12+ Important SaaS Metrics To Track In 2023 (+ Benchmarks)

The growth and profitability of your SaaS company depends on a variety of crucial parameters known as SaaS metrics. 

These metrics shed light on your company’s current and future health and can help you identify performance issues before they escalate into significant problems. 

But with so many metrics to consider, it can get tricky to figure out which ones are the most relevant to your business and how to get the best results for them. 

Not to worry — we’ve got you covered.

In this article, we’ll define what SaaS metrics are and discuss the 12 key metrics you should be tracking. We’ll also provide a few helpful tips to improve these metrics and answer two popular questions about them.

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Let’s get to it!

What Are SaaS Metrics?

SaaS metrics are the key health and growth indicators for your SaaS company. These metrics track various aspects of the business, such as customer acquisition, retention, revenue, and profitability.

Tracking such metrics can help you:

  • Track performance across departments
  • Predict the cash flow and plan for the future
  • Accurately predict customer churn
  • Make adjustments to business strategies when necessary 
  • Determine if the company is growing sustainably
  • Make data-driven decisions 

Now, you could actively track dozens of Saas metrics, but that would most likely overwhelm you. Besides, some metrics are more important than others. Let’s discuss what those are. 

12 Key SaaS Metrics You Should Be Tracking

Below, you’ll find 12 popular metrics that’ll help boost your SaaS business’s growth and productivity. We’ll explain how to calculate each metric and share SaaS industry benchmarks to aim for. 

1. Activation Rate

Activation rate is a key metric that measures the percentage of customers who complete a specific milestone in the onboarding process or reach their “aha! moment.” This could be anything from logging in on successive days or using a specific feature.


Activation Rate = (Number of users who attained the activation milestone / Total number of users who signed up for the product) * 100


Although activation rate benchmarks depend on your company’s services and what your milestones are , most SaaS companies aim for a 40% activation rate.

2. Customer Acquisition Cost and Payback Period

Customer Acquisition Cost (CAC) is a metric that highlights the average money a company spends to acquire a new customer, including all marketing campaign expenses.

The CAC payback period is the number of months it takes to recover the money spent on acquiring a new customer.


CAC = Total amount spent on sales and marketing for a given time period / Number of customers acquired in the given time period

Payback Period = Customer Acquisition Cost / (Monthly Recurring Revenue *Gross Margin)


According to a report by FirstPageSage, the average CAC for a small, B2B SaaS company is $891. Whereas for an enterprise-level company, it’s around $7,430.

SaaS companies should aim for a payback period of fewer than 12 months.

3. Annual Recurring Revenue and Monthly Recurring Revenue

Annual Recurring Revenue (ARR) is your annual expected recurring revenue from subscriptions, while Monthly Recurring Revenue (MRR) is your recurring revenue on a monthly basis. 

You can use ARR and MRR growth rates to gauge your business’s performance for a given period.


MRR = Total number of customer accounts * average monthly revenue earned per account

ARR = MRR * 12

ARR Growth Rate = [(ARR for the current year – ARR for the previous year) / ARR for the previous year] * 100

MRR Growth Rate = (New MRR – initial MRR0 / Initial MRR * 100

“Initial MRR” is the revenue at the beginning of the month whereas, “new MRR” is that at the end of the month.


While the ideal recurring revenue will heavily depend on your product and its pricing, you can aim for certain recurring revenue growth rates.

The median ARR growth rate for SaaS companies with less than $2.5 million ARR is 84%, while that for a business with an ARR of $10-25 million is 47%.

In the case of MRR, the growth rate for SaaS companies should be around 10-15%.

4. Expansion Revenue

Expansion revenue is a key SaaS metric that tracks the additional MRR generated when an existing customer upgrades their account/purchases more features (upselling) or buys additional products (cross-selling). 


Expansion Revenue = Total MRR generated from upselling and cross – selling.


The expansion MRR should form about 20%-30% of the total revenue of your SaaS company. 

