SaaS businesses depend on recurring revenue
Monthly recurring revenue (MRR) is the lifeblood of the subscription business. Without predictable sources of revenue, it’s impossible to sustain your business over the long-term. On the flip side, it’s critical to track churned MRR to assess how customer attrition affects your revenue. If you’re losing customers too quickly, it can seriously hurt your ability to grow.
It's cheaper to retain customers than acquire new ones
CAC, or customer acquisition cost, is one of the most important SaaS metrics to track. CAC is the total costs of sales and marketing efforts that are needed to acquire a customer. It is one of the most defining factors in whether your company has a viable business model that can yield profits by keeping acquisition costs low as you scale.
A successful business model means your CAC is sufficiently lower than customer lifetime value (LTV). Low CAC and high LTV means your customer satisfaction is high and customers are staying for the long-term. Remember, it’s less costly to improve your customer journey to retain customers than acquiring new ones.
Improving customer engagement is an underrated revenue channel
Focusing on acquisition alone is a huge mistake because existing customers are likely to spend more money than new customers. You should still work to acquire new customers, but upgrading your existing customer base will unlock even more revenue.
Existing customers are with your product for a reason and have already developed brand loyalty from their onboarding process. It’s easier to sell to existing customers because they already have rapport with your company. If existing users find value in your product, then they are more likely to upgrade features if it means the experience will be enhanced. Convert more sales by focusing on upselling. Offer additional features or upgrades in an attempt to make a more profitable sale.