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  • How do you measure your SaaS growth metrics? What do you prioritize?

    Emmanuel Nwosu
    3 replies
    The way I think about SaaS growth metrics, I see them on (a) business level (b) product engagement level (c) unit/product economics level, and (d) market expansion level. Business level metrics focus on telling you about your business health. How are you doing? Where do you need to improve to align performance with business goals? Here, revenue metrics are usually attainable because it is assumed that every business wants to make money. So, at business level, focus on recurring revenue, your runway (probably) to constantly check what keeps you running, gross margin, and revenue churn (how much revenue are you losing per customer churn). IMO, these metrics give you a solid idea of how your SaaS is doing. For product engagement, there's a lot more. Metrics here help you to understand how users interact with your SaaS, what they think can be better/ or what you can learn from their usage to make your SaaS better. Here, use metrics like customer churn rate, active users, feature usage, activation rate (learn how to increase the rate to drive aha-moment signups), and good old NPS. THEN unit economics should help you understand the economics of your production and operations. How much is needed to keep the lights on? And how much are your customers contributing to keep those lights on? Use metrics like CAC, LTV, Average revenue brought per user (to know if your product pricing is on-point and learn how to use pricing as a growth lever), LTV:CAC ratio, and gross profit are good ideas too. Finally, for market expansion (ideally for SaaS products more advanced into their operating period), you need to be competing for market relevance and dominance. Today, when you learn you're only 5% of X industry, and you ideally want to be 30% ahead, this forces you to think of how to look at your (paying) customer growth rate. The singular metric to use here is total % of market share. But you'll need your TAM, SAM, and SOM, of course. IMHO, categorising your SaaS growth metrics in this way gets you more granular insights into the overaching goals you should be optimizing growth levers in these metrics for. Haphazardly measuring growth metrics just won't cut it. You need to connect them to something bigger. I'm actually working on an article for this exact topic where I'll expand on these points I've made. If you'll like to read more about this, let me know so I'll update this comment with the link to the resource once it's published.

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    Emmanuel Nwosu
    I will especially rope @sandradjajic into this one to learn from her because what she's done with klu.so is so impressive.👏👏
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    Gurkaran Singh
    Hey there! Love the structure you've laid out for SaaS growth metrics! It's crucial to dive deep into different levels to truly understand how your business is performing. From business health to product engagement, unit economics, and market expansion, each metric plays a vital role in shaping your SaaS success. Can't wait to read your article on this topic! Keep up the great work!
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