12 SaaS Metrics to Measure for Business Success

July 19, 2025

5 min read

Effectively managing SaaS subscriptions is not just a backend task it is a core pillar of a successful SaaS business. From tracking renewals and churn to understanding customer lifetime value, how you handle subscriptions can directly impact growth, retention, and revenue.

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Quick Read

Summary generated by AI, reviewed for accuracy.

This blog highlights why SaaS metrics play a key role in driving business success. It explains how tracking the right metrics helps spot growth opportunities, reduce risk, improve customer retention, and make informed decisions. By focusing on measurable data, SaaS companies can plan better, scale faster, and build a stronger path to long-term growth.

There are numerous SaaS startups booming in this digital era.

In fact, as per Better Cloud, SaaS is expected to make up more than 85% of all business software by 2025.

Why does this matter? Because every decision you make in a SaaS business whether you are in product, marketing, finance, or customer success should be rooted in the right SaaS metrics.

In this blog, we will break down the most essential SaaS metrics you need to monitor, including

What each metric means
Why it matters
How to use it
Where it fits in your growth journey

What Is SaaS Metrics?

SaaS metrics are important numbers that show how a SaaS business is doing. They tell you if your product is growing if users are staying and if you are making a profit.

These numbers help you understand how people use your product how much they pay and how long they stay. They also show if your business is spending more than it earns or if it is growing the right way.

By tracking these numbers, teams can spot problems early and fix them before they grow. Businesses can also see how well subscriptions is working well and do more of it. This helps your team make better choices and plan.

In short SaaS metrics give you a clear view of your business. They help you grow with purpose and stay on the right path.

Importance of Measuring SaaS Metrics

Tracking SaaS metrics is a key part of building and scaling a strong SaaS business. These numbers help you understand how your product is performing and how your customers are behaving. Here are some of things to consider.

Helps You Understand Business Health
Those important metrics give a full view of your business. They show how well the product is performing in the market. Teams can see if your user base is growing if people are using your service and if revenue is going up.
This helps you understand if your business is strong or if it needs changes. It also shows how well your team is meeting its goals.
Tracks Customer Retention and Churn
According to Salesforce research, 90% of buyers believe the experience a company offers is as important as the products or services it sells. This shows how tracking customer retention in SaaS business.
If retention is high it means users find value. These numbers help you improve the user experience and increase long term success.
Supports Better Decision Making
Good decisions need good data. SaaS metrics give you the facts you need. They help identify what brings results and what needs to be improved.
Businesses can use this information to change your plans fix weak areas or invest more in what is doing well. This helps you grow faster and avoid wasting time or money.
Helps You Plan for Growth
Growth should be based on facts nt guesses. SaaS metrcs show which parts of your business are ready to scale. You can find the right time to launch new features hire new team members or enter new markets. This makes sure your growth is steady and smart.
Spots Problems Early
Small problems can grow if you miss them. Metrics help you see signs of trouble early. A drop in revenue or user activity can show that something is wrong. When you act fast you can fix the problem before it grows. This saves money and protects your progress.
Improves Team Focus
When teams look at the same numbers they understand what matters. Metrics help set clear goals for product marketing sales and support. Each team knows what to work on and how to measure results. This brings better teamwork and faster results.
Increases Investor and Stakeholder Trust
Investors want to see progress. Leaders want to know if the business is on track. SaaS metrics show real performance. They prove that your business is growing and stable. This builds trust and makes it easier to get support for funding or new plans.

10 Important SaaS Metrics To Be Tracked

1. Customer Churn

Customer churn is the share of customers who stop using the product within a set period.

Why It Matters

Churn is a clear sign of product satisfaction and customer experience. High churn means users are not finding value or facing issues. In 2025, B2B SaaS companies are seeing an average customer churn rate of around 3.5%, highlighting the growing focus on retention and long-term user value. Monitoring churn reveals whether users are satisfied and choosing to stay. Many users are unsure about what a good churn rate looks like or when to start tracking it.

How to calculate it

Customer Churn Rate = (Customers Lost during the Period / Total Customers at the Start of the Period) × 100

Example,

A SaaS company started the month with 1,000 customers. By the end of the month, 50 customers stopped using the service.

Churn Rate = (50 / 1,000) × 100 = 5%

This means 5 percent of the customers were lost during that month.

2. Revenue Churn

Revenue churn shows how much monthly recurring revenue is lost when current customers cancel or downgrade their plans. This includes cancellations and downgrades.

Why it matters

You may retain customers but still lose money if they downgrade. Revenue churn shows if your earnings are stable or shrinking. A healthy SaaS business must keep this low.

