How to track your SaaS growth
Many new companies across all industries make the mistake of not paying close enough attention to the data. This has always been a bad idea, but in the days of machine learning and massive data, it can kill a business. Tracking your growth in as fine of detail as possible will help ensure that you are making the right moves to keep your bottom line moving in the right direction. Luckily, tracking SaaS growth is easy:
Step 1. Get ProfitWell Metrics
ProfitWell Metrics is a free analytics tool that was designed specifically for the SaaS market. It will provide you with all the tools you need to track the most important KPIs for SaaS in general, and for your business specifically.
Step 2. Track the metrics below
ProfitWell Metrics will provide you with tons of data to make day-to-day management of your SaaS business easier, but here are four of the most important KPIs to monitor when you want to track your growth:
Churn rate is how many customers are leaving your service in a given period. If your churn rate is high, then adding new customers is only replacing the old ones. This means that growth can stagnate even with large acquisition numbers.
The purpose of tracking monthly active users is similar to the above. If your MAU is continually rising, then you know you are gaining more customers than you are losing.
MRR / ARR
In the early days of a business, MRR (monthly recurring revenue) is all you will have to work with. Later, you'll be able to track ARR (annual recurring revenue) as well. These are important metrics to track as they will help you gauge the momentum of your business. If these metrics are climbing or falling, so too is the health of your company. Keep in mind that seasonal fluctuations may be expected in MRR. In those cases, they are most beneficial when comparing them to the same month in previous years.
This measures the lifetime value of a customer. From the moment they sign up with your service to the time they leave the service, how much have they paid you? Knowing this is an important part of estimating not only what a customer is worth now, but what they'll be worth in the future.
Finally, we have customer acquisition cost. This is how much it costs you in sales and marketing to acquire a new customer. You want this number to be much lower than your LTV, otherwise bringing in loads of new customers doesn't necessarily equal bringing in loads of growth.