8 SaaS Metrics and KPIs Every Company Should Track

8 min readJan 12, 2022

A lot of SaaS companies find it hard to grow their Revenue while the public SaaS businesses struggle to attain profitability.

It is not enough to disrupt your software framework and expect quick output. You need to implement data-driven steps as far as your marketing, customer success endeavors, and sales are concerned.

Tracking the appropriate SaaS KPIs and Metrics is the prerequisite to making data-based decisions.

What’s the Relevance of Data to Your Business?

The business model of SaaS depends on recurring revenues compared to the enterprise software companies, which depend on huge, upfront fees to generate a faster payback so many years ago.

SaaS revenue relies on a lump sum sale, paid incrementally. This is where efforts in sales, marketing, and customer success are challenging. You need to devise means of finding and attracting quality leads in high volume and then enhance this volume over the years with a small budget.

Not only that, you need to discover approaches to increase the efficiency of the sales team so they can win more deals on time. Every investment in productivity impacts the payback in a positive way. And usually, you may not have the capability to hire the best hand to assist you in figuring things out.

Customer success is another future expenses you have to take care of given a limited budget.

While it is tasking to scale a SaaS, it is nevertheless not impossible as some pioneers such as Hubspot, Marketo, Buffer, Trailblazer Salesforce, Zendesk, Databox have shared the strategies as well as their playbook on how to grow your SaaS business to success.

Here are 8 SaaS Metrics and KPIs You Should Be Tracking.

The 8 SaaS Metrics and KPIs To Track

1. Monthy New Visitors

This is the sum of new clients that visited your site in a particular month. If the visit is more than once, the visit will be counted as one as long as the person utilized the same device and browser and left the cookies uncleared all through the visits.

This metric perfectly reflects your audience size, and it also shows the overall effect of your marketing endeavor. Not only that, you can estimate the volume of unique visits per source and can determine the impact of your marketing across channels.

You should also endeavor to examine engagement metrics such as average page visits, and average duration spent on the website, the number of comments, repeat visits, email subscriptions, downloaded content, etc.

The engagement metrics can provide clarity on your traffic quality, which also matters like the quantity.

You can employ tools such as Adobe Analytics and Google Analytics for tracking unique visits. Most SaaS enterprises utilize Google Analytics because it is free so that you can begin from there.

2. Number of Signups

Not all SaaS companies provide self-service features or free trial. Some will even compel you to speak with their sales team prior to trialing their solutions. Nevertheless, self-service remains the most effective way of reducing what it costs to acquire customers.

Therefore, for SaaS enterprises that offer self-service, signup is a significant metric to track.

It does not matter if you provide your customers with the opportunity to trial for free; your fundamental marketing objective is to increase signups. Under a normal condition, a customer can familiarize himself or herself with the software, use it consistently, and derive sufficient value that ensures a seamless conversion to a paying client.

You can adopt several means of boosting signups. You can write educational and helpful content for prospects and current users. You can also optimize your site for conversion.

Tools such as Google Analytics, Hubspot, Adobe Analytics, and Mixpanel can be used to estimate signups.

3. Product-Qualified Leads (PQLs)

These are your potential clients who have used your products and are satisfied and also attained some pre-defined triggers that qualify them as paying clients.

PQL enables SaaS companies in rating prospects based on how they use their products. In a freemium SaaS Business model, qualified marketing lead will be the PQL.

You can define PQL parameters based on the number of times spent, usage frequency, number of features utilized. You can then run experiments on how to scale the PQL volume.

4. Lead Velocity Rate or LVR.

The next thing to estimate after your PQL is to determine the number of new PQLs needed each month.

Determining your LVR can help you estimate the number of leads volume you will need to exceed your revenue target.

It would make sense if you could increase your lead volume at the snap of a finger. But because it is not that easy, devise the means of increasing the volume each month so you can hit your yearly target.

Why do you need to prioritize LVR?

It indicates your future sales achievement.

You can use this formula to calculate your LVR:

For instance, let’s say you generated 2,100 qualified leads this month and 2,000 last months. Your LVR is growing at 5%.

Peradventure your lead quality is static; you can utilize your average sales cycle in forecasting the revenues from new sales in the subsequent month.

5. ROI from Organic-to-Paid Traffic

Organic traffic indicators incorporate visitors who visited via a non-paid listing on the search index. While paid traffic indicators factor in those, who checked in from search outcomes such as pay-per-click or PPC ads.

