Article · 45 min read

SaaS Metrics 2.0: A Guide to Measuring and Improving what Matters

David Skok · For Entrepreneurs Free Intermediate

The piece that set the vocabulary the whole industry now uses for LTV, CAC and churn, still the best single explanation of why a SaaS business is measured differently. Long, but you only need to read it once.

  • The best SaaS businesses run LTV to CAC above 3, sometimes as high as 7 or 8.
  • They recover CAC in 5 to 7 months; past 12 months profitability goes anemic.
  • Net revenue churn above 2 percent a month is a warning sign, since that compounds to roughly 22 percent a year.
  • Everything reduces to three jobs: acquire customers, retain them, monetise them.
Open on forentrepreneurs.com ↗

It answers 2 questions

  1. How do I work out CAC payback when I do not have a finance team?
  2. Which handful of GTM numbers should a first time founder actually track?

Read with it

  1. The formula reference: CAC, months to recover CAC, magic number, net MRR churn and NRR, each with the calculation spelled out.... For Entrepreneurs Article · 20 min read SaaS Metrics 2.0: Detailed Definitions David Skok
  2. Video · 40 min Mastering Startup Math: TAM, CAC, Churn, Retention, LTV, Payback and more Shripati Acharya and Amit Somani
  3. From the Chennai billing company that sees these numbers across thousands of subscription businesses, each KPI with a... Chargebee Article · 22 min read 32 SaaS KPIs Every Company Should Track Haris Kumar
  4. Organises metrics by company stage instead of dumping all of them on you at once, which is exactly what a founder tracking... Chargebee Article · 25 min read Important SaaS Metrics to track at every stage of your business Chargebee
  5. A short India-authored primer on the five metrics that matter early, plus a clean explanation of leading versus lagging... SaaSBoomi Article · 6 min read SaaS Metrics SaaSBoomi
  6. Deliberately picks nine metrics instead of forty and argues for a focused set, which is the right instinct for a small team.... Factors.ai Article · 10 min read 9 SaaS Marketing Metrics You Should Be Tracking Ranga Kaliyur
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