Today's fastest growing SaaS companies all have one thing in common.
They know their data and core growth metrics
Data is any software as a service company’s lifeblood. If you don’t have the tools to regularly monitor what key data points are saying, you could quickly find your business in a hole from which it can’t get out.
Thankfully, Klipfolio is here to help. Our reporting tool makes it possible for your company to monitor its most important key performance indicators and metrics, without the big price tag.
After all, your business is unique. Shouldn’t your business intelligence tool be as well?
Why data is so important to SaaS companies
Traditionally, software companies didn’t keep up with their data on a regular basis. Key SaaS KPIs were measured and evaluated quarterly or when it suited the product release cycle. But for SaaS companies – because of their different business model – that’s just not an option.
Rather than depending on revenue when major new product updates are released, sign up new users on a daily basis. That means changes in revenue can happen quickly. Lose a few customers and you could find yourself facing an unexpected revenue crunch. Acquire a significant number of customers that your servers can’t handle and you may end up scrambling to keep your software up and running.
That’s why, when it comes to SaaS companies, data matters.
The essential SaaS metrics and KPIs
What, exactly, do you need to be measuring?
The particular metrics will be unique to your particular business model. But these should give you an idea of the key SaaS metrics that are worthy of your attention.
Why they matter: For SaaS companies, revenue fluctuates frequently. Since you’re dependent on monthly subscription revenue, losing or gaining a few users during a particular month can mean the difference staying in business and going out of it. Staying in the know when it comes to your financial situation is important.
But simply counting revenue isn’t enough.
You need to dive into your data to determine where your revenue is coming from and who is generating it. Say you’ve got an uptick in revenue. Are you signing up more people? Or are you just upselling your existing ones?
These are the types of questions to which revenue metrics can provide the answers.
- Net monthly recurring revenue or MRR: Refers to the monthly value of newly acquired accounts to your sales system and monthly added value to current accounts, minus the value lost from closed or reduced accounts.
- Quick ratio: Shows the ratio of your revenue gains to your revenue losses, so you can see immediately if your company has both a significant increase in growth and low churn.
- Customer lifetime value or LTV: Measures the amount of gross profit that is generated from a customer over the entire time they do business with a company.
Customer satisfaction and retention metrics
Why they matter: Customer satisfaction levels can change quickly in the SaaS world. Add a troublesome new update and you could find that your once-beloved product is quickly sinking like a stone in its users’ eye.
Staying on top of metrics that measure your customers’ satisfaction is essential.
- Customer churn rate: The rate at which a subscription based company is losing its customers due to account cancellations or non-renewal of subscriptions.
- Net promoter score: A measure of a customer base’s willingness to promote a product or service to colleagues and friends.
Why they matter: Running SaaS businesses costs a lot of money. You’ll want to stay on top of how your company is spending money, as well as what it’s being spent on.
- Customer acquisition cost or CAC: Measures the costs of acquiring new customers by adding up sales and marketing costs for a given period, and dividing them by the number of new customers for that period.
- Net burn rate: Measures how quickly a startup is using up its venture capital.
SaaS KPIs to Focus on at Each Stage of Growth
They may sound obvious, but these words from Paul Graham, the co-founder of Viaweb and Y Combinator, have grown into a truism for those working in the startup world:
“A startup is a company designed to grow fast.”
And if that startup is a SaaS company, Graham’s words could perhaps become “designed to grow really fast.”
It’s often this speed, and the resulting pressure, that leads to those working in the space to believe they need to always have a grasp on every KPI under the sun. The result, aside from being overwhelming and nearly impossible, is inefficiency. And inefficiency will ultimately limit growth.
Our CEO, Allan Wille, finds it helpful to organize KPIs in relation to where they are most important in these three stages of a startups lifecycle: Product, Growth, and Efficiency.
To better align your KPIs with your company's stage of development now and in the future, below is one example of a KPI per growth stage. To view the rest of the KPIs, including a handy infographic cheatsheet, read Allan's blog post.
Product - Net Promoter Score
Net Promoter Score or NPS® is a measure of a customer base’s willingness to promote a product or service to colleagues and friends. It is based on the results of a current customer survey, which asks respondents to answer the following question: (on a scale of 1-10) “how likely is it that you would recommend (brand or product X) to a friend or colleague?” (10 being ‘extremely likely’ and 1 being ‘not likely at all’)?
