As a SaaS (Software as a Service) business leader, you’re constantly seeking ways to measure performance and make informed, data-driven decisions about growth. However, navigating the world of SaaS metrics can be overwhelming. With hundreds of metrics to choose from and various ways to calculate them, it can feel like a minefield. But don’t worry; we’re here to demystify SaaS metrics for you in this comprehensive guide.


What Are SaaS Metrics and Why Are They Important?

SaaS metrics are like the vital signs of your business. They are essential for measuring your performance and understanding what’s working and what isn’t. When used effectively, SaaS metrics offer valuable insights that enable you to make quick, data-driven optimizations for success and prevent losses. These also allow you to benchmark your business’s performance against competitors or your own previous quarters, informing your target setting and forecasting.

SaaS businesses have a unique customer lifecycle that includes acquisition, renewals, and expansion. Each stage is crucial for sustainable growth, and they come with different sets of metrics. To thrive, you need a robust payments infrastructure that provides timely and accurate data on these metrics.

Choosing the Right Metrics for Your SaaS Business

With a multitude of metrics available, it’s essential to select the ones that align with your business goals and stage of growth. Your choice of metrics should reflect what you’re trying to achieve and what matters most at a given time. Here are some factors to consider:

SAAS Metrics

Business Goals

Your metrics should align with your goals. Are you aiming for rapid year-on-year growth, moving into new markets, or focusing on customer retention? The metrics you choose should help you track your progress toward these goals.

Growth Stage

The stage of growth your business is in will influence your choice of metrics. For instance, a recently launched business may prioritize customer acquisition, while a more established one may focus on customer retention and lifetime value.


Different industries have distinct success metrics. Your choice of metrics should consider the usage patterns and needs of your specific industry.

Customer Base

The type of customers you serve, whether business or consumer, small or enterprise, will affect the most relevant metrics for your business. If you serve multiple customer segments, you must choose metrics that provide a balanced view.

Billing Model

Recurring billing adds complexity to SaaS metrics. Metrics like Monthly Recurring Revenue (MRR) are essential for recurring billing, but they need to account for add-ons, different billing frequencies, and promotions.

The Benchmark Metric for SaaS Success: Net Revenue Retention (NRR)


Regardless of your business model, growth stage, or customer base, there’s one metric no SaaS company can afford to ignore: Net Revenue Retention (NRR). NRR reveals how much recurring revenue you retained from current customers over a specific period. It factors in customer upgrades, downgrades, and churn to show, as a percentage, how much your business could grow from your existing customer base alone, without acquiring new customers. NRR offers a true picture of your business’s security.

Some of the biggest recent SaaS IPOs, such as Snowflake, Twilio, and Elastic, have impressive NRR percentages. For a thriving SaaS business, an NRR of at least 109% is a target worth aiming for.

10 Key SaaS Metrics for Growth

Now that you understand the importance of SaaS metrics let’s explore the metrics that provide answers for your SaaS business’s growth:

Monthly Recurring Revenue (MRR)

MRR indicates the revenue you receive from your subscription customers on a monthly basis, sometimes measured annually as Annual Recurring Revenue (ARR). It reflects your monthly growth or contraction and is valuable for predicting future revenue, cash flow, and profitability.


Churn refers to customers who stop using or subscribing to your product over a period. MRR churn measures the lost monthly recurring revenue due to downgrades or non-renewals, while customer churn counts the number of customers who didn’t renew their subscriptions.

Churn data should also provide insights into why customers are leaving, helping you identify issues and implement solutions.

Expansion Rate

Expansion Rate, or Expansion MRR Rate, tracks additional recurring revenue generated from existing customers in a month. This includes add-ons, cross-sells, or upsells. Established businesses use this metric to enhance revenue from loyal customers.

Customer Acquisition Cost (CAC)

CAC is the cost of acquiring new customers. Even if you’re acquiring customers rapidly, it’s crucial to ensure that the acquisition process isn’t financially burdensome. Managing your CAC is vital for maintaining a healthy bottom line.

