SaaS Performance Metrics

Ever wondered why despite immense potential, some SaaS companies struggle to scale and achieve profitability? I recently went deep into a compelling discussion that shed light on the vital role of business metrics in SaaS growth. One anecdote stood out: the story of Salsify, a company that enhanced its trajectory by relocating its European headquarters to Lisbon, symbolizing a strategic shift in optimizing operations. The central theme was crystal clear: "If you can't measure it, you cannot improve it." Accurate metrics are not just numbers; they shape strategies, align teams, and spark growth. But what's the secret formula? Key takeaways include: - The Rule of 40: A SaaS company's growth rate and profitability combined should exceed 40%. - Net New ARR: Monitor bookings via net new Annual Recurring Revenue (ARR), encompassing new customer ARR, expansion ARR from existing customers, and losses from churned customers. - Sales Funnel Efficiency: Deploy a holistic funnel that includes onboarding, retention, and expansion. - Sales Team Metrics: Productivity per salesperson and timely hiring are crucial to meet growth targets. - Customer Economics: Balance the Customer Acquisition Cost (CAC) against the Lifetime Value (LTV). Aim for an LTV to CAC ratio of 3:1 and recover CAC within 12-18 months. - Negative Churn: Expansion revenue should ideally outpace revenue losses from churned customers for sustainable growth. Metrics like these can transform a SaaS company from merely surviving to thriving. It's fascinating how strategic measurement and adjustment can turn potential into proven success. How do you leverage metrics to steer your SaaS business towards growth and profitability? Share your experiences and insights! #SaaSMetrics #GrowthStrategy #BusinessAnalytics #SaaS #CustomerRetention #StartupGrowth #ScaleYourBusiness

12 Metrics Every SaaS CFO Should Know 📊 There are many SaaS founders who think tracking revenue means they understand their business. Well, they're wrong. In my job as a fractional CFO, I've worked with dozens of SaaS companies and seen the same pattern over and over. Founders get excited about growth numbers while completely missing the unit economics that determine if they're building something valuable or just burning cash with recurring revenue on top. ➡️ REVENUE METRICS See, your foundation starts here, but most founders calculate these wrong. MRR shows your predictable revenue stream. You need to count subscription fees only, not setup costs. Think about it this way: if customers aren't committed to pay next month without any sales effort from you, it's not recurring revenue. ARR gives you the annualized view, but don't just multiply MRR by 12 if you have annual contracts. Those annual customers contribute their full contract value to ARR immediately when they sign. Revenue Churn Rate tells you how much revenue you're losing from cancellations. You know what's painful? Losing one enterprise customer worth 10 small customers. Net Revenue Retention shows whether existing customers are growing their spend with you. Above 100% means expansion exceeds churn. Below 100% means you're stuck on a customer acquisition treadmill. ➡️ RETENTION & ENGAGEMENT METRICS Logo Churn Rate measures what percentage of customers you lose. Good SaaS companies see less than 5% annual churn. Higher numbers? You've got product market fit problems. Activation Rate tracks users reaching their first success moment. Here's the thing most SaaS companies lose customers during onboarding, not after they've experienced value. ➡️ GROWTH & EFFICIENCY METRICS Customer Acquisition Cost includes all sales and marketing expenses, not just ad spend. Sales salaries, tools, events, content creation... if you wouldn't spend it without trying to acquire customers, it counts. LTV represents total gross profit from a customer relationship. You need to use gross margin because hosting, support, and delivery costs eat into actual customer value. CAC Payback Period shows how long it takes to recover acquisition costs from gross profit. Most investors want this under 12 months. Burn Multiple measures how efficiently you're converting cash into ARR growth. Simple formula: net burn divided by net new ARR. ➡️ STRATEGIC INDICATORS Rule of 40 balances growth and profitability. Add your growth rate to your profit margin. Above 40% shows you can grow efficiently. Gross Margin reveals your business model health. SaaS companies should see 80%+ gross margins. Lower than that? You're probably not selling software. === That's my take on the 12 metrics that separate sustainable SaaS businesses from expensive billing systems. What metrics does your team track religiously? Let me know in the comments below 👇

