service divided by the number of current customers in a given time.

This number is important because this helps you see a trend. It also helps you identify when to become more aggressive in marketing.

Lead Velocity Rate

In essence, Lead Velocity Rate refers to a number that represents the growth of your qualified leads per month.

It’s very helpful for SaaS companies because the changes and decisions that arise from the Lead Velocity Rate are directly attributable to your sales. It’s widely considered to be the best indicator of future revenue and is normally unaffected by seasonality.

Having a reliable growth indicator is a great asset for your sales team and to your company. If you anticipate a seasonal decline in sales, you can mitigate this from manifesting in your revenue by bringing in more leads.

However, make sure that the qualified leads you bring in are being closed, or at the very least, are being properly entertained, to reap its value.

Lead Conversion Rate

Now that we’re talking about leads in sales, another key metric your SaaS company should be looking at is your Lead Conversion Rate. This number represents the percentage of website visitors that were captured as leads.

A higher Lead Conversion Rate means your top-of-funnel conversion is wide enough to feed leads in your sales funnel.

Calculating this number is pretty straightforward. Simply divide the number of leads by the number of visitors in a given time.

Customer Engagement Score

For your SaaS product to become integral to your customers, they should be constantly engaged and motivated to use your product. This is why keeping track of your Customer Engagement Score is essential.

This number is based on customer activity and their usage of your service. The higher this number is, the happier your customers are.

But how do you exactly measure customer engagement?

To determine your Customer Engagement Score, you will have to set your own scoring system. The easiest way to do this is with these 3 easy steps:

  1. List your product’s main benefits vis-a-vis its features
  2. Set a score to each benefit and track each feature’s usage
  3. Compute each score based on usage

Viral Coefficient

Even in today’s day and age, word-of-mouth has always been a strong marketing asset. Viral Coefficient simply tells you how many users are being referred by existing customers to your business.

While there are varying computations that will determine your business’ viral coefficient, it’s mainly based on the current number of users over how many were referred by the existing ones within a timeframe.

Monthly Recurring Revenue

To keep your business afloat and to help you predict future revenue, knowing your Monthly Recurring Revenue is very important for your SaaS company.

Because SaaS platforms rely on a subscription-based model, identifying this is pretty straightforward. Just calculate how many customers are paying for your service at any given time.

Customer Lifetime Value

Your Customer Lifetime Value will be a very important factor when creating your revenue forecast. This value is an estimation of the total amount that you will likely receive as payment from a single customer over the lifetime of their account in your service.

By tracking your Customer Lifetime Value, you’ll be able to set a cap on how much to spend for your Customer Acquisition Cost, which is another factor you should keep track of.

Customer Acquisition Cost

As its name suggests, Customer Acquisition Cost is the amount you usually spend through marketing to push leads through your sales funnel into conversion. This cost can widely vary depending on your company’s market, industry, and target consumers.

Average Revenue Per User

When taken by its literal meaning, the Average Revenue Per User can be pretty basic. Some people even call this a “vanity metric” because they think it’s not as important.

However, once you break down your customer demographic and identify your ARPU for each, then it can greatly impact your business decisions by focusing on a high-revenue user base.

Wrap Up

Plenty of SaaS companies find a hard time to hit its revenue and growth targets. Even established SaaS businesses fine-tune their processes from time to time just to increase profits and diminish losses and risks.

By knowing these key metrics, you can confidently steer your company with every decision and drive it to greater lengths.

About the Author

Kevin Urrutia is the founder of Voy Media, a SaaS Marketing Agency based in New York. He helps people promote their SaaS business by creating digital marketing, demand and lead generation, content, and web design and strategies.