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August 8, 2023
Find out which SaaS metrics are the most useful and how to create a SaaS metrics dashboard with them.
Software as a Service (or SaaS) companies naturally handle lots of data. Just think about how many tools you have in your tool stack: your CRM, marketing stack, customer success tools, and of course, your own software platform also has a ton of data and usage statistics.
With so much data spread across your tool stack, the biggest challenge is to keep a bird’s eye view of what’s happening in your business. To do that, you need a SaaS metrics dashboard.
A SaaS metrics dashboard is a business document that is updated in real-time and that shows the most important metrics for running a SaaS business. With the use of data visualization, a SaaS metrics dashboard helps business leaders and product managers see the most important KPIs for a software business at a glance.
A SaaS dashboard allows you to:
If you follow good practices, and if you choose the right business metrics, you’ll gain a comprehensive range of actionable insights from this type of SaaS analytics dashboard. This article will help select the right KPIs for your SaaS business and your different teams.
From all-important umbrella KPIs to team-specific metrics: product, marketing, sales, and customer success, we’re here to help you find the measures that matter most for your business.
In this article, we’ll split up the most important KPIs into 4 different categories:
Creating a SaaS metrics dashboard has become increasingly easier with analytics tools such as Luzmo. You no longer need to use Excel sheets or Google Data Studio to build a modern, comprehensive SaaS dashboard.
PS. With Luzmo, we focus on embedded analytics, but the instructions below are valid even if you want to create a dashboard that is shared outside of your product.
First, make sure you choose the right data sources. In your case, these are the tools connected to your SaaS product, such as sales, marketing, and development tools that can help you unearth metrics such as MRR, DAU, and others.
Second, choose the types of visualizations for your data. You can choose from a variety of bar charts, graphs, tables, pie charts, and others.
Last but not least, share that dashboard with the right people. In some cases, this is just the management team in your SaaS business. In others, it is the marketing, sales, product teams, and anyone else who might be relevant.
As key SaaS metrics, umbrella KPIs (key performance indicators) help increase performance in line with your overall business goals.
They allow you to track, set targets, and justify important decisions to the board in relation to all aspects of your business – marketing, IT, staffing, product development…
Most established SaaS companies offer both monthly and annual contracts. For growing SaaS startups, revenue is likely the North Star Metric to which the whole company is aligned.
The whole team contributes to MRR and ARR – monthly and annual recurring revenue so let’s look at these two major KPIs:
ARR, or annual recurring revenue is the total revenue generated by your customers on an annual basis. Note this doesn’t include profits – it’s purely turnover. MRR, or monthly recurring revenue is the same, but on a monthly basis.
MRR = average revenue per account (ARPA) * Total number of accounts that month
ARR = MRR * 12
MRR can be broken down further, allowing you to factor in areas like expansion MRR – from existing customers who upgrade – and churned MRR – revenue lost from customers who downgrade or cancel.
Knowing different price plans and contract lengths helps you to forecast and determine the future growth and make more informed decisions about customer retention rate and revenue.
For example, 8 existing customers might upgrade from $500 to $650 per month, resulting in an MRR increase of $1200 and an ARR of $14,400. Then another 8 might downgrade the same way, effectively canceling the expansion MRR.
You can keep track of this in a simple KPI dashboard together with other key metrics. Have a look at the example below for some inspiration.
Net burn rate is the total amount of money lost – essentially negative income. This happens when your operating costs are higher than your revenue. The gross burn rate measures the total operating costs and all expenses incurred monthly.
To measure the net burn rate, take your cash balance from the end of the quarter (3-month period) and subtract it from the cash balance at the start of the quarter:
Starting cash balance-finishing cash balance ÷ Time Period
To calculate gross burn rate: Expenses ÷ Time Period
Knowing your burn rate will allow you to calculate the revenue needed to have a positive income -i.e. profitable companies don’t have a burn rate.
For instance, a SaaS start-up might have monthly expenditures of $2,000 on office rental, $4,000 on server costs, and $20,000 on employee salaries, its gross burn rate, therefore, being $26,000.