SaaS finance cardinal rule: You must not fixate on a single metric. I've seen far too many founders and executives fixate on 1-2 metrics without context because a board member, investor, or blog said that its critical for growth, valuation, etc., etc. In the hypothetical example below, a SaaS company hits its annual bookings goal of $3m in combined New and Expansion ARR. And it does so efficiently with a CAC Payback Period of between 8-9 months and a blended CAC Ratio around .5. The issue is that this particular company exhibits a frustrating combination of Sales and Marketing prowess with poor retention. Zooming out and looking at the annualized churn rate, we can see that the company has a huge problem. And this issue shows up in another composite metric: The CAC to CLTV ratio. CLTV is an important metric. It's essentially the expected future cash flows from a single customer, and it's highly sensitive to churn rates. Because of this company's poor retention, the CAC to CLTV ratio is below 3 for most of the year (not good). Basically, this company is the classic leaky bucket. It's good at bringing in revenue but not keeping. Had we focused on the positive signals alone, (e.g., CAC Paypack Period), we would have missed the larger underlying issue. Now, what causes a company to have such a mixed profile. Two of the most common reasons I have seen: -Sales & Marketing prowess without product<>market fit. The team is good at selling to anyone and everyone, but is having a hard time delivering value. -Selling indiscriminately. Poor ICP discipline. The company may have a core of very happy customers, but there is no discipline around who we sell to. Peeling back customer data may reveal high retention in certain segments. THAT IS WHO YOU WANT TO SELL TO. Remember, it's essential to look at metrics in context rather than fixating on one or two in isolation. #saas #bootstrapping #founders #finance #startups #metrics

SaaS metrics are the unsung heroes of business success. If your goal with SaaS is to achieve sustainable growth, you want data-driven decision-making. The logical flow: Track key metrics -> Analyze insights -> Optimize strategies -> Achieve sustainable growth So if you want to drive long-term success, reverse engineer the process and: 1) Monitor essential SaaS metrics regularly 2) Leverage data to make informed decisions 3) Continuously refine strategies based on insights Most SaaS businesses on the market get distracted by vanity metrics. And on the surface, these businesses may seem more successful than you. But the truth is they're struggling to achieve profitability. Let's learn from them and avoid their mistakes. So instead of prioritising vanity metrics, focus on these: Monthly Recurring Revenue (MRR) ↳ Optimize pricing and expand customer base Customer Lifetime Value (CLV) ↳ Enhance customer experiences to increase loyalty Net Revenue Retention ↳ Implement effective upselling and cross-selling strategies Upon tracking these 3 metrics, you'll quickly realize their direct correlation with sustainable growth.

