Saas Metric Terms 3.0

The desired level of performance

KPI

Target

Provides early evidence of progress

Kpi

Leading Indicator

Provides historical proof of performance

Kpi

Lagging Indicator

Comparative measurement taken at the start

Kpi

Baseline

External standardized measurement of performance

Kpi

Benchmark

Level & standard of internal advocacy for the seller provided by key customer stakeholders (often refers to seniority of budget holders or decision makers)

Sponsorship

Amount of external advocacy for the seller provided by the customer organization

Advocacy

Overall level of satisfaction with reseller's products, services, and relationship

Sentiment

Pattern of utilization of support services

Support Usage

Level of usage of products (measured variously e.g. no. of logins, time spent, features used, etc.)

Product Usage

How well the implementation has gone thus far, including whether it has met or exceeded any major milestones

Implementation

Combined rating for customer sentiment that includes satisfaction survey ratings and promotional activity (for example references and case studies)

Net Promoter Score (NPS)

What are the four umbrellas that SaaS metrics can be divided under?

Growth metrics, Retention metrics, Efficiency metrics, and Sales metrics.

measures normalized (amortized) monthly subscription revenue.

Monthly Recurring Revenue (MRR)

The amount of money a single customer generates for a company (also known as ARPU or ARPC) is a key metric that helps businesses understand revenue generation per customer, allowing for better pricing and marketing strategies.

Average Revenue Per Account (ARPA)

Revenue from previously active customers moving back onto a paid plan.

Reactivation MRR

Revenue added from existing customers, such as through upgrades to higher pricing tiers or add-ons.

Expansion MRR

The loss of revenue when customers switch to a lower-priced plan or stop paying for an add-on.

Contraction MRR

The percentage of revenue retained over a period of time, after gains from expansion and offset by contraction and churn.

Net Revenue Retention (NRR)

The percentage of revenue retained over a period of time, excluding expansions.

Gross Revenue Retention (GRR)

When the MRR gained from existing customers (expansion and reactivation) exceeds the MRR lost from churn and contraction.

Negative Churn

What NRR rate should B2B SaaS companies aim for?

Over $100\%$

According to the transcript, what is the net MRR churn rate for a median early-stage SaaS company?

$$6.2\%$$

A group of customers that join in a particular time period.

Cohort analysis

The estimated revenue a company will receive from an average subscriber from signup through cancellation.

Customer Lifetime Value (LTV).

What is the generally accepted target for the CAC : LTV ratio in SaaS?

$$1:3$$

A company’s ability to grow recurring revenue in spite of churn (growth efficiency), calculated as the ratio of money coming in to money going out.

Quick Ratio

The average time taken for CAC to be recouped through MRR.

Payback Period

The average number of days it takes for a lead to convert into an active paying customer.

Average Sales Cycle Length

The total subscription revenue a customer generates for a company on an annual basis, excluding one-time fees.

Annual Contract Value (ACV)