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April 13, 2018 Finance

Software Companies: How Do You Manage Your SaaS Metrics?

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By Sonja Fridell

Is your SaaS company healthy? Are you growing at the right pace? If you don’t have a quick answer to these questions, it’s probably because your business isn’t identifying and tracking key metrics to help you keep a finger on the pulse of your company.

How a subscription-based company manages metrics depends on many things, like the services sold, age of the business, number of customers served, and rate of growth. We encourage you to download this eBook for some helpful advice: Managing SaaS Metrics Throughout the Company Growth Lifecycle.

Now, let’s take a closer look at some best practices that will ensure your SaaS business is managing metrics correctly.

Know Your Stage

Confusion over metrics is very common. There are dozens of metrics an SaaS business can use to track its success. Where do you start?

Many experts advise starting by identifying your business’ stage in the company lifecycle. Over time, a company’s status changes. A brand-new startup has very different needs and goals from one that’s been around for 30 years.

Your stage clues you in to the most important things to measure. Here are two examples of metrics by stage:

YOUNG COMPANIES. A very early-stage company, like an SaaS startup, must focus on urgent issues: beating the competition, acquiring customers, bringing in enough revenue to pay monthly bills. This means metrics like customer acquisition cost (CAC) and monthly recurring revenue (MRR) are critical.

HIGH-GROWTH COMPANIES. A company that is expanding fast is in transition to a new life stage. Now the company is competitive and customer acquisition is happening quickly. Metrics like churn – the percentage of lost subscribers – and the customer lifetime value (CTV) become more important.

Master SaaS Tracking

As you identify the metrics you need to track, the question becomes how to track them properly. Some SaaS entrepreneurs simply use spreadsheets, QuickBooks or some kind of homegrown database. All of these entry-level solutions come with downsides: inflexibility, human error, incompatibility with other business systems.

It’s easier to manage metrics with an enterprise resource planning (ERP) system which works in the background to track and consolidate key metrics at all times.

The best ERP systems for SaaS businesses have features like:

  • Cloud-based architecture that can be accessed anywhere
  • Flexible functionality, regardless of device used
  • Easy connection with other cloud solutions, for simple integration
  • Scalable, no matter the business size
  • Affordability for even small companies
  • Ability to customize and tailor to your business

Red-flag and Refine

The beauty of ERP is that it frees you up from the hassle of tracking metrics, so you can go about the day-to-day work of helping your SaaS business grow and succeed. If one of your metrics goes out of whack, you can get a red flag to take quick action.

Say you’re a mid-stage SaaS business with moderate growth, but you’d like to be a high-growth company. You’re having trouble identifying what’s holding you back. With an ERP solution, you could see important metrics in real time so you can make proactive adjustments instead of relying on information that’s too old and too late.

You can also slice-and-dice your customer data to see exactly which customers are profitable and which ones are just costing you time and money. These insights can completely transform your business strategy.

For more SaaS business insights like these, download our eBook below and contact BrainSell for more guidance with SaaS metrics and technology solutions.

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Managing your Saas Metrics

author bio

Sonja Fridell

Sonja is very active in architecting CRM, ERP and marketing automation solutions for clients across North America. As an ex-journalist, she is adept at exploring a client’s needs and coming up with cutting edge, elegant solutions that fit, drive adoption, and create real results.

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