Everything bootstrapped founders need to know about SaaS metrics.
What SaaS metrics should you be tracking, and how often? In this guide, we’ll share what metrics we track for our own portfolio of businesses and why, what we recommend for bootstrappers, and what steps you should take around metrics if you’re thinking about selling your SaaS.
By Tom Kincheloe
VP of Product
There’s a ton of info out there about SaaS metrics, and not to get too meta, but there are also a lot of SaaS companies out there that specialize in tracking SaaS metrics with the ability to go deep on details.
However, tracking metrics is one of those things where it can be hard to find a happy medium or know you’re doing it “right.” A lot of bootstrapped founders know their MRR but rarely look at Google Analytics. Others obsess over minutiae that may not be actionable or pay for expensive tools they may not need.
Over the past five years, we’ve looked at thousands of businesses to acquire the 30+ in our portfolio, and no two founders have tracked things exactly the same way. Running a portfolio means we need to be able to scale, so we’ve developed our own playbooks on SaaS metrics for what we review when we’re looking at a company for acquisition, and what we track when we acquire a SaaS product and it moves over to our team.
We’ve broken this guide into sections to help you navigate different categories depending on where your interests lie and what stage of business you’re in.
In this guide:
- Revenue-related SaaS metrics
- Customer retention metrics
- Customer happiness metrics
- Google Analytics metrics
- Other business metrics
- How often to track
- Apps we recommend
- Metrics considerations for an exit
Before we jump in: A note on when to start tracking SaaS metrics
If you’re still in the “launch” phase, track the basics on revenue and customer happiness and set up Google Analytics. Then bookmark this page and come back to it when you’ve really figured out your product offering and pricing strategy to get more detailed in your tracking.
When you’re just getting your product out the door, your stats are going to be jumping all over the place, and you’re going to be spending either money (or more likely your sweat equity) hard.
You need an MVP product to take to market, then you need to drive the heck out of lead generation. After that, you’ll reach a point where you have enough meaningful traffic that “tracking everything” starts to make sense. If you track everything too early, you can wind up making poor decisions based on data you think is good, but in reality, is rubbish.
So the full list of metrics here is something you want to start looking at when you’ve ironed out your product offering and pricing strategy and you’re moving into your “stabilize” and “grow” phases (see our interview with SaaS Founder, Arvid Kahl for more on those phases).
MRR (Monthly Recurring Revenue)
This one’s pretty obvious and we’ve never seen a serious bootstrapper who doesn’t track it, so we won’t dive super deep on the “what” or “why” for this one — but yeah, it’s a good idea to know how much money you bring in each month. And if you have a services (or hardware, etc.) side of your business, make sure you can easily separate out that non-recurring revenue.
In the beginning, it’s fine to just track revenue monthly. We actually track revenue for all of our portfolio companies on a weekly basis though (some even daily), in addition to monthly.
Why? Because it makes it a lot easier to spot both opportunities and issues. A lot can happen in a month. I don’t want to be finding out we had a major customer service boo-boo that cost us 10% of MRR at the end of the month if it happened on the fifth.
Likewise, if we have a crazy good week, I want to know why, and how we can repeat that, or capitalize on it. Hindsight isn’t 20/20 in this case because it can get hard to decipher why you had a great month or a down month.
It’s also worth noting that a lot of bootstrappers have a really specific goal for MRR that they want to hit. We’ve heard magic numbers of $50k in MRR, or some people want to hit $1M in annual revenue, so they break that down to hitting $83,333.33 in MRR.
Goals are great, but you should know that you don’t need to hit a magic number for a successful exit. Our Co-Founder and CEO, Kevin McArdle had a great interview on types of buyers at every level of MRR with Steve McLeod on the bootstrapped.fm podcast.
Besides that, MRR isn’t necessarily the primary metric you should be looking at to maximize your value. If you hit that magic number, but your growth rate slowed from 100% YoY at 90% of that MRR goal to 10% YoY once you hit it, you’re not going to get as high a SaaS multiple if you go to sell. So, there are moments where chasing MRR can actually hurt your value.
