There are lots of articles and blog posts on SaaS metrics for the typical monthly subscription type SaaS companies, but many of the metrics offered don't translate well to the enterprise/annual contract SaaS world. What metrics work well for businesses that deal with longer lead times, lower churn, and annual recurring revenue?

In my experience, the longer sales cycle requires more attention. The metrics will be unique to your business, but you can't go wrong with these:

Marketing & Sales Metrics
Look at metrics that will help you scale and project growth, and then accelerate opportunity to close velocity
#s and conversion rates of marketing qualified leads (MQLs)
#s, time, and conversion rates of MQLs to sales qualified leads (SQLs)
#s, time, and conversion rates of SQLs to opportunities
#s, time, and conversion rates of opportunities to sales

Customer Success Metrics
An ARR SaaS business may have a guaranteed 12 month customer lifespan, but that doesn't guarantee the customer actually uses the product and won't churn at renewal time. Measuring product usage will help you discover patterns that cause churn, increase the perceived value of the product, and improve the customer experience.

Financial Metrics
Each Reporting Period (I'd recommend monthly) look at Values & Rate of Change
Customer Acquisition Cost
Average Value of a Customer
look at Values, % of total, & Rate of Change
Revenue from New Subscriptions
Revenue from Renewal Subscriptions
At the early stage, businesses will see new Subscriptions significantly outpace renewals. As the business matures, the % of total ARR from New Subscriptions will begin to decline, assuming churn rates are good.

Answered 8 years ago

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