𝗦𝗮𝗮𝗦 𝗦𝗲𝗿𝗶𝗲𝘀 𝗔 𝗙𝘂𝗻𝗱𝗶𝗻𝗴: 𝗪𝗵𝘆 𝟵𝟬% 𝗼𝗳 𝗦𝗮𝗮𝗦 𝗙𝗼𝘂𝗻𝗱𝗲𝗿𝘀 𝗙𝗔𝗜𝗟 (𝟯 𝗠𝗲𝘁𝗿𝗶𝗰𝘀 𝗩𝗖𝘀 𝗔𝗰𝘁𝘂𝗮𝗹𝗹𝘆 𝗪𝗮𝗻𝘁) 𝗧𝘄𝗼 𝗦𝗮𝗮𝗦 𝗳𝗼𝘂𝗻𝗱𝗲𝗿𝘀 𝗽𝗶𝘁𝗰𝗵𝗲𝗱 𝗺𝗲 𝗹𝗮𝘀𝘁 𝘄𝗲𝗲𝗸. Same market. Similar ARR. Similar team size. 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗔: Rejected by 12 VCs in 3 months. 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗕: 3 term sheets in 4 weeks. 𝗧𝗵𝗲 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝘄𝗮𝘀𝗻'𝘁 𝘁𝗵𝗲𝗶𝗿 𝗽𝗿𝗼𝗱𝘂𝗰𝘁. 🤯 It was these 3 numbers... 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗔: focused on features and vision. 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗕: had bulletproof unit economics. 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗔: talked about market opportunity. 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗕: showed 15% month-over-month growth for 8 straight months. 𝗧𝗵𝗲 𝗯𝗿𝘂𝘁𝗮𝗹 𝘁𝗿𝘂𝘁𝗵 𝗺𝗼𝘀𝘁 𝗦𝗮𝗮𝗦 𝗳𝗼𝘂𝗻𝗱𝗲𝗿𝘀 𝘄𝗼𝗻'𝘁 𝗮𝗱𝗺𝗶𝘁: Series A isn't about having a great product. It's about proving you've built a predictable GROWTH MACHINE. 𝗛𝗲𝗿𝗲'𝘀 𝘄𝗵𝗮𝘁 𝘀𝗲𝗽𝗮𝗿𝗮𝘁𝗲𝘀 𝘁𝗵𝗲 𝟭𝟬% 𝗦𝗮𝗮𝗦 𝗙𝗼𝘂𝗻𝗱𝗲𝗿𝘀 𝘄𝗵𝗼 𝘀𝘂𝗰𝗰𝗲𝗲𝗱: ❌𝗙𝗔𝗜𝗟𝗘𝗗 𝗳𝗼𝘂𝗻𝗱𝗲𝗿𝘀 𝗳𝗼𝗰𝘂𝘀 𝗼𝗻 : → Product features → Team credentials → Market size potential → "We just need money to grow" ✅ 𝗙𝗨𝗡𝗗𝗘𝗗 𝗳𝗼𝘂𝗻𝗱𝗲𝗿𝘀 𝗽𝗿𝗼𝘃𝗲: → $1M+ ARR with 3x YoY growth → CAC payback under 12 months → 90%+ customer retention → Clear path to profitability 𝗧𝗵𝗲 𝟯 𝗺𝗲𝘁𝗿𝗶𝗰𝘀 𝗩𝗖𝘀 𝗮𝗰𝘁𝘂𝗮𝗹𝗹𝘆 𝘄𝗮𝗻𝘁 𝘁𝗼 𝘀𝗲𝗲: 🎯 𝗠𝗲𝘁𝗿𝗶𝗰 #𝟭: Monthly Recurring Revenue Growth Not just revenue. RECURRING revenue. Growing 15%+ month-over-month consistently. (This is what got Founder B those term sheets) 📈 𝗠𝗲𝘁𝗿𝗶𝗰 #𝟮: Unit Economics That Actually Work Your Customer Lifetime Value must be 3x your Customer Acquisition Cost. No exceptions. No "we'll figure it out later." 🔄 𝗠𝗲𝘁𝗿𝗶𝗰 #𝟯: Revenue Retention Rate Net revenue retention above 110%. This proves customers are expanding, not just staying. I've helped 100+ SaaS founders nail these metrics and raise $500M+ in funding. The SaaS founders who succeed start preparing 18 months BEFORE they need the money. They build their data story first. Then they build relationships. Finally, they raise capital. In that order. Always. What's your biggest Series A challenge right now? 👇 𝗗𝗠 𝗺𝗲 "𝗦𝗖𝗔𝗟𝗜𝗡𝗚" and I'll send you the link to book your complimentary SaaS Scaling Diagnostic where you'll get my Series A Readiness Scorecard plus a personalized action plan.  𝗣.𝗦. This isn't a sales call - it's a strategic session designed to give you immediate clarity on your Series A readiness and specific next steps. #SaaS #SeriesA #Fundraising #StartupFunding #SaaSMetrics #VentureCapital #StartupGrowth #SaaSFounders #ARR #UnitEconomics #SaaSCoaching #ProductMarketFit #StartupLife #SaaSScaling #InvestorReady #B2BSaaS