Customer Lifetime Value (CLV)

CLV represents the revenue you’ll earn from a customer throughout their relationship with your company. It’s a foundational metric that gauges how well your product or service resonates with customers. CLV complements other metrics related to churn and retention.

Average Revenue Per User (ARPU)

ARPU measures the revenue generated from each user over a specified time. It’s different from CLV in that it focuses on ongoing user spending, rather than their entire lifecycle value.

Payback Period

Payback period reveals how long it takes for a customer to become profitable for your business. This metric is especially crucial for startups seeking to maintain healthy cash flow.

Renewal Rate

Renewal rate is the percentage of customers who renew their subscriptions. It’s a retention indicator, with a high renewal rate suggesting satisfied customers. A declining renewal rate signals issues that need addressing.

Cost of Goods Sold (COGS)

COGS reflects the cost of producing and delivering your product or service. Understanding COGS helps you calculate your gross margin, which indicates how much remains for other business aspects.

Gross Margin

Gross margin is your total revenue minus COGS. It’s valuable for tracking revenue streams and forecasting. SaaS businesses can also examine recurring revenue gross margin, which considers costs related to retaining customers and facilitating recurring billing.

SAAS Metrics for Different Business Departments

Apart from revenue and growth metrics, various departments within your SaaS business have specific metrics to track their performance:

Sales Metrics

  • Win Rate: Measures the leads or opportunities your sales team successfully closes.
  • Sales Qualified Leads (SQLs): Quantifies leads ready for a sales representative.
  • Lead Velocity Rate: Tracks the growth in qualified leads.
  • Deal Velocity/Time to Close: Shows how long it takes to close a deal.
  • Closed Won/Lost: Compares won versus lost deals by team or individual sales reps.

Customer Success Metrics

  • Net Promoter Score (NPS): Gathers customer feedback to determine how likely they are to recommend your product or service.
  • Customer Satisfaction (CSAT) Score: Analyzes feedback data to measure customer satisfaction.
  • Service Level Agreements: Measures the number of met or breached service level agreements.

People and Talent Metrics

Time to Hire: Measures the time from initial candidate engagement to acceptance of a job offer.

Cost Per Hire: Calculates the cost of hiring an employee and can be used to evaluate the return on investment for new hires.

Employee Engagement: Assesses how engaged employees are in their work and their connection to the business. Employee retention and feedback from engagement surveys are essential here.

Risk Metrics

Chargeback Rate: Calculates the percentage of transactions with raised chargebacks, aiming to keep it under the industry standard of 0.65%.

Fraud Losses: Measures the total value of unauthorized or fraudulent transactions against the total transaction value over a specified period.


SAAS Metrics

In this ultimate guide, we’ve explored the world of SaaS metrics that matter, particularly in the B2B and enterprise sectors. Whether you’re a startup or an established player, understanding these and choosing the right ones for your business stage and goals is crucial. Net Revenue Retention (NRR) stands out as a benchmark metric, and focusing on other key metrics can help you unlock the potential for growth in your SaaS business.

Each department in your organization, from sales to customer success, marketing, and HR, has metrics that provide valuable insights into their performance. Use these metrics to fine-tune your strategies, improve customer satisfaction, streamline processes, and make data-driven decisions.

Remember, the SaaS world is ever-evolving, and the metrics that matter today may change tomorrow. Stay adaptable, regularly revisit your metrics, and keep learning. And if you need further guidance, explore our A-Z of SaaS metrics for a comprehensive list of key performance indicators to track across your business.

By mastering these metrics and applying the insights they provide, you’ll be well-equipped to navigate the dynamic landscape of B2B and enterprise SaaS and drive your business towards sustainable growth.

Don’t let the complexities of SaaS metrics discourage you. Embrace them as your compass, guiding your business through the digital landscape towards success.

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