Keeping track of important SaaS metrics requires some upfront investment in data collection and analytics, but the results are obvious. Armed with the right metrics, you can make better decisions.
In this post, we’re not only covering the top metrics, we’re also showing you what you can learn from them and how to apply them.
Here are 19 SaaS metrics every SaaS company should measure:
Average customer lifetime value (LTV)
Customer acquisition cost (CAC)
Time to recover CAC
LTV:CAC ratio
Customer churn rate
Revenue churn rate
New sign ups
Conversion rate to paying customer
Active users
Time to “Aha” moment
Success rate of “Aha” moment
Net Promoter Score (NPS)
Number of support tickets, by type
Monthly recurring revenue (MRR)
Product-qualified leads (PQLs)
Marketing-qualified leads (MQLs)
Sales closing ratio
Organic to paid traffic ratio
User engagement score
How to track your SaaS metrics
Klipfolio is one of the best KPI and metrics dashboards for SaaS companies. It comes preloaded with dashboards that are helpful for SaaS, and their marketing and customer support teams have a lot of resources for SaaS customers.
You could also use a few different products instead of just one SaaS metrics dashboard. You might need one tool for your marketing and product analytics, and another for tracking revenue and expenses.
1. Average customer lifetime value (LTV)
What is this SaaS metric?
Your LTV is how much you earn from customers over the lifetime of your relationship with them.
How to measure it
To calculate the LTV, you multiply your average monthly revenue from a single customer by the average number of months a customer is retained.
While it’s tempting to calculate your non-churned users annual payments ad infinitum, you need to assign a reasonable expectancy, even if you have a new business. Many SaaS companies set this at 4 or 5 years.
What it can tell you
It’s essential that you calculate your LTV realistically and accurately, because (when combined with other metrics below), it can help you make important budgeting decisions, particularly around marketing and sales.
2. Customer acquisition cost (CAC)
What is this SaaS metric?
This metric measures how much it costs you to acquire a new customer. Instead of looking at the individual marketing campaign level, you’ll incorporate all of your marketing and sales costs.
How to measure it
To calculate your CAC, you need to combine the entire marketing and sales budget for a given time period, and then divide that number by the number of new customers gained during that same time period. Don’t just evaluate individual marketing campaigns, because you need to include the cost of marketing campaigns that didn’t bring in customers too. Like I said, add up your entire marketing and sales budget: salaries, software, ad spend, contractors, etc.
What it can tell you
This gives you an honest view of how much you’re spending on sales and marketing. You might be looking at some marketing campaigns favorably, and ignoring the ones that didn’t work. This will show exactly what you’re spending for each new customer you’re acquiring.
In a moment, we’ll explore the LTV:CAC ratio, which can give you decision making power.
3. Time to recover CAC
What is this SaaS metric?
The time to recover CAC is the point at which the amount you have made from a customer surpasses the amount that you spent to acquire that customer. It’s the average time at which you break even.
How to measure it
To calculate the time to recover CAC, you should divide your CAC by your gross margin for one monthly subscription (if you have multiple subscription tiers, then the use the gross margin of the average of what customers pay you).
Let’s say you spend $1000 to acquire a new customer and your monthly subscription cost is $120, with a gross margin of $50 (removing the costs required to produce the product). This means it would take 20 months to recover CAC.
What it can tell you
How long should it take you to recover CAC? The lower or better. Highly profitable companies can take as little as 3 months, while most SaaS companies require 5-7 months. For many early stage SaaS companies however, it can take 12 months or more. Unless you have a very low churn rate and a very sticky product, any higher than 12 months should be a major red flag.
4. LTV:CAC ratio
What is this SaaS metric?
The ratio of your LTV to your CAC is essential for any business to measure. But SaaS businesses especially need to watch this ratio, since it generally takes longer to recover CAC, and a dangerously low LTV:CAC ratio is what tanks SaaS businesses.
How to measure it
If you already know your LTV and you know your CAC then you can calculate your ratio. Let’s say your LTV is $1200 over 36 months, and your CAC is $250. Then we just do some simple math to get the ratio. $1200 / $250 = 4.8. Your ratio is 4.8:1.
