Metrics for SaaSDave Stevenson @dnstevenson

Hack Ogden, June 2014

ARPU

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?

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

MRR & ARR

MRR & ARR

• Monthly Recurring Revenue

• # users * ARPU

• Annual Recurring Revenue

• MRR * 12

• A nice way to track general revenue

Churn

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

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/

LTV

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

CPA

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

CPA

• Is a $100 CPA good?

• Depends on your LTV. If LTV < $100, thats a bad deal. > than $100, then turn it on

WSG

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%

–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.”

NPS

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)

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

Viral Coefficient

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

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

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

Action Items

• Calculate your churn & weekly sales growth

• Take 5 minutes and send survey for NPS

• Mailchimp + SurveyMonkey = easy NPS

Dashboard

• http://www.highcharts.com/

• http://panic.com/statusboard/

• http://www3.totango.com/saas-dashboard/

• https://www.geckoboard.com/

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/

Thanksdstevenson@simplifile.com

@dnstevenson