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SaaS Metrics Every Founder Should Know

The SaaS industry has increased by 500% in the last seven years.

The best way to stand out is to keep an eye on the metrics that matter to you.

Why do metrics matter then and where should you start?

What makes metrics important

Keeping tabs on SaaS metrics allow you to track your company’s progress or any potential problems that may arise. It’s the fastest way to know which actions work (or don’t) and what their consequences are.

They can help you to:

  • Find behavioural patterns in customers who use your product monthly
  • Learn more about the leads you got from your latest campaign
  • Spot a growing revenue churn 
  • Understand your audience and what they want from your product

Metrics can tell lots of stories about your company’s performance.

Whether it’s about the day-to-day decisions within a team or the bigger picture and a potential acquisition, you still need data to be able to make educated decisions.

These are the key SaaS metrics to monitor to grow your company.

Nine most important SaaS metrics 

Monthly Recurring Revenue (MRR)  

The Monthly Recurring Revenue (MRR) measures your recurring revenue on a monthly basis. 

It’s one of the first metrics you need to track to predict your future growth and influence your resources or your product roadmap.

Another relevant metric to track is your MRR growth rate. This is the percentage change you notice from one month to the other in your MRR.

Ideally, you want a consistently positive MRR growth rate as an indication that your SaaS business is steadily growing.

Annual Run Rate or Annual Recurring Revenue (ARR) 

The annual run rate (ARR) refers to the recurring revenue you generate in a year. For a SaaS subscription business, it’s the annual amount of revenue you generate from all the monthly subscriptions.

It’s not enough to track your MRR to forecast your business growth. The best way to have a clear idea of how your business is performing is to keep a close eye both on MRR and ARR. 

If your company is also offering annual or multi-year contracts, use the annual run rate to predict your revenue growth year-over-year.

ARR also plays a huge part in your valuation whether it’s to secure a new round of funding or if you’re planning to sell your startup. You can use ARR to communicate your growth to investors and potential buyers to provide a more holistic view of your recurring revenue.

Customer churn 

Customer churn refers to the rate your clients cancel their subscriptions.

Your monthly customer churn can help you spot the trends on the rate your clients churn while an annual look at your customer churn can help you shape the bigger picture of your scaling growth.

A good monthly churn rate, for example, for SaaS businesses is 2-3% but the lower is always better. One ancillary metric to keep in mind that is often associated with churn is your NPS (Net Promoter Score). NPS is a simple question of “how likely are you to recommend our product to a friend or colleague?” which is answered on a sliding scale from 1 (least likely)  to 10 (most likely).

A closer look both at the customer and revenue churn can help you spot any red flags that might slow down your growth or cause financial troubles. 

Revenue churn (Gross MRR churn)

The revenue churn (or Gross MRR churn) measures your monthly revenue losses from clients who decide to leave your service or simply to downgrade a plan.

Tracking your MRR churn can help you uncover the business challenges that could affect your future success.

Go beyond the percentage of the churn. Is there a bigger churn on one specific product or pricing range? Is the churn sudden or was it happening in a series of months?

Gross margin 

Your gross margin is the revenue after deducting the costs to produce a product or service. It is also known as the Cost of Goods Sold (COGS) and it doesn’t include your operational costs like marketing and sales.

Investors are always interested in your gross margin as an indication of how efficient your business is.

A lower gross margin, for example, could also indicate a lower revenue for your operational costs and your ability to invest more in the product and the team.

Customer Lifetime Value (LTV) 

The Customer Lifetime Value (LTV) is the average anticipated revenue from an active customer in your company. The longer a customer is happy with your services, the higher their LTV.

Your ultimate goal is to keep your customers happy to stay engaged with your company as much as possible. This is a combination of a good product that adds value to them, the right pricing, and a customer success team that goes beyond the way to support them.

Customer Engagement Score 

The customer engagement scores measure your customers’ engagement with your product.

It can help your customer success team keep all customers happy while the product team can request useful feedback from the happiest customers. On a higher level, founders can look at the customer engagement score to understand how much their customers like their product and how far they are from churning.

It’s up to you to define your own scoring based on the frequency and usage of your product.

Someone who uses your product daily has a higher value than a customer who uses your product every other month.