How to calculate it

Revenue Churn Rate = (MRR Lost from Existing Customers in a Period / MRR at the Start of the Period) × 100

3. Customer Lifetime Value (CLTV or LTV)

Customer lifetime value is the total money earned from one customer before they stop using the product. It shows how valuable a customer is during their time with the business.

Why it matters
LTV helps understand how much a customer is worth over time. It is useful for setting prices planning marketing spend and measuring results. A high LTV shows that customers remain with the business for a longer time and bring in more revenue. A low LTV may show that customers are not happy or not finding enough value in the product or service.

How to calculate it:

LTV = Average Revenue per Customer × Customer Lifetime

4. Customer Acquisition Cost (CAC)

CAC is the total money spent to get one new customer. It includes spending on ads marketing tools software content and team salaries. It shows how well a business turns leads into paying customers.

Why it matters
When CAC is high and LTV is low it becomes harder for the business to grow or stay profitable. It becomes hard to make profit. Tracking CAC shows how much is spent to get a customer and if that spend brings results. It also helps find the best channels that bring good leads at low cost.

How to calculate it
CAC = Total sales and marketing cost ÷ Number of new customers acquired

5. CAC to LTV Ratio

The CAC to LTV ratio compares the cost of acquiring a customer (CAC) to the total revenue that customer is expected to bring over their lifetime (LTV). This ratio helps SaaS businesses understand if their customer acquisition efforts.

Why it matters

This metric is key to knowing if the business model is sustainable. A healthy SaaS company should earn much more from each customer than it spends to acquire them.

How to calculate it

CAC to LTV Ratio = LTV / CAC

Example;

Let us say the Customer Lifetime Value (LTV) is $900, and the Customer Acquisition Cost (CAC) is $300.

CAC to LTV Ratio = $900 / $300 = 3:1

This means for every dollar spent on acquiring a customer, the company earns three dollars in return over that customer’s lifetime. This ratio reflects a stable and sustainable model for a SaaS business.

6. Months to Recover CAC

This metric shows how many months it takes to earn back the money spent to get a new customer. It helps track how fast the business recovers customer acquisition cost through monthly revenue.

Why it matters

Most SaaS products use monthly plans. Getting back the money spent on a customer quickly is important. Recovering CAC quickly supports faster growth and strong cash flow. Taking too long can slow progress and increase risk. How to calculate it

Months to Recover CAC = CAC ÷ Monthly revenue per customer

Example

If CAC is $300 and each customer pays $50 per month:

300 ÷ 50 = 6 months to recover CAC

This means it takes 6 months to recover the acquisition cost from that customer. After that point, the company starts earning profit from that relationship.

7. Renewal Rate

Renewal rate is a key SaaS metric that shows the percentage of customers who continue their subscription at the end of a billing cycle. It reflects how well the product or service meets customer needs and how satisfied customers are over time. Renewal rate can be measured in terms of customers, revenue, monthly recurring revenue (MRR), or total bookings.

Why it matters

A strong renewal rate shows loyal customers and steady recurring revenue. It sows that customers find value and are willing to stay long-term. A low renewal rate may signal problems with product fit, onboarding, pricing, or support. This metric is essential for understanding customer loyalty and guiding decisions on growth, product development, and support focus.

How to calculate it (Customer-based)

Renewal Rate = (Number of Customers Renewed / Number of Customers Up for Renewal) × 100

Example

A SaaS company has 120 customers whose subscriptions end this month. Out of them, 96 customers choose to renew.

Renewal Rate = (96 / 120) × 100 = 80%

This means 80% of customers continued their subscription, indicating solid customer satisfaction.

8. Revenue Retention

Revenue retention is a key SaaS metric that shows how much recurring revenue is kept from existing customers over a set period. It focuses on the value of customer accounts rather than the number of customers. Even if some customers leave, revenue retention may remain strong if the remaining customers grow in value through upgrades or expansions.

There are two main types of revenue retention that SaaS companies track

Net Revenue Retention (NRR):

NRR measures the total change in recurring revenue from a group of existing customers. It accounts for revenue lost from cancellations and downgrades, and adds revenue gained from upgrades, cross-sells, or expansions.

Formula

NRR = (Current MRR from a customer group / MRR from the same group one year ago) × 100

An NRR over 100% shows that revenue from current customers is increasing and driving growth. This often shows strong customer satisfaction and product fit.

Gross Revenue Retention (GRR)

GRR shows how much base revenue is kept from existing customers, without including any new income from upsells or price increases. It focuses only on revenue that was at risk of being lost.

GRR = (Current MRR – Upsell Revenue) / MRR from the same group one year ago × 100

GRR is always less than or equal to NRR. A high GRR means fewer customers are leaving or downgrading, which is a sign of strong customer loyalty.

