Today Dave and Craig are talking through the key SaaS benchmarks that you can (and probably should) be tracking to make sure your business is headed in the right direction.
Like any set of metrics it’s important to keep these in context for your business age, size, market, and goals. But, generally there are 8 key metrics that we should all be tracking to make sure we’re growing our businesses the right way:
- Unique Visit to Trial Ratio
- Aiming for ~1%, depending on amount of content, traffic, and marketing channels
- Trial to Paid Conversion Ratio
- Aiming for 50%+ with Credit Card up front
- Aiming for 25%+ without Credit Card up front
- Monthly Recurring Revenue (MRR) Growth per month
- Usually an absolute number here is best. Doubling annually is a good goal for bootstrappers
- Lifetime Value of a Customer (LTV)
- Higher is better, but >$500 allows for paid acquisition channels
- Customer Acquisition Cost (CAC)
- Lower is better, but more importantly the ratio of CAC:LTV is important. LTV > 3xCAC is a good goal.
- Churn – both Revenue and User Churn
- Lower is better, and it needs to be around or less than 5% in order for you to grow efficiently.
- Quick Ratio – a measure of how efficiently you’re growing (expansion / contraction MRR)
- Greater than 4 – Awesome
- Between 2 and 4 – pretty good
- Below 2 – not cool
- North Star Metric – that One Thing that is a symbol of the health of your business. Can be more than 1 thing, but you really want to get a snapshot on a regular basis which direction the business is heading.
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