SaaS Metrics That Actually Matter (And the Ones That Don't)

MRR, churn, LTV, CAC - there are dozens of SaaS metrics. Here are the ones worth tracking and the ones that are just vanity.

If you're building a SaaS product, you can drown in metrics. Every analytics tool wants you to track everything. The result is usually a dashboard with 30 charts that nobody looks at. Here are the metrics that actually change how you make decisions.

The big three

Monthly Recurring Revenue (MRR): how much predictable revenue comes in each month. Net Revenue Retention (NRR): are existing customers spending more or less over time? Churn rate: what percentage of customers leave each month. If you only track three things, track these.

The ones that matter for growth

• Customer Acquisition Cost (CAC): how much you spend to get a new customer
• Lifetime Value (LTV): how much a customer is worth over their entire relationship
• LTV:CAC ratio: should be at least 3:1 for a healthy business
• Time to value: how long from signup to the user getting real value from the product
• Activation rate: what percentage of signups actually start using the product

The vanity metrics to ignore

Page views, total registered users, and app downloads are feel-good numbers that don't tell you anything about the health of the business. A SaaS product with 10,000 registered users and 200 active ones is not doing well. Focus on active usage and revenue, not signups.

Ben Arledge

CEO & CTO, CloudOwl