10 SaaS KPIs Every Company Should Track

SaaS key performance indicators are the compass points guiding software-as-a-service companies through the digital expanse.

Imagine steering a ship across the vast digital ocean. You watch the horizon for signs of growth, engagement, and revenue. Without these navigational stars, you’re adrift amidst waves of data, unsure if you’re sailing toward success. Or if you’re circling back to stagnant waters.

Now, picture a dashboard bristling with dials and gauges. Each one is a SaaS key performance indicator: churn rate, customer acquisition cost, monthly recurring revenue, etc. They don’t just measure progress; they chart the future. Knowing your position is critical in an industry where over 15,000 SaaS companies hustle under the sun.

SaaS key performance indicators are not mere numbers on a screen. They are the pulse of your business, the breath of your strategy. They tell you how many users sign up but stay silent on Sunday nights. They whisper about the costs of wooing new subscribers and shout about the triumphs of recurring revenue.

This blog post is your captain’s log, detailing the SaaS key performance indicators that matter. No fluff, no filler, just the straight talk on what metrics will keep your company on a steady sail.

Whether you’re a startup or a seasoned SaaS captain, these metrics are the stars by which you navigate. So hoist the sails, and let us embark on this voyage together.

Table of Contents:

1. What are SaaS Key Performance Indicators?
2. Why are SaaS KPIs So Important?
3. What are SaaS KPIs vs. SaaS Metrics?
4. What are the Most Important Areas Your SaaS KPIs Should Cover?
5. How to Set KPIs for SaaS?
6. How to Analyze SaaS KPI Metrics?
7. Wrap Up

First…

What are SaaS Key Performance Indicators?

Definition: SaaS key performance indicators (KPIs) evaluate the performance and effectiveness of SaaS applications and services. These KPIs help SaaS companies measure various aspects of their business, track progress, identify areas for improvement, and make data-driven decisions.

Common SaaS KPI examples include:

• Customer Acquisition Cost (CAC): The cost of acquiring a new customer, including marketing, sales, and onboarding expenses.
• Monthly Recurring Revenue (MRR): The reliable and consistent monthly revenue realized from subscription services. MRR is used to indicate a company’s financial status and growth path.
• Churn Rate: The percentage of customers who cancel their subscriptions within a specific period.
• Customer Lifetime Value (CLV): The total revenue a customer is expected to generate throughout their relationship with the company. CLV helps to assess the long-term value of acquiring and retaining customers.
• Customer Satisfaction (CSAT) Score: This score measures customer satisfaction based on feedback and surveys. It indicates the overall quality of the SaaS product and customer experience.
• Average Revenue Per User (ARPU): The average revenue generated per user or customer, providing insights into pricing strategies and revenue potential.
• Expansion Revenue: The additional revenue generated from upselling, cross-selling, or expanding services to existing customers, contributing to overall revenue growth.

Why are SaaS KPIs So Important?

SaaS KPIs help guide the success and growth of software-as-a-service (SaaS) businesses. They provide valuable insights into various aspects of SaaS operations. This enables companies to make informed decisions, optimize processes, and achieve long-term success.

• Strategic insight: SaaS KPIs provide an overview of company health, market standing, and growth prospects. For instance, MRR and CAC help measure competitiveness and strategic gaps.
• Benchmark performance: KPIs help businesses evaluate customer satisfaction, retention efforts, revenue streams, and more. They serve as benchmarks to determine the business’s performance and progress.
• Data-driven decisions: Businesses can avoid reckless assumptions and uninformed decision-making with empirical data based on SaaS KPIs. As a result, organizations can drastically reduce the possibility of crippling, high-risk choices.
• Business optimization: SaaS KPIs highlight areas for improvement and inefficiencies. Businesses can enhance efficiency, productivity, and overall performance by pinpointing bottlenecks and streamlining processes.
• Long-term success: Year-to-year monitoring and optimization of KPIs for SaaS assist in securing and thriving in market leadership. SaaS firms can maintain a long winning streak through frequent adaptation to market changes.

What are SaaS KPIs vs. SaaS Metrics?

SaaS KPIs and metrics are crucial for assessing SaaS businesses’ health, performance, and success. While both are essential for monitoring various aspects of SaaS operations, their focus and granularity differ. Here are the differences between SaaS KPIs vs. SaaS metrics.

Aspect	SaaS KPIs	SaaS Metrics
Definition	Key indicators that measure the performance and success of a SaaS business as a whole.	Quantifiable measures assess specific aspects of a SaaS operation, such as customer acquisition or churn.
Focus	Broad and strategic, providing an overview of overall business performance.	Narrow and focused on specific aspects of SaaS operations or performance.
Example	Monthly Recurring Revenue (MRR), Customer Lifetime Value (CLTV), Churn Rate	Customer Acquisition Cost (CAC), Average Revenue Per User (ARPU), Customer Satisfaction Score (CSAT)
Purpose	Provides insights into the overall health and growth of the SaaS business, guiding strategic decisions.	Offers detailed insights into specific areas of SaaS operations, facilitating targeted optimizations and improvements.

