# What SaaS KPIs Should You Be Tracking?


<br>As a software as a service (SaaS) business, you need to keep track of certain key performance indicators (KPIs). This is the only way for you to gain insights into how your business is performing, how effective your marketing efforts are, and how profitable your services are. By tracking the right KPIs for your SaaS business, you can gauge whether or not changes need to be made so that you can optimize operations and increase profitability.

<h2>Types of SaaS KPIs</h2>

There are several different types of KPIs that every SaaS business should be tracking. Some of the most important include customer acquisition cost (CAC), lifetime value (LTV), customer churn rate, average revenue per user (ARPU), and monthly recurring revenue (MRR). Together, these metrics will provide an overview of the health of your business.

<h2>Customer Acquisition Cost (CAC)</h2>

CAC measures the cost associated with acquiring each new customer. It is calculated by dividing total sales and marketing costs over a given period by the number of customers acquired during that time frame. Knowing this figure helps you determine if your marketing spend is worth it in terms of acquiring new customers. The lower your CAC, the better because it indicates that you are spending less money on marketing for each new customer gained.

<h2>Lifetime Value (LTV)</h2>

The LTV metric is all about gauging how much money each customer brings in. It tells you whether or not certain customers are more valuable than others based on their spending habits over time. A high LTV indicates that customers who stay with your company longer bring in higher amounts of revenue over time. This helps you identify which types of customers should be targeted to maximize profitability.

<h2>Customer Churn Rate</h2>

Your churn rate gives insight into how many customers have stopped using your services within a given period of time—and why they decided to leave. Knowing this information helps you identify potential problems with your product offerings or other areas in need of improvement so that fewer customers decide to leave in the future and more stick around long-term instead.

<h2>Average Revenue Per User (ARPU)</h2>

ARPU measures how much money each user brings in through monthly subscriptions or other services provided by your company on an individual basis. Knowing this metric helps you understand which services make up most of your income stream and where there may be room for improvement when it comes to pricing structures or additional product offerings designed specifically for certain users who tend to bring in more revenue than others do.

<h2>Monthly Recurring Revenue (MRR) </h2>

MRR tells you how much money comes in from subscription-based services every month—and this figure does not include one-time purchases or any other non-recurring sources of income for your company such as consulting fees or training packages offered at regular intervals throughout the year. Having an accurate picture here helps ensure that financial projections stay on track month after month while also helping plan ahead for future growth opportunities based on existing subscriptions alone without taking additional factors into account yet.

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<h2>Conclusion: </h2>

Tracking key performance indicators is essential if you want to get a clear idea about where things stand with regards to the health and overall performance levels achieved by your software as a service business over time. The five main KPIs—customer acquisition cost, lifetime value, customer churn rate, average revenue per user, and monthly recurring revenue—are particularly important because they provide insight into different areas such as financial performance, consumer behavior patterns, marketing effectiveness levels achieved by various campaigns used to acquire new customers and retain existing ones alike, and so forth. By focusing on these five KPIs alone already provides a good starting point when it comes to getting started with tracking data related to running a successful SaaS business—but don’t forget about all those other metrics out there too! The more data points tracked accurately over time will help paint an even clearer picture regarding where improvements need to be made most urgently so that profitability can continue increasing long-term too!