Customer Acquisition Cost (CAC) 

Customer acquisition cost (CAC) measures how much it costs to acquire a new customer. 

You can calculate it by adding your sales/marketing costs and dividing them by the number of new customers you land at a set time.

For example, if you spend $200,000 a month on marketing and sales to land 400 customers, your CAC is $500.

For a SaaS business, knowing your CAC can help you calculate your business costs and future plans on how to stay successful and efficient.

In order to stay successful, your CAC should be lower than your LTV. You don’t want to lose money on every new customer you land.

Burn Rate 

The burn rate is the capital your business is spending each month. For a SaaS business, the burn rate can affect your future funding.

Let’s say your business has $2 million in the bank and a burn rate of $300,000. This means that you have less than 7 months of cash to run the company at this rate. 

No business wants to stay on a high burn rate. It simply means that you need more revenue to remain profitable or you spend more than what you should.

If you are looking to sell a startup, then keep an eye on your burn rate and work on keeping it to the lowest possible level. 

Are there costs you want to minimize? Is there an area in the business that you’re overspending each month?

No two SaaS businesses are the same. All of them rely on metrics though to measure their success. There are hundreds of metrics to look at.

Start looking at the most important ones for your business and keep a close eye on them to stay successful.

Andrew Gazdecki is a 4x founder with 3x exits, former CRO, and founder of MicroAcquire. Gazdecki has been featured in The New York Times, Forbes Inc., Wall Street Journal, and Entrepreneur Magazine, as well as prominent industry blogs such as Mashable, TechCrunch and VentureBeat.

LeadSift Partners with MetaData.io to Help B2B Marketers Run ABM Campaigns Without IP Matching

LeadSift, a B2B Intent Data organization announces a strategic partnership with MetaData.io, the AI-fueled marketing operations platform featuring new ways to help B2B Marketers run digital campaigns without depending on IP Matching.

With less than 5% of your audience actively searching for your services or products during various phases of the buying cycle, it is essential for B2B Marketers to concentrate their intent on in-market buyers. LeadSift’s Intent Data stream helps B2B Marketers Identify Contacts and Accounts indicating intent signals by mining publicly accessible web sources.

“Knowing which Contacts and Accounts to engage with – based on Intent signals, is a massive advantage for B2B Marketers. To truly operationalize intent data, marketers need to reach buyers across multiple digital channels with personalized content as they go through the buying journey” – Tukan Das, CEO of LeadSift

The continuous new trend of working from home has represented an intriguing challenge for Digital Marketers that depend on technology advances mapping IP addresses from anonymous internet users to their businesses, but home IP addresses do not map to their corporate online profiles. This is making it more difficult to accurately execute on ABM campaigns, which is a top priority for B2B Marketers.

With LeadSift’s public web signals – advertisers and marketers are now able to prioritize their pipeline, and automatically contact them utilizing Metadata’s autonomous demand generation platform, all without depending on matching IP addresses.

“Utilizing plan signals from LeadSift, Metadata clients can now laser-focus on the purchasers from their objective record records utilizing identifiers like email address, which is a substantially more successful approach to target B2B experts as they telecommute all the more much of the time,” said Gil Allouche, CEO Metadata.io.

More About LeadSift

LeadSift is the most actionable B2B intent data provider on the market. Helping organizations identify and prioritize the prospects and accounts they should be targeting, relying on data from millions of Unstructured Public Web Documents to identify when prospects are showing an increased interest in competitors and relevant topics. The end output is a contact enriched with corporate details, contact information, and information on what they have been researching. Over 100 of the leading B2B SaaS, including Brainshark, Tipalti, Rubrik, Ceridian, InsightSquared use LeadSift to help optimize ad spend, marketing nurture campaigns, and sales outreach.

More About MetaData.io

Metadata is the autonomous demand platform that optimizes your social and digital ad spend to help you quickly create more quality demand and pipeline from your target accounts. Our patented AI and machine learning platform analyzes historical CRM data to identify who should be seeing your ads, then our multivariate testing engine tests hundreds of variations and optimizes to what delivers the best results most efficiently. The result? Quality pipeline from target accounts generated quickly.