The results you seek and how soon you should be defined by how much you are spending on marketing.

If you want quick results and you can finance it, the right option is paid search.

If you do not seek quick outcomes, channel your energy and fund on developing quality content to facilitating a steady growth of your organic traffic.

Growing your organic traffic is what puts you in the business for the long term. However, if you have what it takes to do both, why not? However, do not squander your marketing fund. Ensure you are converting the traffic into Revenue if you are running PPC ads.

It does not matter the option you choose; it is expedient to estimate your traffic volume, customers coming in from paid and organic traffic sources, as well as your leads.

Here’s what you need to measure the performance of your organic and paid sources:

· Analytic tools such as Google Analytics to measure traffic, client acquisition volume by platform, and lead.

· SEO tools such as Semrush, Ubersuggest, Ahrefs, Moz, or Google Search Console.

· You will also need to link up with your ad manager (Google Ads or Facebook Ad manager) to have an overview of the performance of your paid search granularly.

6. Conversion Rate To User

Based on how you have defined the procedures for your sales and marketing, different definitions of lead types may ensure. For instance, you may have:

· users who only subscribed to your newsfeed or blog.

· Leads who filled forms on your site to download ebooks.

· Users who have interacted with the site, and you know about them as well as their enterprises. These are called marketing-qualified leads.

· And those who are using your products freely.

Your definitions may even incorporate all of the above. It is not enough to track the volume of PQLs that become paying clients; you also need to estimate new clients who end up as clients. For instance, you can determine your PQLs to Client conversion as the total percentage of PQLs that became paying clients.

This is the formula:

Regardless of which lead-to-client conversion ratio you estimate, ensure you have a proper definition of the types of lead and diligently calculate the conversion rates.

The conversion rate is a great parameter to know if you are doing an excellent job of converting your leads to clients — the higher your conversion rate, the higher your Revenue.

7. Average Revenue Per Account or ARPA.

ARPA or Average Revenue per unit or user estimates the Revenue you generate per user (usually estimated per month as most Subscription-based model use monthly). However, you can estimate it per year or quarter based on the plans as well as the billing options you offer.

You can estimate your ARPA by calculating the aggregate MRR generated by the month-end and divide the result by the total number of active users at that period.

A best practice is to estimate ARPA for your current and new clients distinctively so you can know how your ARPA is performing, or if new clients are showing different behaviors compared to the old ones. Some business owners will estimate this as their average sales price or ASP in a bid to distinguish the effect of upselling from the actual price at the onset.

You will need some accounting and billing system to track your ARPA. Some SaaS enterprises utilize Stripe in managing their billing, but you can extract data from Quickbooks and Paypal if your financial model is based on those frameworks.

Peradventure, you are running multiple payment platforms, and you are yet to consolidate your data. You can pull them off in a central database and add up the numbers.

8. Monthly Recurring Revenue or MRR

Recurring Revenue is referred to as the heart of a SaaS business. This is a single and recurring figure you need to track regardless of the number of your billing cycles and pricing plans.

How do you estimate your MRR?

You need to summarize your Revenue received from all paying clients each month. Another means of calculating this metric is to multiply the aggregate number of paying clients by your average revenue per unit or user.

For instance, let’s assume there are five paying clients. Two of them are paying $150/month; two are paying $200/month while the last client is paying $960/year. Your MRR, in this case, will be:

(2*$150)+ (2*$100)+ $80=$580.

When you divide the outcome by the total number of paying clients, you will get $116, which is your ARPU in this case.

While you may find this estimation to be simple, you have to calculate several MRR figures, based on your business complexities. For instance, every SaaS enterprise should estimate churned MRR and new MRR in calculating net MRR.

Peradventure you have incorporated a pricing and brand strategy that makes you generate extra income from your current clients, you will also need to calculate your add-on MRR and include it in your net MRR.

These are the MRR figures you need to estimate:

· New MRR generated in a particular month by new clients only.

· Add-0n MRR or what is called expansion MRR from current clients( adding new customers, account upgrades, purchasing additional products, etc.)

· Churn MRR- the monthly income lost due to downgrades and Revenue lost per month.

· Net New MRR or aggregate MRR, which is the aggregate recurring income at the month-end calculated from add-on and churn.

·If you derive a higher churn rate than the new MRR, it means you are losing a lot of clients as each month goes by. This is the tip of going out of business.