How to track and use SaaS metrics effectively

[Ehsanuls55]

No metric is enlightening on its own. In fact, metrics are best understood in comparison. These may be industry benchmarks or past performance.

For example, venture capitalist David Sacks suggests that “The startup that generates $1 million in ARR by burning $2 million is more impressive than the one that does it by burning $5 million.” These can be treated as industry benchmarks.

On the other hand, if you have been consistently reducing CAC by 10% year over year, this shows that your marketing and sales efforts are paying off. It’s all about evaluating metrics based on past results.

For both methods, you need the right KPI software to track and use SaaS metrics. Here’s how you can do that.

Identify the metrics to track
There are dozens of metrics you can track, from monitoring the big picture to zooming into coo email list granular details. However, tracking too many metrics can lead to more confusion than insight.

So, pick the 5-7 metrics that are most important to you. If you're an early-stage company, focus on lead generation, conversions, and CAC. In the first year, if you're tracking customer lifetime value, you might not have the full picture because you won't have data on enough customers who have gone through the full lifecycle.

If you are in the growth phase, measure MRR, ARPU, and cash flow. In this phase, you will continue to optimize your sales and marketing team strategy. Therefore, focusing too much on funnel metrics or compliance could slow you down.

As a mature startup, think about CLTV, revenue expansion, and granular funnel metrics. At this point, if you’re still struggling to calculate CAC, you’re in big trouble.

Consider your business model, your goals, your investors' expectations, your growth phase and choose the metrics that best suit you.