See how utilizing intent data can boost your sales strategy by reading LeadSift’s latest eBook entitled, Real Life Intent Data Success Stories.

If you need help decreasing your costs per lead, you can check out our free account insights.

Now Hiring – Customer Marketing Manager

At LeadSift – we are building a Sales Intelligence Platform to predict Buying Intent from mining Public Web documents, to help B2B organizations Identify and Reach their best Prospects at the Right Time. Over 100 of the leading B2B SaaS companies use LeadSift to help optimize Ad Spend, Marketing Nurture Campaigns, and Sales Outreach.

We are looking for a Customer Marketing Manager, to help our new and existing customers have the best onboarding experience and guide them to be successful with our data. You will also plan and execute on different Goto Market strategies to help LeadSift be the leader in our space. To be successful in this role, you need to have good knowledge of marketing fundamentals, familiarity with Marketing Automation tools and have run Paid Digital Media campaigns.

You’ll be part of a strong, hard working team in a startup environment, and learn hands-on about our industry and our customers. We love people who can set their own direction and are self-motivated, work hard and are passionate about what they create. See Level 5 team-mate

LeadSift is backed by some of the most prominent venture investors including OMERS Ventures, Salesforce Ventures, Innovacorp, East Valley Ventures and a stellar group of angel investors.

Full Time / Halifax, NS / Starting Immediately

Responsibilities

  • Work with Customer Success team to help existing customers have the best onboarding experience and be successful with using LeadSift
  • Develop compelling product and customer-centric content for prospective and existing customers including emails, blog posts, webinars, product videos, sales sheets
  • Work with our Marketing Agency to Plan and Execute Product/feature + New Partnership launches.
  • Work with our existing channel partners to create interesting and compelling narratives based on their feedback and stories

Skills

  • 2+ years of marketing experience
  • Must have knowledge of Marketing Automation systems (Hubspot or similar) and have successfully run email marketing campaigns
  • Must have experience running Paid Media Campaigns (Facebook or LinkedIn)
  • Scrappy, Passionate and Entrepreneurial mindset and you love to get things done.
  • Articulate storyteller, must be able to both speak and write with passion and clarity
  • BONUS: Started an online business (<< Highlight this in your application)
  • BONUS++: Strong personal brand in Linkedin / Twitter

Benefits

  • Start-up culture = being able to get your hands dirty with many things at once
  • Full health benefits from day one
  • 15-days vacation + statutory/federal holidays + we also take the last week of the year off
  • Regular team lunches
  • Equity Options

Send your resumes at [email protected]. Along with your application, please include references to any open source contributions you’ve made or examples of side projects (i.e. Github, HackerNews, your own website)

LeadSift Identifies Resilient Companies During The Economic Downturn

“Sales is challenging right now” is a huge understatement. The economic landslide we find ourselves in has been earth-shattering for the sales industry. In fact, one survey conducted by Business 2 Community found that 74% of B2B Sales Reps say their sales opportunities have decreased since the Coronavirus outbreak. However, the news is not all negative. 26% of respondents report a jump in sales opportunities. What are they doing differently? How can you be in the percentage of sales teams that are thriving?

Strengthen your competitive position. Gain an edge over your competition. Be a source of information for buyers. That is one of the key pieces of advice emphasized by trusted advisor Gartner. How can you do that? Focus on investing in customer relationships with companies that are resilient during the economic downturn. LeadSift is helping sales teams do just that. We’ve used our technology to identify companies that are resilient during the current economic downturn, making them ideal prospects for your business.

What is Intent Data and How do We Use it?

Imagine being able to filter through all your leads and pick out ones you know are in need of your services and ready to buy. Intent data makes that scenario a reality. At LeadSift, our goal is to help B2B companies identify more relevant leads based on intent.

Intent data is gathered by looking at the online behavior of potential buyers. For example, it might be based on website visits and time spent on those websites, product reviews, online subscriptions to newsletters, attendance at webinars, or simply an increase in content consumption on a specific topic.

Why is it effective? Research from Gartner found that during the B2B buyer’s journey, the amount of time actually spent talking to a sales rep may only be 5% or 6% of the buyer’s journey. The rest of the time buyers are doing their own research. That means by the time the buyer engages with a salesperson, they are almost entirely through their journey. Intent data allows you to intercept buyers early in the journey, ensuring they don’t end up with one of your competitors.