5. Customer Lifetime Value

Customer Lifetime Value (CLV) is the total revenue that a single customer account is expected to generate over its lifetime, i.e., from acquisition to subscription cancellation. CLV is often used with CAC to determine the net revenue earned over a customer’s lifetime. 


CLV = Average value of a purchase * Annual purchase frequency * Average customer lifetime (years)


There isn’t a specific benchmark for Customer Lifetime Value; it largely depends on your price plans and average customer lifetime. 

6. Average Revenue per Account

The Average revenue per account (ARPA) is the average revenue generated through each customer account. 

If your MRR (monthly recurring revenue) has increased, ARPA helps determine if it is due to new customers or because of subscription upgrades by the existing ones. In the first case, the ARPA would remain almost the same, whereas, in the second, it would be higher.


ARPA = MRR / Total number of user accounts


This metric will vary across companies depending upon the services on offer and the pricing plans. However, you can use your own company’s ARPA from the last year as a benchmark for comparison.

7. CLV to CAC Ratio

The CLV to CAC ratio is a key SaaS metric that compares your customer lifetime value against your customer acquisition cost. This will tell you if you’re spending too much on acquiring new customers for your SaaS business.


CLV to CAC ratio = CLV / CAC


The CLV to CAC ratio benchmark for the SaaS industry is any value greater than 3:1.  

8. Gross Margin

Your gross margin is the total revenue your SaaS company earns minus the Cost of Goods Sold (COGS). Since SaaS companies don’t produce physical products, the COGS usually refers to the money spent on delivering and maintaining your software product.


Gross Margin = (Total Revenue-COGS) / COGS * 100


A healthy gross margin for private SaaS companies is around 70-85% of the total revenue.

9. Net Revenue Churn Rate

The net revenue churn rate refers to the monthly recurring revenue that a SaaS company loses due to subscription cancellations and account downgrades. It’s a metric that takes into account expansion revenue as well, providing a more comprehensive picture of the company’s revenue loss.


Net Revenue churn rate = [(Churn MRR- Expansion MRR) / Beginning MRR)] * 100


The average net revenue churn rate for the SaaS industry is 5–7% per year. However, for SaaS startups, a net revenue churn rate as high as 10–15% is also considered acceptable.

10. Customer Retention Rate

Customer retention rate is the percentage of customers who continue using a SaaS product for a given time period out of the total number of customers at the beginning.


The Customer retention rate for a given time period is given as:

Customer Retention Rate = (Number of customers at the end – Number of customers gained) / Number of customers at the beginning * 100


The average monthly customer retention rate is 92-97%, while the average annual retention rate is 50-68% for SaaS companies.

11. Customer Churn Rate 

The Customer churn rate tracks the percentage of lost customers over a given time period and is the opposite of the customer retention rate.


Customer Churn Rate = Number of customers who canceled their subscription over a certain period / Total number of customers over the same period * 100


A monthly customer churn rate of 5–7% is generally considered to be acceptable for a SaaS company. However, you should aim to keep it as low as possible to preserve your customer base.

12. Net Promoter Score

Net Promoter Score (NPS) is a key metric related to customer success that can help SaaS companies gain insight into customer satisfaction and loyalty. To determine NPS, simply ask an existing customer about their willingness to recommend your product to others — on a scale of 1-10.


NPS =(Number of promoters / Total number of surveyed users * 100) – (Number of detractors / Total number of surveyed users * 100)

Here the different categories of users are defined as:

  • Detractor: A customer who responds with a score from 0-6.
  • Passives: A customer who responds with a score of 7 or 8 (not factored into the NPS calculation).
  • Promoters: A customer who responds with a score of 9 or 10.


The average NPS score for the SaaS industry is 36, and a score above 50 is considered impressive. A score greater than 80 is considered to be outstanding.

Now that we’ve covered the key SaaS metrics, let’s discuss how they can be improved.

