The primary metrics commonly used by SaaS startups.

For Software as a Service (SaaS) companies, measuring performance and growth involves tracking specific key metrics to provide insights into the health, efficiency, and profitability of the business.

1. Monthly Recurring Revenue (MRR): The total predictable revenue generated by the business in a month. This is a crucial metric for understanding the steady income generated from subscribers.
2. Annual Recurring Revenue (ARR): Similar to MRR but calculated on an annual basis. It's particularly useful for SaaS businesses with annual subscription models.
3. Customer Lifetime Value (CLTV or LTV): An estimate of the total value your business can expect from a single customer account throughout the business relationship. It helps in determining how much to invest in acquiring new customers and retaining existing ones.
4. Customer Acquisition Cost (CAC): The total cost of acquiring a new customer, including all marketing and sales expenses. Understanding CAC is vital for assessing the effectiveness of marketing strategies and the sustainability of the business model.
5. Churn Rate: The percentage of customers who cancel or do not renew their subscription during a given period. A low churn rate is critical for long-term success, as retaining existing customers is often more cost-effective than acquiring new ones.
6. Lead Conversion Rate: The percentage of leads that convert into paying customers. This metric helps in evaluating the effectiveness of sales and marketing efforts.
7. Average Revenue Per Account (ARPA) or Average Revenue Per User (ARPU): The average revenue generated per account/user over a certain period. This metric can provide insights into revenue trends and the financial contribution of each customer.
8. Gross Margin: The difference between revenue and the cost of goods sold (COGS), divided by revenue. This metric indicates the efficiency of a SaaS company in generating revenue from its services after covering the direct costs of providing those services.
9. Net Promoter Score (NPS): A measure of customer satisfaction and loyalty, based on the likelihood of customers to recommend the product or service to others. A high NPS indicates satisfied customers and potential organic growth through referrals.
10. Expansion Revenue: Additional revenue generated from existing customers through upselling or cross-selling. This metric highlights the ability of the business to grow revenue within its current customer base.
11. Payback Period: The amount of time it takes for a customer to generate enough revenue to cover the initial CAC. A shorter payback period means the company recoups its investment in customer acquisition more quickly.
12. Daily Active Users (DAU) is a crucial metric for SaaS companies, especially those whose success depends on frequent and regular user engagement. DAU measures the number of unique users who engage with the software or application within a 24-hour period. This metric is particularly important for understanding user engagement, product stickiness, and overall daily usage trends:

• User Engagement: DAU provides insights into how engaging and valuable users find the product on a daily basis. High DAU indicates that a significant number of users find the product essential to their daily routines.
• Product Stickiness: By comparing DAU with Monthly Active Users (MAU), companies can calculate the "stickiness" of their product, which is a ratio that indicates how often users return to the product within a month. A higher stickiness ratio suggests that the product is becoming an integral part of users' lives.
• Growth and Retention: Tracking DAU over time helps in identifying growth trends and patterns in user retention or churn. An increasing DAU trend can signal healthy growth, while a declining DAU may indicate problems with user retention or product-market fit.
• Effectiveness of Updates and Features: DAU can also help measure the impact of new features, updates, or marketing campaigns by observing changes in daily user engagement following these initiatives.

When evaluating the performance and success of a SaaS (Software as a Service) company, metrics can be broadly categorized into several main areas. These categories help in focusing on different aspects of the business, from financial health to customer satisfaction and operational efficiency. Here are the main categories of metrics relevant to SaaS businesses:

1. Financial Performance Metrics

• Monthly Recurring Revenue (MRR)
• Annual Recurring Revenue (ARR)
• Customer Lifetime Value (CLTV)
• Customer Acquisition Cost (CAC)
• Gross Margin
• Revenue Growth Rate
• Cash Burn Rate: The rate at which a company uses its cash reserves over a specific period.

2. Customer Acquisition and Marketing Metrics

• Lead Conversion Rate
• Customer Churn Rate
• Net Promoter Score (NPS)
• Cost Per Lead (CPL)
• Marketing Qualified Leads (MQL)
• Sales Qualified Leads (SQL)

3. Customer Retention and Success Metrics

• Customer Retention Rate
• Customer Churn Rate
• Revenue Churn Rate
• Expansion Revenue
• Net Revenue Retention (NRR)
• Customer Satisfaction Score (CSAT)

4. Product and Engagement Metrics

• Daily Active Users (DAU)
• Monthly Active Users (MAU)
• Session Duration
• User Stickiness (DAU/MAU Ratio)
• Feature Usage Rate

5. Operational Efficiency and Performance Metrics

• Gross Margin
• Operating Margin
• Employee Efficiency (Revenue Per Employee)
• Time to Resolution (TTR) for Customer Support Tickets
• System Uptime and Reliability

6. Growth and Expansion Metrics

• Revenue Growth Rate
• Customer Growth Rate
• Market Share
• Expansion Revenue and Rate
• International Growth Rate