If you are running a SaaS business, you know the importance of monitoring its progress regularly. Instead of running behind hundreds of KPIs, how about focusing on the most effective ones? In his blog, Neil Patel shares five metrics to monitor the progress of your SaaS business.
Identifying the SaaS Business Metrics
Try not to go beyond ten metrics to measure your improvement in the SaaS business. It becomes simpler to analyze and detect trends and patterns. So, calculate the monthly recurring revenue to find out the amount that is coming to your pocket. Here are the five metrics to increase SaaS business productivity:
Find Your Monthly Recurring Revenue
The majority of the SaaS business models get monthly or yearly payments from customers. So, calculate the monthly recurring revenue to find out the money is going to come to your pocket. Have regular checkpoints with the finance department to get accurate data.
Limit Your Customer Churn
Every business wants to have a loyal customer base. The metric will discover how many of your consumers are never coming back for your services. If the metric throws up a higher number, halt your marketing and production. Analyze what is wrong with your product. Ask feedback from current and leaving customers. If your customers make yearly purchases, create an annual churn rate.
Measure Cost Per Acquisition
A wrong campaign platform can cost millions. Add all the expenses you have made for marketing and sales the previous month. Collect the total number of customers you currently have. Divide the combined expenses by total customer number to get your cost per acquisition. To get an accurate result for every campaigns CPA, track the numbers for a more extended period.
Calculate Your Average Revenue Per Customer
Once you know the churn rate, you can calculate the revenue you are getting from each customer. Move them to a more premium version of the same service by up-selling. You can also cross-sell additional features. Convince customers for annual plans to increase average revenue per customer.
Analyze the Lifetime Value
With the help of average revenue per customer and churn rate, you can figure out the lifetime value of your SaaS business. Multiply average subscription length by average monthly revenue per customer to get the result. You can also calculate using metrics like cost per acquisition, cost to service your customers, and profit margins.
The Marketing Steps
You can also track if the marketing funnel for your SaaS business is doing well. Follow the steps that customers take. They visit the site, sign up for a free trial, actively start using it, and choose a paid plan. If they retreat from a stage, you know where the problem lies.
To view the original article in full, click on the following link: https://neilpatel.com/blog/5-metrics-for-saas/