Master the SaaS-specific metrics (MRR, ARR, NRR, CAC, LTV, churn) that define business health and unlock capital—and understand how they connect to unit economics.
The long-term viability and profitability of your company is dependent on efficient, strong growth. Rather than just aiming to report growth, a company should strategically and thoughtfully pursue healthy revenue that will support the company in the long run.
There are many SaaS-specific metrics a company can track. However, in the beginning, we recommend tracking the following key metrics that point to the health of aspects of your company that investors will consider in the next round of funding or an acquisition.
A SaaS company is essentially in the business of producing bonds. Each customer contract represents a new bond developed. The value of that bond is the market value of the revenue for the SaaS segment the company trades in (usually 4-8x top line revenue). There isn't much a firm can do about what the market values the bond at, but a firm can manage the cost to produce the bond. In a SaaS firm, the cost to develop the bond is equivalent to the customer acquisition cost (CAC). In most cases, the CAC shoul d also include any unpaid services or support necessary to get the customer settled into an average existence (i.e. into a position expected to result in average churn). This is why CAC to customer lifetime value is such an important comparison.
The impact: Build a clear understanding of what each metric is, how it is calculated, and what it points to. These are not just numbers to store away on a dashboard, but numbers to guide your strategy and growth decisions at all stages of growth. A template is included to compare your company's metrics to industry benchmarks.
The goal: Develop a deep understanding of SaaS metrics and how your metrics compare to industry averages. We will create a dashboard to display the metrics for regular review in a future process.
How can Golden Section Assist?
There are many SaaS-specific metrics a company can track. However, in the beginning, we recommend tracking the following key metrics that point to the health of aspects of your company that investors will consider in the next round of funding or an acquisition.
A SaaS company is essentially in the business of producing bonds. Each customer contract represents a new bond developed. The value of that bond is the market value of the revenue for the SaaS segment the company trades in (usually 4-8x top line revenue).
Master the SaaS-specific metrics (MRR, ARR, NRR, CAC, LTV, churn) that define business health and unlock capital—and understand how they connect to unit economics.
Master the SaaS-specific metrics (MRR, ARR, NRR, CAC, LTV, churn) that define business health and unlock capital—and understand how they connect to unit economics.
Master the SaaS-specific metrics (MRR, ARR, NRR, CAC, LTV, churn) that define business health and unlock capital—and understand how they connect to unit economics.