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Metrics for SaaS

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The presentation covers the basic metrics that any SaaS company should have at a minimum. Metrics include: …

The presentation covers the basic metrics that any SaaS company should have at a minimum. Metrics include:
ARPU
MRR
ARR
Churn
LTV
CPA
Growth
NPS
Viral Coefficient

Published in: Software, Technology, Business

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  • 1. Metrics for SaaS Dave Stevenson @dnstevenson Hack Ogden, June 2014
  • 2. ARPU
  • 3. ARPU • Average Revenue Per User • Take the average of your users and the plans they are on and average it out. • Use this as a discussion around your price points and plans. Which plan are you trying to get people to signup for? Is there an imbalance? • Get more customers or drive this higher?
  • 4. ARPU Example: 100 customers on $10 / month plan. 50 customers on $20 / month plan. 5 customers on $50 / month plan. (100*10) + (50*20) + (5*50) / 155 = $14.51 ARPU
  • 5. MRR & ARR
  • 6. MRR & ARR • Monthly Recurring Revenue • # users * ARPU • Annual Recurring Revenue • MRR * 12 • A nice way to track general revenue
  • 7. Churn
  • 8. Churn • Answers: What is your customer turnover rate? • # lost / starting value • Track by month • Example: • 3 cancelled accounts during month / 100 customers at start of month = 3% churn
  • 9. Churn • Aim for 5-7% annually • 5% monthly ends up 46% yearly • Yearly Churn = (1-.<monthly churn>)^12 • 5% monthly: (1-.05)^12 = 46% yearly • http://sixteenventures.com/saas-churn-rate/
  • 10. LTV
  • 11. LTV • LifeTime Value • Tells you how much a user is worth • LTV = ARPU * (1/C<monthly churn>) • Example: • $14.51 * (1/0.03) = $480.28 LTV
  • 12. CPA
  • 13. CPA • Cost Per Acquisition • How much does it cost you to gain a customer. • Vital to know when determining value of advertising • $2 per click on Adwords. 50 clicks to get 1 signup == $100 CPA
  • 14. CPA • Is a $100 CPA good? • Depends on your LTV. If LTV < $100, thats a bad deal. > than $100, then turn it on
  • 15. WSG
  • 16. WSG • Weekly Sales Growth • Measure just about anything. Best are revenue and active users • WSG = (present - start) / (start) • Example: 100 customers on Sunday, 112 customers on Saturday = 12% growth • (112 - 100) / 100 = 12%
  • 17. –Paul Graham “A good growth rate during YC is 5-7% a week. If you can hit 10% a week you're doing exceptionally well. If you can only manage 1%, it's a sign you haven't yet figured out what you're doing.”
  • 18. NPS
  • 19. NPS • Net Promoter Score • 1 Question: How likely is it that you would recommend [your product] to a friend or colleague? • Promoters: 9-10 • Passives: 7-8 • Detractors: 0-6 • NPS = (% of P) - (% of D)
  • 20. NPS • Example: Send email to 100 people. 20 score 9+, 30 score 0-6. NPS is -10. (-10 = 20% - 30%) • You want this to be positive • Better for enterprise/B2B apps than viral coefficient • Do this every 6 months for all users. Do 30-60 days for batches of new users
  • 21. Viral Coefficient
  • 22. Viral Coefficient • What happens when users share your product? • VC = (# of invites) / (# actions) • Aim for coefficient greater than 1. That means for every user that signs up, they will cause another person to signup • Better for consumer or social apps than NPS
  • 23. Tips • Keep metrics on cohorts & overall • Try different ranges (i.e. weekly & monthly growths) • Don’t delete data (i.e. users when they cancel) • Don’t forget to build your business
  • 24. Caveats • If you have just launched, ignore most of what I just said. Concentrate on Metrics for Pirates - AARRR - http://500hats.typepad.com/500blogs/ 2007/09/startup-metrics.html • Acquisition • Activation • Retention • Referral • Revenue
  • 25. Action Items • Calculate your churn & weekly sales growth • Take 5 minutes and send survey for NPS • Mailchimp + SurveyMonkey = easy NPS
  • 26. Dashboard • http://www.highcharts.com/ • http://panic.com/statusboard/ • http://www3.totango.com/ saas-dashboard/ • https://www.geckoboard.com/
  • 27. Resources • http://www.leananalyticsbook.com • http://www.forentrepreneurs.com/saas-metrics/ • http://www.forentrepreneurs.com/saas-metrics-2/ • http://andrewchen.co/2013/05/06/the-critical-metrics- for-each-stage-of-your-saas-business-guest-post-by- lars-lofgren-of-kissmetrics/ • https://www.udemy.com/lean-analytics-workshop- alistair-croll-and-ben-yoskovitz/
  • 28. Thanks dstevenson@simplifile.com @dnstevenson