What it can tell you
A successful business should ultimately shoot for a ratio of 3:1 at a minimum. Of course, fast growth, well-funded startups will not have this ratio, as they might be spending more on marketing than their LTV. However, you should still be able to calculate a future scenario where you can get to 3:1 when you are ready to prioritize profitability over growth.
Also, if your ratio is quite high, like 6:1, that shows you that you should invest more on marketing so you can grow even faster.
5. Customer churn rate
What is this SaaS metric?
Customer churn rate is how many customers you’ve lost in a certain period of time, typically this is measured on a monthly basis.
How to measure it
You can measure the number of customers who cancelled or failed to renew. Depending on the complexity of your user personas, you might measure this for your entire business, or by certain user types.
What it can tell you
Every business will have churn, and while you want to reduce that churn as much as possible via better marketing and onboarding, what you’re really looking for in terms of ongoing measurement is variation. Did anything change? If so, you need to dig deeper into why.
6. Revenue churn rate
What is this SaaS metric?
While the above tracks how many customers have been lost, this metric measures how much revenue has been lost.
How to measure it
This can be more complex to calculate, because your product analytics can’t give you exact counts like with customer churn rate. You may need to do some manual calculations to multiply the user types by their subscription tiers to calculate revenue loss, or you could code a script to do this automatically each month.
What it can tell you
This can give you a more accurate depiction of your level of churn. If you’re only looking at customer counts (even by type), it may not be as clear. With revenue churn, you can see exactly how much money is lost with churn and keep track of any big spikes in variation.
7. New sign ups
What is this SaaS metric?
How many new signups do you get each day? What about each week? Each month? Each quarter? This is one of the simpler SaaS metrics to track, but it’s often not utilized to the fullest.
How to measure it
Whether you’ve built your SaaS with a trial and invoicing software like Zuora, or have custom built the subscription side of your platform, you should be able to instantly pull your sign up counts.
What it can tell you
Benchmarking your daily, weekly, monthly, and quarter sign up counts can help you gauge the efficacy of marketing campaigns that are notoriously hard to attribute, such as digital PR.
8. Conversion rate to paying customer
What is this SaaS metric?
This metric is for SaaS companies that are engaged in some sort of product marketing, whether they’re offering a free trial or a freemium plan. How many people who sign up ultimately convert to a paying customer?
How to measure it
You’ll want to track how many free trial sign ups ultimately converted to a paying account, regardless of whether or not you have a freemium plan. Tracking those unique new accounts through to a paying customer will be more accurate than dividing your number of new sign ups by your number of new customers (because some people might go straight to a paid plan).
What it can tell you
This is a very important metric to benchmark and watch regularly. This can help you identify issues with your onboarding, and measure the success of new onboarding projects.
9. Active users
What is this SaaS metric?
This metric keeps a running count of how many active users you have.
How to measure it
Depending on your product, you might measure activeness in a different way. Maybe you’ll count people who login once a day, or those who login once a month.
What it can tell you
You can compare the number of accounts to the number of active users to identify how many users are in the danger zone. You can also benchmark this number to see how it grows in relation to your new sign ups. Of course, you don’t only want to grow new sign ups, but you want to make sure that the number of active users are growing proportionally, otherwise you’re attracting the wrong customers.
10. Time to “Aha” moment
What is this SaaS metric?
The “Aha” moment is onboarding lingo for when a user first sees the value of your product. How long does it take them to get there?
How to measure it
Your “Aha” moment should be a real measurable thing, such as created a design or shared a file. In your product analytics, you should be able to measure how long it takes after creating a new account to achieve this one action.
What it can tell you
If it takes days or weeks for users to reach your “Aha” moment, this can show you that you have a big onboarding problem, or that you’re measure the wrong “Aha” moment (which makes it hard to optimize).
11. Success rate of “Aha” moment
What is this SaaS metric?
The number of new users who reach your “Aha” moment is a critical metric for measuring the success of your onboarding.
How to measure it
Because you’ve selected an “Aha” moment that represents a measurable activity, you should be able to calculate the ratio of new signs up to the number of users who complete this action.
What it can tell you
Benchmark this and see how your onboarding efforts (walk throughs, tool tips, empty states etc.), affect the metric.
12. Net Promoter Score (NPS)
What is this SaaS metric?
The NPS measures how likely users are to recommend your product to someone they know.