9. MRR Growth Rate

MRR Growth Rate

Monthly recurring revenue (MRR) growth rate measures the percentage increase or decrease in recurring revenue over time. It reflects how fast a SaaS business is growing each month based on subscription revenue. This metric helps show whether the business is gaining traction in the market and building consistent revenue momentum.

Why it matters

MRR growth rate shows how well a SaaS business is growing. A steady increase often means the product fits the market, sales are working, and customers are happy. Investors and stakeholders closely monitor this metric to evaluate whether the company is scaling successfully.

How to calculate it

MRR Growth Rate (%) = [(Current Month’s MRR – Previous Month’s MRR) / Previous Month’s MRR] × 100

Example

A SaaS company had $420,000 in net MRR last month. This month, net MRR increased to $483,000.

MRR Growth Rate = [(483,000 – 420,000) / 420,000] × 100 = 15%

This means the company achieved a 15% increase in monthly recurring revenue. That level of growth is often considered strong for a business in the early growth stage.

10. Customer Monthly Growth Rate (CMGR)

CMGR shows how fast a SaaS business adds new customers each month. It compares new customers to the number at the start of the month.

Why it matters

This metric tracks how well marketing and sales are working. A high CMGR means strong demand or good product fit. A low CMGR may show trouble in reaching new users or issues in the sales process. Watching this over time helps keep growth steady.

How to calculate it CMGR = (New Customers ÷ Customers at Start of Month) × 100

Example

If a business starts the month with 150 customers and adds 18 new ones. CMGR = (18 ÷ 150) × 100 = 12% This means the customer base grew by 12% that month.

Leveraging SaaS Metrics Part of Core Business Workflows

To make SaaS metrics part of daily business workflows, follow these practical steps:

Assign specific people or teams to track each key metric. This creates ownership and ensures every important number is actively monitored and improved.
Discuss relevant metrics during regular team meetings. Sharing updates helps everyone understand current performance and stay focused on business goals.
Set up live dashboards for real-time visibility. Easy access to updated data allows faster decisions and keeps teams informed throughout the day.
Link key metrics to team objectives. When each team works toward a measurable outcome, progress becomes easier to track and align across the company.
Automate data analysing using tools like analytics software, and SaaS billing software. This saves time and improves accuracy.
Monitor trends over time instead of looking at one-off numbers. Watching how metrics move month to month reveals deeper patterns and growth opportunities.
Use the insights from metrics to guide real actions. Let the data show where to improve, test new ideas, or adjust business strategy when needed.

Conclusion

SaaS metrics are more than just performance indicators—they are essential tools for guiding business strategy, improving customer relationships, and driving sustainable growth. From tracking churn and CAC to measuring lifetime value and revenue retention, these numbers reveal what’s working, what’s not, and where to focus next.

Understanding the data is one part of the journey. Managing it effectively is another.

That’s where Revenue 365 comes in. Designed to help SaaS businesses manage subscriptions, monitor revenue, and track key metrics all in one place.

Start using Revenue 365 today and turn real-time metrics into smarter decisions.

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Frequently Asked Questions

What is the 5 pillar SaaS metrics framework?

The 5 Pillar SaaS Metrics Framework is a structured approach to tracking performance across critical areas of a SaaS business. It organizes metrics into five categories:

Growth – Tracks revenue, user, and pipeline expansion.

Retention – Measures how well the business keeps customers and recurring revenue.

Margins – Looks at gross and net margins to assess cost efficiency.

Financial Profile – Reviews metrics like burn rate, runway, and cash flow.

Sales & Org Efficiency – Examines how effectively the sales team and organization drive growth.

This framework helps SaaS metrics helps companies make data-driven decisions with a balanced view of performance.

What is a KPI in SaaS?

In SaaS, KPIs (Key Performance Indicators) are measurable values that reflect how well a company is meeting its business objectives. These indicators track growth, customer engagement, profitability, and operational efficiency. Common SaaS KPIs include churn rate, MRR, LTV, and CAC. Monitoring these metrics helps leadership understand what’s working and where to improve.

What is the efficiency metrics of SaaS?

Efficiency metrics in SaaS measure how effectively a company uses its resources to drive growth and revenue. They help assess whether the business is scaling in a cost-effective way and maintaining healthy unit economics.

What is the key metric of SaaS?

While SaaS companies may track dozens of metrics, the most critical ones are Customer retention, Monthly recurring revenue (MRR), Churn rate, and Customer acquisition cost (CAC). These core metrics provide a clear view of growth, profitability, and customer health. However, the most important KPI may vary based on business stage, goals, and product model.