Most SaaS founders chase revenue, but the real problem is what they’re not tracking. They focus on: - Sales - Scaling - Signups But behind the scenes, pricing leaks are quietly draining profits. A small tweak in pricing could 2x retention. But without the right metrics, they never see the problem. Pricing isn’t just a number, it’s a growth engine hiding in plain sight. Here’s what you should be measuring: → LTV → CAC → NRR → MRR → ARR → ARPU → Churn Rate → Price Sensitivity → Discount Impact → Expansion Revenue SaaS growth isn’t just about more customers, It’s about pricing them right. P.S. Which pricing metric has made the biggest impact on your SaaS growth? ♻️ If you find value, let others benefit too. __________________________________________ Ready for more SaaS pricing insights? Follow me, Marcos Rivera🔔

In the early stages of a startup, it's easy to get caught up in vanity metrics, like website traffic or social media followers, but these don't always reflect real progress. For startups aiming for growth, focus on metrics that truly matter: Customer Acquisition Cost (CAC): How much does it cost to acquire a new customer? Reducing CAC while increasing revenue is a key sign of efficiency. Lifetime Value (LTV): What’s the total revenue you can expect from a customer over their lifetime? A high LTV to CAC ratio shows long-term sustainability. Monthly Recurring Revenue (MRR): For SaaS or subscription-based models, MRR provides a clear view of consistent revenue growth. Churn Rate: Are your customers sticking around? High churn is a red flag that you need to refine your product or retention strategy. Customer Retention Rate: The flip side of churn, this metric shows how well you're keeping your customers engaged and satisfied. Growth Rate: Ultimately, how fast is your business expanding? A steady growth rate indicates that you're on the right path to scaling. These metrics give investors and founders a better sense of real performance and sustainable growth. The key? Tracking them early and adjusting course before it's too late. What metrics do you focus on in your startup? #startups #growthmetrics #businessstrategy #scaling #entrepreneurship #venturecapital #privateequity

Most startups drown in metrics. They track everything. They understand nothing. Sound familiar? Your MRR is growing. Your user count is up. But why does your growth plateau? Because revenue alone doesn’t mean traction. And scaling in the wrong direction is just burning cash faster. The strongest SaaS companies focus on these four areas: 1/ Unit Economics ↳ Shows if your customers generate more value than they cost to acquire ↳ If LTV:CAC isn't 3:1, fix your pricing, retention or acquisition costs 2/ Retention & Efficiency ↳ Tells you if your product is solving a real problem ↳ If churn is above 5% monthly, fix onboarding, engagement loops, or product stickiness 3/ Cash Flow & Burn ↳ Measures how long you can survive without new funding ↳ If runway is under 12 months, cut unnecessary spending or/and test expansion revenue 4/ Operational Efficiency ↳ Measures if growth is increasing profitability or just inflating costs ↳ If gross margins are below 70%, reassess pricing, COGS, and team structure before it’s too late Every metric tells a story. Benchmarks show you where you stand. Your model decides where you're headed. Make sure you're reading the right one Which metric scares you most? ♻️ Share this with a leader who needs clarity And follow Mariya Valeva for more

