Credited for their convenience and effectiveness, software companies are often the driving force behind any modern organization. And while the product may not be tangible, there are still numerous KPIs to track.
Key performance indicators in the SaaS industry highlight how companies can effectively their goals and objectives. This may sound obvious, but the million-dollar question is what KPIs should a tech-based company focus on?
Outlined below are the main ones to track.
The success of any entity is directly proportional to disposable income. Money is the most significant performance tracker especially since the product and service are constantly consuming capital. Enterprises should be vigilant in their bookkeeping and cash reserves, as a tiny mishap can send the whole business into oblivion.
As most SaaS companies are subscription-based, maintaining customers is one of, if not the, number one priority. Customers aren’t going to stick around if the product isn’t good; especially in these trying times when many are going to seek a more strict budget, your product may be one of the first things they cut.
With that in mind, then customer churn should be your top priority. The customer churn rate will enable the proprietors and shareholders to identify the number of clients lost, reasons, and how to re-attract the lost clients.
Measure the customer lifetime value (CLV), this highlights the sum of money that your clientele has generated throughout your entire engagement. This valuation directly portrays the direction of the franchise and the value of the company to potential investors.
Cost of Acquiring New Customers
This indicator is vital in analyzing the cost-benefit analysis in terms of acquiring new customers.
Popularly known as (CAC) it is essential in assessing the value your new clients will bring. Integrated with customer lifetime value (CLV), the duo is vital in guaranteeing the viability of the business.
Customer acquisition should be the focus of any business, as clients are directly reflected in the company’s income.
Adopting A Customer Engagement Score
A healthy engagement score is critical to any business, especially in the SaaS industry. It is through this score that key revelations such as how often clients log in with your software are captured.
The collected data will give business insights on how to improve their services while keeping abreast of their competitors. The customer engagement score is essential in studying the current needs of clients and positioning the company to fulfill them.
Lead -To- Customer Rate
Another customer intensive approach, the lead to customer rate, facilitates the business to monitor their conversion rates.
This mechanism highlights how leads turn to buy customers or vindicate your lead-nurturing approach. It highlights distinct business campaigns and methodologies, prompting the proprietor to adopt more converting techniques.
Monthly Recurring Revenue
Last but not least is the monthly recurring revenue. Simple but effective, this metric is significant in tracking upsells, new sales, and renewals monthly.
MRR enables the SaaS companies to track their growth as well as pivoted to the present.
The list of key performance indicators is inexhaustible; however, above are some of the top-notch KPIs that are likely to propel your business to the next level.