As a leader of a growing startup, do you know how your SaaS company is performing? SaaS metrics serve as benchmarks that help an organization measure success. Not only do these benchmarks identify where a company is falling behind, but they also indicate when the business is right on track. By setting clear objectives, companies can align all functions on expectations and goals, helping to take the organization to the next level.
If you’re looking to take a pulse on your company’s performance and be more strategic with your business planning, outlining key SaaS metrics is the best way to do so.
Top SaaS metrics to track for startups
Below we will be breaking down key SaaS metrics to track by function. If you are an early-stage startup, start with this list to gain an overview on the performance of your SaaS company.
SaaS Marketing metrics
Are your marketing initiatives supporting your bottom line?
Find out by tracking these benchmarks below.
1. Return on Ad Spend (ROAS)
ROAS is the SaaS metric that measures the performance of paid advertising initiatives. This benchmark compares the revenue driven by ads to the cost of running those ads.
ROAS = Revenue Attributed to Ad Campaign / Cost of Campaign
Recommended benchmark: 4:1
2. Email Open Rate & Email Click-Through Rate
These two metrics help the marketing team gauge how much their audience engages with company emails and news.
Open Rate = (Total Unique Opens / Total Recipients) x 100
Click-Through Rate = (Number of Clicks / Number of Opened Emails) x 100
Recommended benchmarks: email open rate: 25%, email click rate: 2.45%
3. Website Conversion Rate
The website conversion rate is meant to illustrate how well marketing initiatives are able to turn visitors into leads.
Website Conversion Rate = (Total Number of Conversions / Total Number of Visitors) x 100
Recommended benchmarks: website conversion rate: 2.5% – 5%
SaaS Revenue metrics
SaaS sales metrics allow the management team to get a clearer picture on the journey from opportunities to deals. By setting clear sales benchmarks, companies can gain greater visibility into how their sales team is operating while identifying opportunities for improvement.
1. Net Monthly Recurring Revenue (MRR) Growth Rate
The Net MRR growth rate measures the month-over-month percentage increase or decrease in Net MRR.
MRR Growth Rate = ((Net MRR Current Period – Net MRR Previous Period) / Net MRR Previous Period) x 100
Recommended benchmark: 10% – 20%
2. CAC Payback Period
The CAC payback period is the time it takes for a business to recover the cost of acquiring a client.
CAC Payback Period = (Customer Acquisition Cost) / (Revenue – Average Cost of Service)
Recommended benchmark: 5 – 15 months
3. Lifetime Value (LTV)
Lifetime Value (LTV) or Customer Lifetime Value (CLTV) is the overall value of a client to a company throughout the course of their relationship.
LTV = Average Total Order Amount x Average Number of Purchases Per Year x Retention Rate
Recommended benchmark: 3x CAC
4. Win Rate
The Win Rate is the percentage of opportunities that become customers compared to total opportunities in the sales pipeline over a certain period of time (e.g.: a quarter).
Win Rate = (Closed – Won Opportunities / Total Number of Opportunities) x 100
Recommended benchmark: 47%
5. Pipeline Coverage
Pipeline coverage is a sales metric that a SaaS business uses to compare the organization’s pipeline (number of opportunities) to the outlined sales quota to guarantee revenue goals can be met.
This allows an organization to plan ahead and ensure that they have enough pipeline to hit their projected goals. To measure this metric, you take your total pipeline for a period and divide it by your quota for that specific time frame.
Pipeline Coverage = Total Pipeline Size / Sales Target
Recommended benchmark: 3x – 4x
6. SaaS Magic Number
This metric measures sales and marketing efficiency. It estimates how many dollars worth of revenue have been generated per dollar spent on acquiring new customers through both sales and marketing.
SaaS Magic Number = (ARR Current Q – ARR Previous Q) x 4 / Sales & Marketing Spend Previous Q
Recommended benchmark: 0.75
Learn more:
SaaS Product metrics
SaaS product metrics are unique in the sense that they help organizations see how the product affects the daily lives of the user.
By better understanding the user and their needs, your team will be able to be more strategic when refining the product.
1. DAU/RAU Ratio
This is the measurement of continuous engagement within a platform. The closer it is to 100%, the more people are engaging regularly and the “stickiness” is high. It tells you how active monthly users are on a daily basis.
DAU/RAU Ratio = (Count DAU / Count MAU) x 100
Recommended benchmark (SaaS): 13%
2. Product Activation Rate
Product activation rate refers to the moment a user starts using the product properly and consistently. This is typically measured through a set of user actions, also known as in-app events.
Product Activation Rate = (Number of Completed In-App Events / Number of New Users) x 100
Recommended benchmark: SaaS products offering a free trial: 40%, SaaS products offering a freemium version: 20%
3. Net Promoter Score (NPS)
NPS is a metric that assesses customer satisfaction by asking customers how likely they are to recommend a product to others on a scale of 0-10. Promoters give a score of 9-10, Passives 7-8, and Detractors 0-6.
NPS = Percentage of Promoters – Percentage of Detractors
Recommended benchmark: Good = 20 – 30 / Great = 30 – 70
SaaS Customer Success metrics
Customer success benchmarks focus on how happy your customers are when it comes to using the product. If you find out that customers are not satisfied, your team can course-correct product planning to get back on track.
1. Customer Satisfaction Score (CSAT)
CSAT measures customer satisfaction level with a specific product or feature. Usually, customers will be asked to give a rating from 1 (very dissatisfied) to 5 (very satisfied).
CSAT Score = (Number of Satisfied Customers / Total Number of Responses) x 100
*satisfied customer = 4 and 5 ratings
Recommended benchmark: 60% – 80%
2. Annual Churn Rate
The annual churn rate measures the proportion of customers you lost in a year.
Churn Rate = Lost Customers / Total Customers
Recommended benchmark: 3% – 7%
How to track & manage SaaS benchmarks
As you begin to track your data and derive insights, you will need to build the right tech infrastructure that can manage all of these data processes. With Abacum, our strategic finance solution allows you to automate all of your data from different sources so you can conduct analysis right from the start.
Not only does this give your finance team more time for value-added strategic work, but it also allows your organization to focus on what matters most – having the right conversations over real-time data that supports your business’ overall growth strategies.