Including intent data in your sales strategy is now more important than ever. As companies are forced to close their doors, delay projects or drastically cut staff, their priorities have shifted overnight. It’s possible that your list of hot leads has turned cold as ice overnight. Your traditional lead generation strategy is most likely completely irrelevant now. Unleashing the power of intent data allows you to generate new leads or better understand the shifting priorities of your current prospect list.

Identify Resilient Companies

Companies across industries are venturing into uncharted waters. While many have seen sales come to a standstill, others have experienced exponential growth. Overall, experts are predicting most major economies will lose at least 2.4% of the value of their gross domestic product over 2020. For sales teams, their efforts are futile if they continue targeting leads as they did pre-COVID. Streamlining your lead generation process to filter companies who are thriving during this economic downturn will put you in front of buyers who are ready to purchase.

Intent data is key to identifying companies that are resilient during the economic downturn. LeadSift curated a list of companies that meet that criteria by monitoring the following online behaviors and signals.

• Companies that are actively running marketing programs, including virtual conferences, webinars and paid media campaigns.
• Companies who are maintaining their content stream through blogs, whitepapers, e-books and other forms of content marketing.
• Companies who are hiring for new roles.

In order to provide top quality leads, our team looked at companies that showed these growth signals between March 26 and April 6. Our research yielded 17,000 accounts ranked globally that are potential prospects. Details, such as company name, industry, size and location are also provided. You can view the list here.

Use Intent Data to Enable Buyers

Gartner’s research found that the B2B buyer’s journey has been changing long before we had even heard of COVID-19. Months ago, they emphasized the importance of “buyer enablement.” Why do we need to enable buyers? Seventy-seven percent of buyers they surveyed said their last purchase was complex. The number of decision-makers, as well as the growing number of solutions available make buying a difficult process.

“The single biggest challenge of selling today is not selling, it is actually our customers’ struggle to buy,” said Gartner VP Brent Adamson. How does intent data solve this struggle? Intent data provides the road map you need to find out who those struggling buyers are. Sales teams must focus on providing buyers with information that is specifically designed to help them complete the buyer’s journey.

Gartner defines buyer enablement as “the provisioning of information to customers in a way that enables them to complete critical buying jobs.” Shift your focus from selling to enabling prospects that are ready to buy. Intent data tells you exactly who those buyers are. View yourself as simply another channel the buyer is using to consume information about solving their problem(s).

In Conclusion

Social distancing. Flattening the curve. Stay-at-home orders. We’ve all had to get used to new terms and change. That includes changing the way we do business. Motivational speaker Ian Rose reminds us, “We are on a constant curve of continual development anyway throughout life.” Developing a resilience when it comes to change has the potential to be extremely rewarding. Changing the way you do business, connect with clients and identify prospects will take you through this difficult time, and help you learn more efficient ways to work going forward.

Is learning a more effective method of prospecting a valuable skill? Absolutely. View the new economic environment as a part of personal development. Learning new skills is a chance to take on additional responsibilities, improve your value to your sales team and open doors for future advancement.

See how utilizing intent data can boost your sales strategy by reading LeadSift’s latest eBook entitled, Real Life Intent Data Success Stories.

If you need help decreasing your costs per lead, you can check out our free account insights.

How Marketing Can Help Sales Teams During Tough Times

Watch Video Now

Key Takeaways:

• The most important thing for businesses is to extend the cash-runway. So as a marketer you have to get in battle mode and leave behind some of the long-term strategic initiatives and focus on short-term wins.

• Replace your in-person trade show/conference leads with leads from virtual events.

• Partner with other complementary companies (targeting a similar audience) in your space to be involved with your event. Leverage their network to drive attendance and increase reach.

• Continue to explore further content collaboration (webinars, blogs, etc.) with those companies.

• Shift focus from top-of-funnel marketing content away to more middle/bottom-of-funnel content to help your sales team in their outbound prospecting efforts.

• Be empathetic towards your sales team.

• Take part in daily sales standups to understand what they are hearing from the market and adapt quickly.

• Enable the field sales reps to better sell in this environment.