As a SaaS business matures, the importance and value of SaaS metrics
increase. Most SaaS businesses begin their journey down the SaaS metrics path
by tracking recurring revenue in relation to customer acquisition costs.
After building a solid customer base, churn becomes a priority. These
fundamental SaaS metrics are all apparent in the standard SaaS profit
SaaS profit =
current customers x ( avg recurring revenue – avg recurring cost )
– new customers x avg acquisition cost
However, it quickly becomes apparent that fighting churn requires a SaaS
metrics toolkit that digs significantly deeper than simple financial metrics.
Operational metrics are needed that connect day-to-day business reality to
financial performance. It is this realization that gives birth to the new
Metrics-driven SaaS Business as it discovers the goldmine of SaaS customer
We are witnessing a dramatic change in the way SaaS businesses are managed.
While SaaS financial metrics, such as recurring revenue, acquisition cost,
service cost, churn, growth and lifetime value have dramatically increased
our understanding of the economics of SaaS businesses, they have proven
inadequate for managing them. As useful as they may be, SaaS financial
metrics look at the past, not the future. They can tell you that you have a
problem with churn, but they cannot tell you what you should do about it.
Motivated by the need to better understand churn, many Sa... (more)
The SaaS community has gained a solid understanding of SaaS financial
metrics, as well as many of the operational principles required to achieve
them. However, there has always been an obvious gap between what happens on
the top line and what happens on the ground. This is about to change! The
SaaS industry is maturing beyond simple, historical SaaS financial measures
toward sophisticated operational measures in the form of new SaaS customer
success metrics and predictive analytics. We are witnessing the emergence of
The Metrics-driven SaaS Business.
This new Ebook is... (more)
A few months back, Gartner placed big data at the peak of its hype cycle for
cloud computing, meaning most big data products are solutions looking for a
problem. I always find this bad entrepreneurial habit to be one of the most
frustrating of our industry. Having recently joined Meltwater as head of
marketing and product (BTW Meltwater is hiring marketing and product
managers!), I think a lot about big data and how to unleash it’s value to
solve important business problems, because that is our business. How does big
data go from “so what” to “must have”?
The Big Data Challenge
Over the past few years, the SaaS community has gained a solid understanding
of SaaS financial metrics, as well as many of the operational principles
required to achieve them. However, there has always been an obvious gap
between what happens on the top line and what happens on the ground. It’s
one thing to claim that a 50% reduction in churn will result in a 2X increase
in recurring revenue, but it’s quite another thing to make it happen.
Achieving that 50% reduction in churn is usually a tedious and unreliable
process of trial and error. This is about to change. As the SaaS ind... (more)