Growth - Brad Feld’s Rule of 40
The Rule of 40% is simply a rule of thumb to analyze the health of a SaaS business. It takes into consideration two of the most important metrics for a subscription company: growth and profit (GP).
Efficiency - CLV:CAC
The Customer Lifetime Value to Customer Acquisition Cost Ratio (CLV:CAC) measures the relationship between the lifetime value of a customer and the cost of acquiring that customer.
How a data analytics tool can help your SaaS startup
A SaaS Analytics platform transforms the glut of raw information that flows through your organization – revenue numbers, margins, inventory, pay roll – into insights that help you make better decisions. It comes in a variety of forms, but the most common is a software tool that allows you to quickly track and identify how your organization is performing against key targets and unearth observations that would otherwise go unnoticed.
One of the best defining qualities of being a software as a service (SaaS) company is the reliance on data, in all months, all year. But the plethora of data available to SaaS companies carries with it a dangerous risk: Drowning in a sea of numbers.
That’s where business intelligence software can help.
Why a dashboard is the ideal reporting tool for your SaaS company
SaaS Analytics helps to cut out the noise surrounding your data. By turning your numbers into visualizations such as graphs, charts and indicators, you get everything you need to quickly check up and understand your SaaS business’s health.
Here are the key benefits of using business intelligence tools.
They update in real time
For companies, data is always changing and it's crucial to think ahead to what's next.
New customers sign up for your products or services. Old customers, inevitably, leave. Some stick to a trial.
Getting a portrait of where your company stands – with revenue, spending and customer satisfaction – is an everyday must.
With SaaS Analytics you get the most up-to-date numbers and make data a high or higher priority. No need to wait for quarterly report time to see how your company is performing on average.
They transform your data into actionable insights
How often have you shared an Excel spreadsheet with your team...and only received silence back in return?
A SaaS BI reporting tool fixes that problem - simple as that.
Visualizing your data means that anyone can get a sense for what is going on at a quick glance, no need to spend a long time on set up. Because you can use graphs, charts and other visual content – as well as indicator tools to show how performance measures up against key goals – everyone is on the same page about what’s relevant including your investors, and you have total control.
They only provide the most important metrics
An SaaS BI dashboard isn’t that different from another dashboard with which most of us are familiar: the dashboard on our car.
Your car’s head up display doesn’t give you everything related to your car’s performance. Just the major metrics – speed, revolutions per minute, fuel available. Other indicators, such as the check oil light, only come on when you need to take a look under the hood and see what’s going on.
So it is the same with business intelligence software.
You get a quick, at-a-glance update on how your company is performing against key targets, all while cutting out the statistical noise. Stay on course.
Klipfolio’s reporting tool advantage
Klipfolio gives you everything you need in a reporting software
Combine your internal numbers with external data
Companies are using more apps and tools than ever before. Where you might need a little bit of help, though, is in mastering how to bring all those data sources into one place.
Klipfolio makes it easy to pull in data from tools such as Twitter, Google AdWords, Excel, Spreadsheets, Databases and pretty much anything else.
That allows you to get a 360-degree view of how your company is performing – internally, and externally.
Easily import your data from all sources
Building reports is a great idea in practice. But many companies quickly sour on the idea when the tool they’ve selected makes it really difficult to import data sources.
With Klipfolio, that’s not a problem.
Our Connector Gallery allows you to connect to pretty much any data source around.
Want to go even simpler? The Dashboard Gallery is here to help. Just choose the report template you want, import your data and you’re good to go.
No need to spend lots of time gathering internal input and whiteboarding designs.
Present your reports in a variety of formats
You can’t just hide your SaaS company’s key metrics away in a broom closet. When it comes to how your business is performing, the rest of your company needs to know.
Klipfolio offers a number of different formats in which to present your company’s data. TV wallboard, mobile application, desktop browser – it’s your choice!
Have a look at some of our live examples highlighting what is possible you can create with Klipfolio's business intelligence and analytics reporting tool so you can present the right KPIs on the right device, at the right time to your team:
Looks like a ton of work to put those dashboards together right? Not entirely. We’ve created pre-built dashboards and metric templates for some of the most popular services and data sources. In only a few minutes, you can use our Gallery to get the dashboards that matter the most to your business.