If the same start-up is also making monthly revenue of $20,000, its net burn rate is $6,000.
As a SaaS company, knowing how users are navigating the platform is crucial. From the number of daily active users to actions per session; these measures can tell you a lot about your customers’ behavior.
SaaS product metrics can help you to know your buyer persona and the challenges they face, so you can eventually spot any product or UI challenges and solve them for a better user experience.
A better user experience means more happy customers, which translates into long-term loyal customers, and higher retention revenue.
DAU and MAU reflect the number of daily and monthly active users on your platform. You can do far more than simply monitoring the number of log-ins, for example, tracking actions that add value and show real customer engagement:
As it sounds, daily active users are simply the number of unique users on a given day. You will need to have some mechanism or technology in place to track the number of logins. Or if you want to go beyond this, tools like Pendo offer great product analytics to track usage statistics.
MAU is defined by the number of unique users over a 30-day period – not user actions performed within the app itself.
The MAU is a key metric as it measures over time – allowing you to dig deeper and find out why your platform usage is growing or stagnating in a specific period of time.
For instance, if your MAU suddenly drops, does this coincide with product changes, server issues, or even staffing factors?
Whilst DAU shouldn’t be used in isolation as a success measure, it can be a good indicator of effective PR and media coverage: has an influencer been praising your product on YouTube, or a blog post liked and shared on a SaaS forum? It might show through a sudden spike in usage!
Session metrics are the basic user stats around your product and give important customer insights into your services. This could be the duration of a session, the number of sessions per user, or the number of actions a user takes per session.
Every SaaS product can choose how they count a session. 30 minutes is a common session length used by many SaaS products, but you’re free to pick whatever fits your business model and your clients’ needs. You can choose to implement your own tracking or make use of product analytics software tools.
During your monthly SaaS meeting, the number of actions per session metric may indicate which product features should get more attention based on customer usage.
Below is just an example of how an education SaaS platform is tracking usage per course inside its product.
SaaS metrics can help you to understand your buyers and the buyer journey. What information are they looking for and where do they look for it, before they buy your product? Having a clear view of this, you’ll be much more targeted in your SaaS marketing efforts, which will create more leads.
Leads mean business & pipeline growth – both in the short and long term.
Qualified Leads – whether marketing, product, or sales – are individuals who have expressed a certain degree of interest in your product, thus more likely to convert into paying customers. Tracking these SaaS metrics with the best link trackers leads to a more efficient marketing and sales team, allowing you to invest time & effort in the right prospects.
MQL – A marketing-qualified lead is someone who fits your ideal customer profile, and has completed a marketing action that you’ve defined as valuable. For example, whenever you offer a piece of content that is downloaded – from an e-book to an online calculator – in return for a visitor’s email address, this constitutes an MQL.
SQL – Once the MQL has been vetted and checked out by the sales team, they are ready for 1-1 attention with the sales team. Once the sales team has qualified the lead against multiple criteria (BANT is a very popular framework), the lead becomes a sales-qualified lead and an active opportunity.
PQL – For B2B SaaS companies, product-qualified leads are the most important metric, these are people who have for example started a free trial of your product, and are actively evaluating your product.
Knowing what differentiates your MQLs from your SQLs and your PQLs will better align your marketing and sales teams. Use these SaaS metrics to strategise.
For instance, if you have a high number of MQLs but are lacking SQLs, you might need to adapt your marketing campaign’s targeting to attract visitors that fit your ICP, or you might want to focus on initiatives that drive new leads through the funnel quicker.
If MQLs are in short supply, with the pipeline in danger of running dry, you may need to focus on driving more traffic and reaching a broader audience, which will create new MQL opportunities.
CAC is the total cost of combined sales and marketing efforts needed to win a customer.
CAC = Total Cost of Sales and Marketing ÷ No. customers acquired
CAC really helps your SaaS to set realistic marketing budgets.
For example, if you’re spending $20,000 on winning 500 customers, your CAC is $40. This will help you with your planning to determine how long it will take your B2B SaaS to make a profit. The right CAC ratio is necessary for sustainable business growth.