Which SaaS metrics have the highest correlation to Enterprise Value to Revenue multiples? This is the topic of my session at SaaSOpen on Thursday so I thought it might be valuable to share my findings... I started to track the correlations using the R^2 factor early in 2021 and the findings below are quite instructive: 👉 July, 2021 - Net Dollar Retention Rate was the number 1 factor with an R^2 of .40 - Revenue Growth Rate was the number 2 factor with an R^2 of .37 - ARR Growth Rate was the number 3 factor with an R^2 of .29 - Rule of 40 was the number 5 factor with an R^2 of .15 👉 January, 22 - Revenue Growth Rate was the number 1 factor with an R^2 of .51 - Net Dollar Retention Rate was the number 2 factor with an R^2 of .42 - ARR Growth Rate was the number 3 factor with an R^2 of .38 - Rule of 40 was the number 5 factor with an R^2 of .15 👉 January, 23 - Rule of 40 was the number 1 factor with an R^2 of .44 - Revenue Growth Rate was the number 2 factor with an R^2 of .31 - ARR Growth Rate was the number 3 factor with an R^2 of .24 - Net Dollar Retention Rate is the number4 factor with an R^2 of .07 👉 March, 23 - Revenue Growth Rate is the number 1 factor with an R^2 of .42 - ARR Growth Rate is the number 2 factor with an R^2 of .34 - Rule of 40 is the number 3 factor with an R^2 of .44 - ARR Growth Rate was the number 3 factor with an R^2 of .20 - Net Dollar Retention Rate was the number 5 factor with an R^2 of .18 👆 The above highlights the moving target of investor sentiment over time - what was most important yesterday is not as important today and it will be different in the future... 💡 There appear to be four "investor" centric metrics that will always be important to maximizing Enterprise Value: Revenue Multiples which include: 1️⃣ Growth - over time growth has proven to be "on average" 2x - 3x more important to EV multiples than profitability 2️⃣ Rule of 40 - which measures the combination of growth and operating profitability continues to be a top factor to EV multiples - but there is a bias to growth over high levels of profitability - but not over NO profitability 3️⃣ Net Revenue Retention is a consistent top 3 factor to EV:Rev multiples but can swing dramatically due to the over indexed impact of expansion revenue in Usage-Based pricing model companies (Snowflake, DataDog, Twilio, etc) during the best of times... 4️⃣ Gross Margin and SaaS Magic Number are or use important input variables to the profitability variable in the Rule of 40 but as an "investor metric" are not highly correlated to enterprise value to revenue multiples 🦉 It's important to understand that some metrics are more important to investors and some metrics are more important to operators - understanding the difference and when/how to use or highlight each is important #b2bsaas #metrics #benchmarks

$5,000,000 revenue. 100 employees. Zero real metrics. Here's the dead-simple system that fixes it this week: Last week, I was talking to a founder who built a high-touch SaaS platform for medical practices. Great margins, solid team, but he was hitting the leadership ceiling hard. When I dug into his operation, I found the problem immediately. No cascading KPIs. No clear metrics. No visibility into who was actually performing. He was running a $5M business like a corner store. Making decisions based on gut feel. Hoping people would figure it out. Delegating without any way to measure results. That's not leadership. That's expensive guesswork. Here's the exact framework we used to fix it: The 3-Level KPI Stack Level 1: Company KPIs (3-5 maximum) Monthly recurring revenue growth Customer acquisition cost Net revenue retention Gross margin percentage Level 2: Department KPIs (tied directly to company goals) Sales: Lead conversion rate, average deal size, sales cycle length Product: Feature adoption rate, bug resolution time, user engagement Support: Response time, resolution rate, customer satisfaction Level 3: Individual KPIs (tied directly to department goals) Sales rep: Calls per day, demos booked, deals closed Developer: Features shipped, code review completion, sprint goals hit Support agent: Tickets resolved, first-call resolution, satisfaction score The Weekly Execution Process: Monday: Everyone submits their numbers in a shared Google Doc Wednesday: Department heads review and flag issues Friday: Company-wide brief on what's working and what's not No fancy software. No complex dashboards. Just 5 minutes a day to get brutal clarity. The moment you install this system, weak performers can't hide and strong performers get the recognition they deserve. Every decision based on feelings costs you money. Every decision based on data makes you money. Ready to stop running your million-dollar business on vibes? I'm sharing the complete KPI framework that turns chaos into clarity in my upcoming workshop: https://buff.ly/BRpKAKr