As a key stakeholder at a SaaS startup, you are responsible for keeping track of multiple business performance metrics on a regular basis, starting all the way from the growth in your monthly user base to the revenue generated so far. Tracking the right subscription metrics becomes pivotal as a result.
However, as you are well aware, simultaneously tracking all this data is a mammoth task, to say the least, and thus, most SaaS professionals rely on smart analytic tools, which not only helps them capture key metrics in real-time but also forecast future events by analysing past performance.
One such tool is the Dataflo SaaS dashboard, and in today's blog post, we will discuss how it can help you take your SaaS startup to the next level.
Without further ado, let's get started.
Every business, irrespective of its industry and operational methodology, often has a set of metrics which when tracked effectively, can help key stakeholders accurately assess the health of the business.
In this regard, a SaaS startup is no different and better so as in this instance, you have a number of predefined metrics which you ought to religiously track to assess the health of your business.
For simplification, let's divide each of these business metrics into two categories, the first being finance and the second growth, and individually understand how tools like SaaS dashboards can help you track both of them effectively.
As a growing company in the subscription economy, it is crucial that you track a significant number of business performance metrics to effortlessly capture the financial health of your company. In our experience as seasoned SaaS professionals, below are the noteworthy metrics you should track.
The first two metrics you will need to track is your MRR or Monthly Recurring Revenue and your ARR or Annual Recurring Revenue. In a subscription-based SaaS business model, these metrics typically indicate your average monthly recurring revenue from your current clientele as well as annual recurring revenue based on yearly subscriptions.
Second to your MRR, you ought to divert your attention towards your gross margin, which is the difference between your production cost and your revenue.
A compulsory evil in every business is its churn, and while you should ideally aim to keep it well below the 5% industry average, the lower, the merrier. Diligently tracking your churn will empower you with an inside look at how many customers you are losing every month and also provide scope for calculating your lost revenue each month.
In simple terms, ARPU stands for average revenue per user and as the name indicates this is the average amount of earnings you can derive per customer based on historic information. Having your ARPU metric handy will not only help you estimate if you are spending the right amount on acquiring customers but also help you calculate your net profit moving forward.
Last but not the least, two important growth metrics you need to keep an eye on are your burn rate & runway. In simple terms your burn rate is the total amount of cash you are burning on a monthly basis before you start generating income and your runway is the total amount of time you have left before your cash reserves fall short.
The backbone of any business is upheld by the number of customers it caters to and your CAC or Customer Acquisition Cost is a nifty metric to help you navigate the same. In layman terminology, your CAC is the total cost your business bears to onboard one new customer. In the bigger scheme of things you can leverage your CAC to calculate the profit you are earning from each customer.
Related: If you want to know how to reduce the cost of acquiring customers, here are few things you can do.
While there are a multitude of metrics which can be used to measure the growth rate of your business, in our experience, for fundraising, your MoM (month on month) growth rate is best suited, as it gives your key stakeholders a clear idea of your company's potential.
Once you have sufficient data available on your customer, you can leverage the LTV or lifetime value metric to forecast the average revenue you will generate per customer before they churn. Taking this factor into consideration will not only give you a better understanding of how much you are earning from each customer but also how much you should invest in acquiring and servicing new customers while maintaining profitability.
As a growing SaaS company, there are a lot of challenges you will encounter in your growth journey and in our experience, tracking the above-stated metrics will make the process easier, as it will help you forecast better and accurately arrive at decisions.
Excited to visualise all your metrics? Try out Dataflo’s SaaS Dashboard today.
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