4 Helpful Tips to Improve Metrics for Your SaaS Company

Having your SaaS metrics match up to the industry benchmarks is important if you want your product to grow sustainably and outpace competitors.

Here are a few tips to help you improve your SaaS metrics:

1. Choose the Relevant Metrics for Your Company

It’s crucial to choose metrics that align with your SaaS company’s growth stage. For example, a young startup should focus on tracking metrics that are critical to its survival and growth, such as CAC, MRR, and CLV.

On the other hand, an established SaaS business should track a broader range of metrics, including the Net Promoter Score, churn rate, expansion revenue, and churn MRR. 

These metrics help established businesses optimize their existing operations, improve customer retention, and identify new revenue streams.

Additionally, you should consider employing a powerful analytics tool such as Google Analytics to accurately calculate and keep track of the key metrics for your company.

2. Conduct Pricing and User Behavior Surveys

To ensure the growth and profitability of your business, evaluate your pricing packages and ensure that they are in line with industry standards. Overpricing or underpricing your products can increase customer churn rate and lower CLV and cash flow.

Additionally, conduct user behavior surveys to get a clear picture of what your customers like and dislike about the products or services on offer. 

Gathering customer satisfaction feedback and implementing changes can help you reduce customer churn and increase your renewal rate and expansion revenue. Also consider performing cohort analyses regularly.

3. Adopt a Product-Led Growth Strategy

Product-led growth (PLG) companies rely on the product and user experience – not marketing – to drive customer acquisition. As a result, you benefit from a lower customer acquisition cost. 

In a PLG strategy, customers gain first-hand experience with the product through a free trial or freemium plan, helping them actually discover your product’s value proposition.

4. Implement an Effective SEO Strategy

SEO can help boost the organic traffic to your website, reducing your reliance on paid advertising. This, in turn, helps lower customer acquisition costs and generate brand awareness. 

An effective SEO strategy that targets keywords your target persona searches for will help you direct the right customers to your business. This means a better conversion rate and less time wasted by your sales and marketing teams chasing after leads who’ll never convert.

Moreover, the right content strategy can help you educate potential customers and nurture existing ones, building customer loyalty and reducing your churn rate.

FAQs About SaaS Metrics

Here are the answers to two crucial FAQs about SaaS metrics:

1. What Is Cohort Analysis?

A cohort analysis is a technique used in data analytics to group and study sets of users in your customer base who share a common characteristic or experience within a specific time frame.  

The technique can help SaaS companies better understand customer retention, customer churn rate, and lifetime value.

A cohort analysis can be categorized into:

  • Acquisition Cohort: Here, the customers are grouped on the basis of when they signed up for your products or services.
  • Behavioral Cohort: This divides the users into groups based on the factors such as:
    • How they interacted with your product or service.
    • The channels they were acquired through.
    • Their persona (roles and companies that they belong to).

2. What Is the Rule of 40?

The rule of 40 is a popular metric that investors use to gauge SaaS growth. It states that for a healthy SaaS company, the sum of revenue growth rate and profit margin should exceed 40%. 

For example, a company with a revenue growth rate of 20% should have a minimum profit margin of 20% (because 20+20=40).

Use the Right Metrics to Take Your SaaS Business to the Next Level

These SaaS metrics help you predict and plan the future course of your SaaS company and address the concerns that may limit its growth.

Remember to regularly track them and update the metrics you prioritize based on the stage your SaaS business is at. 

Additionally, if you want to skyrocket your growth with an effective SEO and content strategy, contact Startup Voyager. We’ve helped numerous SaaS companies from all kinds of industries grow their traffic exponentially by ranking in the top 3 search results.

With our impressive content and SEO services, you can attract more potential customers to your website, nurture them with ease, and ensure customer success.

About the author

Startup Voyager is a content and SEO agency helping startups in North America and Europe acquire customers with organic traffic. Our founders have appeared in top publications like Entrepreneur, Fast Company, Inc, Huffpost, Lifehacker, etc.