In today’s software world it is all about metrics. The metrics tell you the story about the solution you deliver and if customers are willing to stay with you. Is your product successful and are you able to make money along the way?
Keep your metrics close and your customers even closer.
In the business of SaaS you need to know what you metrics are, because it no longer just about selling something once. Of course you always want to keep the customers with you as long as possible. This is in no way different then even before. However for SaaS companies it is essential that customers stay with you in order to break even. And that is why some metrics are special designed for SaaS companies. Do you use these following metrics?
- ARR or CARR: Committed Annual Recurring Revenue
- CAC Payback Period: How long it will take to recoup the customer acquisition cost (CAC)
- Churn: How many customers you’re losing, and at what rate.
- CLTV/CAC: Customer lifetime value divided by customer acquisition cost
- Cash Flow: How much money is coming in?
Usability and Reporting
Working with these metrics is one thing but how do you accumulate them? Where do you find them? In my daily business I see more than often new roles within companies that are solely busy with managing these metrics and making sure that they are reliable. Much of these tasks can be automated by a solid financial management system that enables your company to sell your solution globally
My advice is to make sure that your back office is capable of managing these numbers in real time and knowing what they mean. The fast moving business gives you a lot of opportunities but can also be hard when it comes to moving away to other vendors. Keep your metrics close and your customers even closer.