Starting up a SaaS company? Who isn’t these days? Working for a SaaS company? Ditto (well, if you’re reading this, then probably!).
It goes without saying that Founders and their Executive team at SaaS Start-ups and more established SaaS Companies should know their SaaS Metrics. However, i’ve seen from first hand experience, many, from director level and below who didn’t know their MRR from their CAC. This just shows to me, that whilst their is a glut of excellent resource available on the web around SaaS metrics, mainly thanks to VCs such as Jason Lemkin, Tom Tunguz, David Skok amongst others, the education and awareness around this topic can continue to be repeated, continue to be raised and ever improved.
So SaaScribe chimes in with our 5 SaaS Metrics that need to be top of mind:
- MRR: Some say that MRR or Monthly Recurring Revenue is the Daddy of SaaS Metrics. SaaS business models are typically subscription based and the MRR shows the predictability and measurement of revenue thats coming in this month, next month and for the duration of the customer contract.
- CAC: Not as bad as it sounds! CAC stands for Customer Acquisition Cost. The cost associated in attaining your customer. Incurred upfront, including cost of product development, sales, research and marketing. This is an important metric, as this allows for the calculation of the value of the customer and the ROI (return on investment)
- Churn Rate: The Rate at which your customers are cancelling their subscriptions* High Churn Bad. Low Churn Good. A High churn rate means that you have too many customers leaving you. You need to find out why and be quick to fix. Low churn rate means you have good customer retention. Your doing something right. Keep it that way.
- ARPC: Average Revenue Per Customer. Does what it says on the tin. How Much revenue, on average you receive from a customer.
- CLV: Customer Lifetime Value. Different SaaS Companies may have different formulas for calculation this metric, but essentially they are trying to predict the Net Profit of their future relationship with a customer
by Alex Theuma @alextheuma