What are the Most Important Areas Your SaaS KPIs Should Cover?

When managing a Software-as-a-Service (SaaS) business, tracking the right Key Performance Indicators (KPIs) is essential for success. These KPIs provide insights into various business aspects and help make informed decisions. Here are the most critical areas your SaaS KPIs should cover:

1. Revenue Generation

Monitor metrics such as Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), and Average Revenue Per User (ARPU). Why? To understand the revenue generated from subscription-based services and identify growth opportunities.

2. Customer Acquisition and Retention

Track Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), and Churn Rate. This will help you assess the effectiveness of marketing and sales efforts and gauge customer satisfaction and loyalty.

3. Product Performance and Adoption

Measure metrics like Active Users, User Engagement, and Feature Adoption to evaluate how customers use your product. You can identify popular features and assess overall product performance.

4. Financial Health and Efficiency

Analyze Gross Margin, Burn Rate, and Cash Runway using a Pyramid chart to ensure the business’s financial stability and sustainability. You’ll also identify opportunities for cost optimization and efficiency improvements.

5. Market Growth and Competitive Positioning

Monitor metrics such as Market Share and Customer Satisfaction (CSAT). Why? To evaluate the company’s position in the market, assess competitive threats, and identify areas for differentiation.

6. Operational Efficiency

Track metrics like Customer Support Tickets, Time to Resolution, and Server Uptime to measure the efficiency of internal operations. This will also help you identify bottlenecks and ensure smooth service delivery to customers.

7. Net Promoter Score (NPS)

A measure of customer satisfaction and loyalty, based on how likely customers are to recommend your product. Net promoter score is a strong indicator of customer satisfaction and potential for organic growth through referrals.

8. Annual Recurring Revenue (ARR)

The annualized version of MRR reflects yearly recurring revenue. ARR provides a long-term view of revenue and is essential for strategic planning and investor communications

9. SaaS Magic Number

A metric that assesses the efficiency of sales and marketing spending in driving new revenue. Calculated as the change in quarterly revenue multiplied by four, divided by the previous quarter’s sales and marketing expenses. The SaaS Magic Number helps determine if a company is scaling efficiently and whether it should invest more in sales and marketing.

10. Customer Lifetime Value

The total revenue a business can expect from a single customer account throughout its business relationship. CLTV helps determine how much can be spent on acquiring new customers and guides strategic planning.

How to Set KPIs for SaaS?

Setting KPIs is straightforward, provided you think it through properly and follow the key rules. Here’s a detailed step-by-step guide on how to set KPIs for SaaS:

1. Define business objectives: First and foremost, you should clearly and SMARTly describe your business objectives. Doing so will help you identify the main performance areas requiring maximum attention.
2. Understand key drivers: At this stage, you should determine the key aspects of your SaaS business’s success and profitability. These drivers commonly include customer acquisition and retention numbers, product adoption metrics, revenue growth, and operational efficiency. You may also opt for other statistics based on your organization’s operation’s specific context and complexity.
3. Identify key metrics: Next, determine the main KPIs for measuring success in the corresponding areas. Choose only those KPIs that seem most meaningful and actionable and are closely aligned with your business objectives.
4. Set SMART goals: Define SMART goals for each of the chosen KPIs. Make sure your goals are objectively determined, measurable, and attainable. For instance, you may want to increase your monthly recurring revenue by 20% within the next six months.
5. Prioritize KPIs: It’s generally advisable to order the key KPIs based on their relevance and importance to your business objectives. Consequently, focusing on the most valuable metrics will maximize their positive effect on your success.
6. Establish baselines: Establish baseline measurements for every KPI. This will allow you to set the initial parameters for monitoring progress and evaluating changes.
7. Monitor and review: Monitor and review KPIs regularly to maintain your grasp on new trends and estimate your progress. Leverage the functionality of data visualization tools and dashboards to visualize your KPIs more easily.
8. Adjust as needed: Be prepared to adjust your KPIs and targets as your business evolves. Reassess them based on changes in market dynamics, strategic priorities, or other internal and external factors.
9. Foster accountability and transparency: Establish a culture of accountability and transparency by clearly communicating your business KPIs, goals, and expectations with your team. Actively integrate different teams and align them on common goals that will contribute to your SaaS business’s success.
10. Iterate and improve: Based on assessments and findings, continuously iterate and improve your KPIs and measurement methodology. Continuous iteration will help optimize business processes and achieve better results for your SaaS business.

