SaaS Churn Rate aka. attrition How often you lose customers. If you have 100 customers, and you lose 10 of them in a yearyou have a 10% annual churn rate.
SaaS ASP: Average Selling PriceThe average price that you sell your product for. ASP = ARR / # of CustomersWhy its important:Determines your sales and distribution strategy. Can you afford a salesteam? Can you afford adwords?
SaaS ACS: Average Cost of ServiceYour average cost to support and maintain a customer. ACS = Total Expenses / # of Customers Trend: This should ideally trend downward as your number of customers goes up.
SaaS CLTV: Customer Lifetime ValueAverage total expected revenue from a customer. simple CLTV = ASP / churn rate Why its important: This also determines your go to market strategy. Can you afford a sales team or adwords?
SaaS CAC: Customer Acquisition Cost The average cost to gain a new customer. costs: adwords, sales, marketing, PRWhy its important:Acquiring a customer along with the ASP must cost less than the life timevalue the customer will bring in.
SaaS Proﬁt?Proﬁt = (LTV - CAC - ASP) * # Customers So you need LTV > CAC + ASP
Split TestingOften referred to as A/B testing. examples: compare designs, pricing, layouts, etc.
Cohort AnalysisSplit testing by a date group example cohorts: join date, age,
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