Imagine the meeting where you’re having to convince the board how viable your business model is: this is a key stat in justifying your answers.
LVR is the real-time, cumulative growth of qualified monthly leads, and is measured as a percentage.
LVR = Current month’s no. of qualified leads – Last month’s no. of qualified leads ÷ Last month’s no. of qualified leads * 100
LVR is often considered the best predictor of future revenue as it not affected by factors such as time of year or staff quality.
This is the rate at which SaaS customers cancel their subscriptions.
Monthly churn rate = Customer count start of the month – Customer count end of month ÷ Customer count start of the month
As a small SaaS company, you’re aiming for a churn rate of about 3-5% monthly. This is likely to be higher at the start but will soon reduce as you’re more confident with your product.
NPS is a crucial metric to measure customer satisfaction. This Harvard Business Review article on B2B value elements explains the direct link between NPS and business growth.
NPS measures and quantifies customer satisfaction, usually as a percentage, and normally using a question along the lines of, ‘How likely are you to recommend this product to a friend?’. The answer is on a 0-10 scale.
To calculate Net Promoter Score, take the number of promoters (those who scored 9 or 10) – No. detractors (those scoring 6 and less than) ÷ No. respondents * 100
For example, if you received 100 responses:
Your NPS would be +45 (according to Survey Monkey the average NPS is +32).
Below, you can get a glimpse of how that same education platform tracks the satisfaction of their online course students.
As a SaaS start-up, it’s cheap and easy to use, you just need to send out one survey question. This way, customer satisfaction is easy to track, and you can measure it against product, tech, and staffing changes.
By weighing the NPS against different variables – including price plans and any new product functions – you can really track the impact.
For maximum engagement and responses, embed the survey in your app, as well as emailing out.
Show off your successes with these SaaS KPIs. Where necessary, follow up with the passives and the detractors, their responses may enlighten you.
CLV is the total worth of a customer throughout their relationship with your SaaS business. The goal is to keep your customer loyal – and therefore, purchasing. It is sometimes also abbreviated as LTV.
To work out CLV, you need to know your ARPU first – average revenue per user.
To calculate ARPU: revenue in time period ÷ no. users in the time period
Then the CLV = ARPU ÷ revenue or customer churn
For a SaaS, annual and monthly subscriptions are what bring in revenue.
To avoid operating at a loss, your company’s CLV must be greater than the cost of acquiring a customer (CAC) in the first place.
To be a sustainable SaaS, it’s thought that your CLV should be around 3 times greater than your CAC
ACV measures all subscription value (including TCV) from each contracted customer, averaged out across 1 or more years (whereas ARR mentioned earlier looks at a single point in time).
TCV looks out how much a contract is worth, it includes monthly recurring revenue (MRR) and one-off charges like onboarding fees, plus any other charges throughout the contract life.
ACV = TCV (excl. one-off fees) ÷ total years in contract
TCV = Monthly recurring revenue * contract term (months) + one-off fees
Like all SaaS metrics, ACV and TCV are better looked at with others, as part of the bigger picture.
For SaaS – and for context – a higher ACV normally means a higher CAC as more is spent on generating leads and converting them.
However, there is not necessarily a link between ACV value and overall growth.
What’s important is that there is a clear, consistent definition of ACV and TCV across your SaaS, and how they’re calculated.
Now that you have a solid guide to pick your most important KPIs, the next step is to visualize them in clear and interactive SaaS metrics dashboards.
The advantage of visualizing your SaaS metrics toward your internal teams are plenty:
Assembling all of these reports in one place, and giving each team member access to the data he or she is allowed to see can feel like a daunting or time-intensive task. Luzmo is here to partner with you.
With Luzmo’s no-code dashboard builder, you can easily create a reports for your internal team members. And if you’re looking to share insights with your SaaS users as well, its embedded analytics functionality lets you add stunning end-user analytics straight to your SaaS app in days, not months.
Ready to start taking action on your SaaS data? Sign up for a free 10-day trial today!
Experience the power of Luzmo. Talk to our product experts for a guided demo or get your hands dirty with a free 10-day trial.