The goal of a “SaaS” (software as a service) is to enable small businesses, who often have limited IT budgets, to manage their core business and operations from a single dashboard. A wide range of features offered by “SaaS” software can be accessed through the web-based dashboard and the company can focus on other aspects of running its business.
A SaaS KPIs is a key performance indicator. It can be used to measure the success of a specific business model or function.
In order to determine the best SaaS KPIs for your business, you should first define what success looks like for your company. Then, you can identify which metrics will allow you to evaluate how well you are doing at achieving that goal.
The key performance indicators are a set of measures that provide insight into the progress of an organization.
They typically include measurements of how well the company is performing in terms of cost, revenue, or market share and growth.
KPIs are metrics that provide you with insights into the health of your business. They can be used to track progress and identify opportunities for improvement in order to increase profitability.
KPIs can be used for many purposes, but the main reason why they are widely used is because it is a common metric that everyone can understand.
It is a way to compare different companies in terms of performance and it also helps you to determine if your company is on track with its goals.
KPIs can be used for many purposes, but the main reason why they are widely used is because it is a common metric that everyone can understand.
It is a way to compare different companies in terms of performance and it also helps you to determine if your company is on track with its goals.
The uses of KPIs include:
• Helping you find out how your company compares to other companies in the same industry.
• Establishing benchmarks that show what's working and what isn't so that you can adjust accordingly.
• Creating measures that will help you stay on top of things when there are changes or shifts in the market, such as new competitors or changing customer needs.
• Helping you find out how your company compares to other companies in the same industry.
• Establishing benchmarks that show what's working and what isn't so that you can adjust accordingly.
• Creating measures that will help you stay on top of things when there are changes or shifts in the market, such as new competitors or changing customer needs.
• A better understanding of how the business is performing.
• Improved productivity in managing a company's business operations.
• Helping to ensure that the company will be able to meet its goals and objectives.
There are several metrics that you can use to measure the success of your business.
The following are some KPIs that can be used for SaaS:
1. Customer Acquisition Cost (CAC) -
This is the cost incurred by a company in order to acquire a new customer. This metric should be tracked over time so that trends can be analyzed and any necessary changes made to increase or decrease this number accordingly.
Calculation-
The calculation of CAC is as follows:
CAC = [Current Assets] / [Total Liabilities]
CAC is calculated as a percentage. The CAC for an individual company can be determined by dividing the company's total assets by its total liabilities.
2. Customer Lifetime Value (CLV) -
This is calculated by multiplying the average revenue per customer by the average length of time spent with each customer. The lifetime value helps predict how much money an individual will spend on your products, and it also provides insight into how profitable your customers will be for you as well as what type of marketing strategies would work best for you.
Calculation-
CLV is calculated by multiplying the lifetime value of a customer by the number of transactions made with that customer.
Let's take an example:
If your CLV is $100 and you have 100 customers, then your CLV would be $10,000.
3. Revenue Per Installment (RPI) -
The RPI measures the average amount earned from every install of an app on a mobile device, desktop computer, or tablet computer which is a great way to understand if there is room for improvement in terms of increasing revenues or reducing costs associated with installation processes while maintaining profitability.
Calculation-
The formula for RPI calculation is:
RPI = 100 x (Current price - $1) / $1
Where:
RPI= a relative indicator of the market's strength, commonly used in financial analysis.
4. Referral Rate -
It’s the number of new users who have been referred by existing customers. It can help you determine whether your marketing efforts are producing an adequate return on investment (ROI) and if your past campaigns or recent update to a product is bringing in potential buyers that previously weren't taking up any particular interest in yours.
Calculation-
Referral rate is the annualized interest rate that you earn when investing your money in a particular investment.
To calculate the referral rate, use this formula:
R = i / (1 + i)n
Where R is the referral rate, i is the annual interest on your investment and n is the number of years that you plan to invest.
5. Burn Rate -
The burn rate measures how many percent each department/department head's time is being utilized. Product teams generally want to see a smaller burn rate while other departments would prefer they be as low or lower than their own.
Calculation-
There are many ways to calculate the burn rate of a company.
The first is by calculating the interest expense and then multiplying it with the average debt outstanding over a given period of time. This gives you the total amount of interest that is paid out for that period, which can be divided by the number of days in that period to get an average daily interest payment per day.
Another way to calculate burn rate is by dividing revenue by debt.
6. Subscription or Perpetual Value -
This is how much customers are willing to pay for future products and services which helps provide insight into what should be offered in the upfront cost of acquiring new customers (or better said, prices that may have influenced users who weren't previously interested). A lower rate may indicate that users might be worth more in terms of what you are charging for the product.
Calculation-
There are many formulas for calculating the subscription or perpetual value of a stock.
A simple formula is to divide the current share price by the average trading volume over a period of time and then multiply it by 100.
7. Average Order Value (AOV) -
It is helpful if your app's average order value is not too far off from other products or services similar to yours offering competitive pricing data which can clarify how competitive a price comparison makes your product compared with its competitors and highlights if it has remained consistent over time therefore provides context on whether there is value to your product pricing.
Calculation-
AOV is a term used in the marketing world that stands for "average order value." It is calculated by dividing the total revenue by the number of orders.
8. Conversion -
It measures the rate at which users complete a transaction following an acquisition or new user via landing page and registration form completing on mobile or web app post-traffic/APIs after clicking through from other sources (like Google, referrals etc.).
Calculation-
The formula for calculating conversion is as follows:
C=E/D
Where C is the converted amount, E is the equivalent value in USD and D is the rate of exchange.
9. Traffic Driven Ratio –
This metric measures how much traffic plays a role in driving revenue versus those users who actually follow through with becoming a paying customer. If it is highly correlated with investment in marketing, that may improve your profitability as opposed to increasing retention rate which might be necessary if you are trying boost organic traffic or just aren't getting enough requests through SEO routes
Calculation-
Traffic driven ratio is a measure of the traffic volume to sales revenue. It is calculated by dividing the total number of visitors in a given period by the total number of products sold in that period.
10. Retention -
This index measures the number of users who re-engage within a given time period and includes how often they open/share content vs engagement metrics like muting on their application; this gives context to your marketing strategy as well as potential ongoings or issues that might arise when evaluating retention.
Calculation-
Retention is a metric that can be calculated using the following formula:
Retention = (Actual Revenue - Expenses) / Total Cost of Acquisition
This formula helps calculate the percentage of customers who remain with your company after they have bought a product or service.
KPI reporting is a method of measuring the performance of an organization or business by looking at key performance indicators.
The KPIs can be used to determine how the company's goals are being met and what changes need to be made in order for it to reach its objectives.
Successful SaaS companies have a number of KPIs in place to measure the performance of their products and services. The metrics vary from business model to business model, but these 10 SaaS KPIs are universal. If you're not measuring them yet, don't delay; start today!
