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Top 6 SaaS Metrics to Track Business Growth

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top 6 saas metrics to track business growth

Quick Summary

Software-as-a-service is in demand. The market for the SaaS industry is booming. Some famous SaaS examples are Netflix, Spotify, Dropbox, Mailchimp, and Slack. So, now the question arises as to by what measures such brands are breaking business growth records. Today we will discover the top six SaaS metrics to track business growth.

Software-as-a-service (SaaS) is a cloud-based service that provides applications. According to Gartner data, the end-user spending forecast for cloud application services (SaaS will reach $195208 in 2023. However, we don’t know what metrics they measure when forecasting growth. So, today, let’s learn what SaaS development companies measure while making business growth.

What is SaaS development?

SaaS applications are cloud-based business software used for a variety of functions. It includes accounting, office productivity, customer relationship management (CRM), and other work-related operations. SaaS applications offer various payment plans for individuals and companies to use services. Hence, to build such applications, SaaS development companies like Citrusbug Technolabs propose effective services and solutions.

You may also like to read:

Build a SaaS Product Strategy in 10 simple steps

What are SaaS metrics?

SaaS metrics are mainly used to track the growth and performance of the software or applications. To observe and chase the engagement, monthly revenue generated, feedback, and lifetime value of the SaaS product. The goal is to monitor the SaaS metrics to understand the business's growth. In addition, it helps to enhance the business and upgrade the SaaS product's features.

Top 6 SaaS Metrics to Track Business Growth

top 6 saas metrics to track business growth

Some essential metrics help track business growth and enhance the productivity of SaaS products. Here, mention the top 6 SaaS metrics that SaaS product companies should consider while forecasting business growth.

Monthly recurring revenue:

Monthly recurring revenue is the most vital SaaS metric for business growth. SaaS product companies ensure they track the monthly income to notify the expansion. If you have launched your SaaS product, it is necessary to gain customers. Well, at this early stage, it's hard to find long-term customers. However, ensure that customers are choosing monthly plans.

Also, your report on MRR will help you understand what changes you need to make to improve the productivity and sales of your SaaS product.

Cost per Acquisition:

It is expensive to bring in new clients for your SaaS company. As a result, you'll want to maximize your marketing. Spending a lot of money on a particular marketing plan and then discovering that it doesn't generate a profit is the very last thing you want to do. You must therefore monitor your cost per acquisition. The cost per customer calculation is done by adding all sales and marketing expenses of the previous month and dividing it by the number of customers you gained in the same month. This will present the average cost to acquire new customers.

Revenue per customer:

A SaaS company’s growth depends on your customers spending money on your product through cross-selling, upselling, and persuading clients to upgrade their plans or use longer billing cycles. Increasing the money you receive from each customer is crucial because acquiring new customers is so expensive.

To calculate the average cost per customer, divide the total monthly income by the number of paid customers. Furthermore, to expand the SaaS business, focus on raising your average revenue per customer.

Customer Churn:

The number of subscribers at the beginning is divided by the number of churns to determine the churn rate. A high rate of turnover indicates that there is a significant problem. also examines the reasons behind the cancellation of accounts by subscribers. Recognize the barriers preventing prospective subscribers from registering. And also, learn from devoted clients what keeps them coming back. Retaining clients is the foundation of long-term success. It's crucial to keep the turnover rate in check.

Customer engagement:

The most effective metric that affects business growth is customer engagement. It is necessary to keep checking the customer engagement score with your existing customers. Keeping track of their activity on your SaaS application will help you know their productivity. Hence, you can enhance the service you provide to your existing customers.

Lifetime Value (LTV):

The lifetime customer value is based on the average revenue per customer. The first crucial KPIs for scale-up and expansion-stage organizations are client lifetime value (LTV), customer acquisition cost, and attrition. These indicators give businesses the ability to assess how much money they will need to invest in client acquisition. Furthermore, how profitable those consumers will be for the company and the difficulties in retaining and expanding a customer base.

best saas developers in india

 

SaaS Development Growth Trends to look forward in 2023

saas development growth trends in 2023

With the increasing demand for SaaS development services, SaaS development companies are targeting users with more niche elements of their services. In the growth of SaaS development services, some trends are to be looked forward to in 2023.

  • Vertical SaaS
  • Micro SaaS
  • SaaS Integration
  • AI & ML
  • Mobile Optimization

Vertical SaaS: SaaS development companies serve both horizontal and vertical SaaS. While understanding it precisely is difficult, SaaS companies serving horizontal SaaS will serve any sector or industry. Whereas, vertical SaaS is the concept to work with a specific industry. Vertical SaaS is one of the trends that can profit businesses. It carries various benefits like finer customization, enhancement with specific features, better marketing, low-cost acquisition, a higher LTV, and others.

Micro SaaS: The SaaS product company run by a smaller number of people is considered in the Micro SaaS category. A great example of a micro-SaaS product could be a browser extension for Chrome or Firefox. In addition, to mention the most popular micro-SaaS application, there is Grammarly.

SaaS Integration: The growth of SaaS products depends on the feature integration avail in the SaaS application. To keep your SaaS application smooth and helpful to the clients, many SaaS development companies use various tools and solutions to incorporate them. After integrating the SaaS product, international SaaS companies observe a 90% of growth in generating revenue.

AI & ML: It is measured that Artificial Intelligence and Machine Learning, are the most influential and trending technology. The touch of AI & ML, in each industry, enhance the productivity of the product. Similarly, SaaS products also can enhance productivity by giving a touch of AI & ML.

Mobile Optimization: As people use their phones more and more frequently each day, mobile optimization is crucial. If your SaaS product is mobile device optimized, it allows your consumers the freedom to use it whenever and whenever they choose, no matter where they are. A responsive web app is sufficient in the beginning, but later on, you can consider creating a specific mobile application.

Conclusion

We have covered the essential topics related to SaaS development services and business growth. In this blog, we understand the top six SaaS metrics to track business growth. Also, unlocked the SaaS Development Growth Trends to look forward to in 2023.

FAQ

SaaS development defines as the applications that are designed & developed, and centrally hosted on a cloud platform. Furthermore, they are accessible across the internet and based on a subscription payment model.

To monitor and pursue the SaaS product's lifetime value, monthly income, feedback, and engagement. The objective is to track SaaS indicators to comprehend company growth.

As we know, SaaS product growth is reliable in many aspects. However, some essential SaaS metrics that help to track business growth are Monthly Recurring Revenue (MRR), Cost per Acquisition, Customer Churn, Customer Engagement, Lifetime Value (LTV), and Revenue per customer.

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