How to measure it
You can install a tool like Hotjar that includes NPS measurement. Users select a number from 0 - 10 of how likely they are to recommend your product.
What it can tell you
You can benchmark your NPS and discover dips or raises, especially tied to new feature launches and product updates.
13. Number of support ticket, by severity or type
What is this SaaS metric?
While measuring the total number of support tickets is useful, it's far better to have some sort of categorization system in place with your customer support team so you can get counts by severity or type.
How to measure it
Have your customer support team use a categorization or ranking system in your Helpdesk software so that quarterly, you can get better analytics than total numbers alone.
What it can tell you
This metric can help you gauge challenges and frustrations that customers are having. If you get a spike in error reports, or support tickets were someone is very upset, you would want to look into the reasoning behind the uptick.
14. Monthly recurring revenue (MRR)
What is this SaaS metric?
MRR is probably the most well known of all SaaS metrics. It tells you how much revenue you’re pulling in each month.
How to measure it
For many SaaS companies, MRR is the only kind of revenue they have, since it includes both monthly and annual subscriptions. However, some companies may have one-time add-on purchases or credits which are not supposed to be included.
What it can tell you
Measuring your MRR is the most accurate way to measure your growth. Because you’re excluding non-recurring purchases, you can also use MRR and your churn rate to predict future income as well.
15. Product-qualified leads (PQLs)
What is this SaaS metric?
A product-qualified lead is one that has been qualified by the product itself, and by taking some sort of action inside of the product. You should keep track of your PQLs monthly and quarterly.
How to measure it
You’ll need to identify which action or set of actions means that a user is qualified by the product to become a paying customer. Maybe it’s the volume of transactions they process, or the number of times per week they login.
What it can tell you
Identifying your PQLs can help you target your upgrade marketing campaigns to the right people. When benchmarked, it can also help you find dips and spikes so that you verify that new sign ups are quality. You want your ratio of PQLs to new sign ups to stay consistent or to raise over time.
16. Marketing-qualified leads (MQLs)
What is this SaaS metric?
MQLs are those that are qualified by the marketing team, and are then typically sent to the sales team.
How to measure it
Together, marketing and sales should agree on the criteria that defines an MQL. There is either manual or automated validation of the criteria before it’s passed to sales. You’ll want to track the number of MQLs monthly and quarterly.
What it can tell you
Drops or increases in MQLs can que you into the failures or successes of different marketing campaigns, especially those that are hard to attribute and measure.
17. Sales closing ratio
What is this SaaS metric?
If you have a sales team, you should measure the closing ratio, meaning how many leads ultimately become a paying customer.
How to measure it
While your head of sales will conduct individual pipeline reviews with sales employees, this should be measured at a company wide level.
What it can tell you
The reason you want to measure the sales closing ratio of your company as a whole is partly to benchmark sales success, but also to gauge the success of your product as a whole. How necessary is your product to the market? What are their objections? A low sales closing ratio can que you into larger problems that need to be solved on the product level.
18. Organic to paid traffic ratio
What is this SaaS metric?
Your SaaS marketing metrics can get really complex, and deserve their own blog post. For now, let’s just take a look at the ratio of organic to paid traffic.
How to measure it
Using Google Analytics and other marketing dashboards, you should be able to tell how much of your website and landing page traffic comes from paid sources like Google Ads, Facebook Ads, and promoted content, and how much comes organically via SEO and social media.
What it can tell you
Of course, you want to invest most of your money in the campaigns that produce ROI. However, over time it’s wise for SaaS companies to gradually increase the amount of investments in organic traffic, which is more of a long term strategy. If your ratio is continually the same, that can be a sign that it’s time to play the long game and put more in SEO and content marketing.
19. User engagement score
What is this SaaS metric?
The user engagement score will be different for every company. Its purpose is to show you the average rate of engagement of all of your active users.
How to measure it
You’ll need to come up with your own criteria for what makes a user engaged. If you have a “set and forget it” type of software, it might be the amount of triggered messages, not the number of logins. Whatever it is, you’ll want to create your own custom way of assigning a score for each user (excluding the inactive ones), and then averaging that number.
What it can tell you
This is a smart metric to benchmark because it can show you success and failures with new feature launches or product updates. It can also reveal any sort of seasonality in your usership, and help you get a broad understanding of how many users are not just active, but engaged.
