If you are running a SaaS business you need to understand the key SaaS metrics to measure the success of your business.
I’m going to show you 5 top SaaS metrics and tips to improve them.
That’s cool isn’t it?
In SaaS, the Top 5 metrics you should know are:
1) Churn Rate
Percentage of service subscribers who discontinue their subscriptions within a given time period.
If you have a SaaS company, you must know your Churn Rate and it’s pretty simple to calculate it:
2) CAC (Customer Acquisition Cost).
Marketing is becoming more expensive…
You have to take care to select the best channels to distribute your product and get the best results for your profit margins. The only way to detect which channel is performing better is to track the cost per acquisition of campaigns.
There are new techniques to save budget in marketing, here you have an article to do that: How to create In-App Retargeting?
And here you have how to calculate your CAC:
3) MRR/ARR (Monthly Recurrent Revenue/Anual Recurrent Revenue)
One metric that you will need to analyze is monthly recurring revenue (MRR).
It tells you how much income is generated each month
There are different types of MRR (Expansion MRR, New MRR, Churn MRR,Net new MRR)
4) ARPA (Average Revenue Per Account)
Is the revenue generated per account, usually calculated on a monthly or yearly basis. It’s sometimes called Average Revenue Per User (ARPU) or Average Revenue Per Customer (ARPC)
5) LTV (Lifetime Value).
By combining the average revenue per account (ARPA) and the churn rate, we can predict how much revenue we expect to receive in the future.
If you’re retaining your customers, you’ll have a higher LTV.
Remember that you need to carefully select the key metrics you will use to measure your business.
Froged Customer Success Team
Now, I’m going to share with you two tips to improve your SaaS metrics.
So… Here we go:
Take care of your onboarding process
One of the most important things to retain users and convert TRIALS into recurrent customers is to show the value of your product in the first two days after the sign-up.
But how to do it?
First, you need to select your key activation event.
Key Activation Event: The action, that once your client does it, becomes recurring
Once you find your Key Activation Event, you have to design an onboarding focused on activate your user.
e.g: If we’re a Fintech Company like Revolut, the Key Activation Event could be the first deposit into the app. So we have to focus our email campaigns, In-app messages and all our onboarding to reach the first deposit.
Stay focused on your retention
According to HBR acquiring a new customer is from five to 25 times more expensive than retaining an existing one.
So… Here you have the key to reduce your CAC.
If you know the online unique behavior of your customers, you’ll be able to send them the correct message in the correct moment to upsell.
You can use our event creator to select the key events that you need to track and our Behavioral Emails or Automated Messages to send to your customers the perfect message.
Retaining customers is so valuable If you’re not convinced of that, consider research done by Frederick Reichheld of Bain & Company (the inventor of the NPS (Net Promoter Score) that shows increasing customer retention rates by 5% increases profits by 25% to 95%.
If you need tools to Activate, Retain customers and grow your metrics, Froged is the best option.