How to Analyze SaaS KPI Metrics?

Data analysis can be as tricky as solving a Rubik’s cube blindfolded. With mountains of data and complex SaaS KPI metrics to decipher, it’s like finding a needle in a haystack.

However, data visualization is the torchbearer of clarity in this data jungle. It’s the superhero cape that transforms raw numbers into meaningful insights.

Excel is a trusty steed in the world of spreadsheets. But alas, it falls short when creating visually stunning and insightful data visualizations. Fear not, for ChartExpo emerges as the gallant hero, ready to liberate your metrics from Excel’s visual quagmire.

With ChartExpo, your SaaS KPI Metrics burst into life, making your data analysis a captivating escapade.

Let’s learn how to install ChartExpo in Excel.

1. Open your Excel application.
2. Open the worksheet and click the “Insert” menu.
3. You’ll see the “My Apps” option.
4. In the Office Add-ins window, click “Store” and search for ChartExpo on my Apps Store.
5. Click the “Add” button to install ChartExpo in your Excel.

ChartExpo charts are available both in Google Sheets and Microsoft Excel. Please use the following CTAs to install the tool of your choice and create beautiful visualizations with a few clicks in your favorite tool.

Example

Let’s analyze the SaaS KPI metrics sample data below using ChartExpo.

KPIs	Value
Customer Conversion Rate	8
Customer Retention Rate	75
Customer Churn Rate	25

• To get started with ChartExpo, install ChartExpo in Excel.
• Now Click on My Apps from the INSERT menu.

• Choose ChartExpo from My Apps, then click Insert.

• Once it loads, scroll through the charts list to locate and choose the “Progress Circle Chart”.

• Click the “Create Chart From Selection” button after selecting the data from the sheet, as shown.

• ChartExpo will generate the visualization below for you.

• If you want to add anything to the chart, click the Edit Chart button:
• Click the pencil icon next to the Chart Header to change the title.
• It will open the properties dialog. Under the Text section, you can add a heading in Line 1 and enable Show.
• Give the appropriate title of your chart and click the Apply button.

• Add a percentage value with all KPIs values as follows:

• Click the “Save Changes” button to persist the changes made to the chart.

• Your final Progress Circle Chart will look like the one below.

Insights

• The conversion rate of customers shows that 8% of potential customers become actual customers, revealing the success of sales and marketing strategies.
• 75% customer retention indicates high customer satisfaction and loyalty, resulting in consistent revenue.
• A customer churn rate of 25% indicates areas for enhancement in product/service or customer experience to lessen attrition and boost retention.

FAQs

What are the KPIs used in SaaS?

Common KPIs in SaaS include:

• Monthly Recurring Revenue (MRR)
• Customer Acquisition Cost (CAC)
• Churn Rate
• Customer Lifetime Value (CLV)

These metrics help assess SaaS companies’ financial performance, customer satisfaction, and business growth.

How do I monitor my SaaS performance?

Monitor your SaaS performance by tracking key metrics such as:

• Monthly Recurring Revenue (MRR)
• Customer Churn Rate
• Customer Acquisition Cost (CAC)
• Customer Lifetime Value (CLV)

Utilize data analytics tools and dashboards to gain insights, identify trends, and make informed decisions for optimization.

How do you measure the success of a SaaS product?

Measure the success of a SaaS product by evaluating metrics such as;

• Monthly Recurring Revenue (MRR) growth
• Customer Churn Rate
• Customer Satisfaction (CSAT) score

Additionally, track user engagement, product adoption rates, and customer retention to gauge overall success.

Wrap Up

SaaS KPIs are critical in assessing SaaS businesses’ health, performance, and successes. These KPIs shed light on many facets of the SaaS business. As a result, they enable businesses to make more informed assessments, streamline processes, and achieve sustained success.

SaaS KPIs provide a complete picture of the company’s overall trajectory and performance. For instance, metrics like MRR and CAC help to understand the company’s market stance and identify lucrative areas for growth.

These KPIs are important in measuring performance. They enable businesses to evaluate the effectiveness of their programs and directives. For instance, CLV and Churn Rate help to gauge customers’ perceived value and holistic organizational performance.

Another vital benefit of SaaS KPIs is data-driven decision-making. They enable companies to make decisions based on fact and evidence rather than guesswork or intuition. This provides benefits such as accuracy and low error risk.

Beyond that, SaaS KPIs allow for the optimization of business processes. Measurements like Gross Margin or Burn Rate indicate where to save money, increase efficiency, or seek growth opportunities.

Finally, SaaS KPIs are critical because they provide long-term market operation opportunities. All the metrics facilitate change, ideal for an organization willing to achieve stability and growth. Thus, SaaS KPIs are indispensable for achieving and maintaining success in the dynamic and competitive SaaS industry.