MRR:• Monthly Recurring Revenue• Shows
how much revenue you make next month if you don‘t winany new customers(assuming no churn, no upgrades/downgrades, etc.)• #1 SaaS metric. Much more important indicator than bookings orcash inﬂow(but cash inﬂow pays the bills!)• 2 customers• 1 on a $20/m monthly plan• 1 on a $120/y yearly plan=> MRR = $30Example:
Churn rate# of customers who
churned# of customers who could have churnedIncluding customers who can‘t cancel in thedenominator screws up your churn estimate!If you include customers who can‘t churn inyour churn calculation, you‘ll be hit by a badsurprise once they can leave!
Do you know these cars?
When small children take a tour in them,they believe they are steering them around the curves.If you‘re attributing all conversions to your sales efforts you‘re doingsomething similar. :)
Find out how well your
signups are convertingwithout being called by a salesperson.A/B test and calculate the ROI on your salesinvestments based on the conversion uplift.
• True exponential growth is
very, very rare in SaaS – requires viralitywhich most SaaS products don‘t have• Most SaaS companies grow linearly and with step changes• Even a modest exponential growth rate of 10% p.m. is very hard tosustain for a longer period of timeReading exponential growth into linear growthnumbers can lead to wrong conclusions
• Investors want historic numbers,
not just a snapshot• Many metrics are actionable – they tell you what to focus on, whento invest in acceleration, etc.• Metrics help you focus your team on what matters mostBecause...