Are you lying to yourself? 6 truth-telling metrics every SaaS business needs

To innovate, we need intuition and imagination. Yet, all of us lie to ourselves.??

Analytics provide a reality check, so we don’t hurt our businesses with our delusions.?

One of the best decisions we made when launching a software as a service (SaaS) product was implementing ProfitWell for subscription management.??

In a nutshell, ProfitWell offers a suite of tools and analytics to help subscription-based businesses optimise their pricing, analyse their revenue data, reduce customer churn, and grow their recurring revenue. It told us the truth about the business.??

Many SAAS startups thrive on key metrics.

Here are six that every SaaS startup and business should be using.

(Yes, metrics are dry but you should drink them in if you want to succeed.)?

1.Churn rate: measures the rate at which customers or subscribers stop using or cancel their subscription.

A high churn rate indicates that a significant percentage of customers are leaving, which can have negative implications for a business's revenue, growth, and profitability. It may also indicate issues with customer satisfaction, product quality, or competition in the market.?

Lowering churn rate and retaining customers can lead to increased customer loyalty, higher customer lifetime value, and improved business performance?

2. Monthly Recurring Revenue (MRR): total predictable revenue that a business expects to generate from its subscribers on a monthly basis.

It is a measure of the stability and predictability of a business's revenue stream and provides insights into customer retention, expansion, and overall business performance.?

Monitoring MRR and analysing its trends can provide valuable insights into a business's growth and financial health, and can help inform decision-making related to pricing, customer acquisition, customer retention strategies, and overall business strategies?

3. Annual Recurring Revenue (ARR): similar to MRR but is the annualised amount and provides a more aggregated and higher-level view of revenue typically used for annual financial planning, forecasting and reporting purposes. MRR is used for monthly monitoring, analysis, and operational decision-making.?

4. Average Revenue Per User (ARPU): A useful metric to assess and monitor revenue performance on a per-customer or per-user basis and make data-driven decisions to optimise revenue generation strategies.?

5. Customer Lifetime Value (Customer LTV): this is an estimate of the total value of a customer over the entire duration of the customer's relationship with the business.

It represents the predicted net revenue that a business can expect to generate from a customer throughout their entire lifetime as a paying customer.?

This metric allows you to make informed decisions related to customer acquisition, retention, and loyalty programs, as well as pricing, product development, and marketing strategies.?

6. Amount spent to acquire a customer (CAC): it represents the total cost incurred by a business to acquire a new customer, including all marketing, sales, and other expenses related to customer acquisition.?

CAC = Total Cost of Customer Acquisition / Number of Customers Acquired?

What’s the big deal about bias?

It undermines the success of your product launch.?

Promoting a data-driven culture that asks good questions and makes decisions backed by evidence will prevent this bias.

It will also give you the much-needed confidence to launch your new product with more than a gut feeling.?

Research: 17 Financial KPIs Every Sales and Marketing Team Should Track (databox.com)?