So, by all means, set ambitious goals for MRR. But just make sure this isn’t the only thing you’re tracking if you’re thinking about an exit and maximizing your company’s value.
If you’re in your business for the long-haul and aren’t planning on selling soon, then you should think about where MRR and your quality of life overlap best (as in an MRR number that allows you financial freedom but doesn’t require 80 hours of your week to maintain). And even if you’re in this camp today, we still recommend planning for an exit to cover your “what if” scenarios.
ARR (Annual Recurring Revenue)
There are two metrics with the ARR acronym. It’s not super common for bootstrappers, but if you only offer an annual plan, or multi-year subscription or contract terms, you’ll want to measure Annual Recurring Revenue vs. MRR as your main revenue metric.
However, if the majority of your customers are on a monthly plan, you should stick with MRR as your main revenue metric, and just be sure you’re measuring revenue from annual plans correctly in it (i.e. don’t count a full year’s payment in your monthly figures since it won’t recur the next month).
If you want to dive deeper into this topic, ProfitWell has a great article on annual plans and why they’re worth testing out.
ARR (Annual Run Rate)
Current MRR x 12
ARR is also used to refer to Annual Run Rate or Annualized Run Rate, and that’s what we measure across our portfolio. Annual Run Rate is a forward-looking measure of your revenue, and it’s calculated by multiplying your current MRR by 12.
It can be useful to help project and benchmark revenue, but it’s a pretty simplistic method of forecasting, and it doesn’t take into account any volatility or seasonality in your business, so be wary of just multiplying a great month by 12.
For bootstrappers, Annual Run Rate usually only really needs to be measured if you’re thinking seriously about an exit or bringing on investors, and those buyers and investors are typically also going to be very interested in your actual revenue history. Which brings us to…
TTM Revenue and TTM Profit (Twelve Trailing Months Revenue and Profit)
These are two backward-looking revenue metrics you might see if you’re thinking about an exit (or bringing on investors) where TTM is “Twelve Trailing Months.” They’re helpful to a buyer or investor to see how your history and projections line up.
If you’re bootstrapping and not thinking about bringing on investors or selling, you don’t need to track these, but it’s helpful to know the terms.
A note for SaaS products without “recurring” revenue
While many SaaS products are based on monthly or annual pricing plans, others price based on something else like usage. In those cases, just remove the “recurring” from what you measure.
We still look at revenue weekly and monthly for the non-subscription products in our portfolio, and we also look at Annual Run Rate to help forecast.
What do buyers look for in all of these revenue metrics?
You should know that some types of buyers will want to see more stability in your MRR numbers than others. SureSwift definitely falls into this camp since our business model is to hold and grow the products we buy — essentially we trade capital for cash flow. That means we’re wary of what our VP of Acquisitions, Chris Reedy, calls “lumpy” revenue.
A strategic buyer might not care about big jumps (or lumps), because they’re not necessarily buying your cash flow and might be more focused on filling their own product gaps.
Gross Margin or Gross Profit Margin
(Revenue – Cost of Goods Sold)/Revenue
Just like it’s a good idea to know how much money you’re bringing in each month, it’s a good idea to know how much of that money goes into running the business, and how much you get to keep (or reinvest, etc). Some bootstrapped SaaS companies can have extremely high gross margins — 70-80% is not uncommon for a niche, B2B SaaS with a solo Founder or small team.
For most bootstrappers with subscription-only revenue streams, the formula for Gross Margin is pretty simple: (Monthly Revenue – Cost of Goods Sold)/Monthly Revenue = Gross Margin.
If you have a more complex business model with subscriptions, services, hardware, etc., here’s a post from the SaaS CFO blog on categorizing things correctly in your accounting software so you can back out your Cost of Goods Sold and Gross Margin by revenue stream.
ARPU (Average Revenue Per User)
Revenue/Number of Paid Accounts
You need to know your ARPU (sometimes also referred to as ARPA, with the final “A” meaning “Account,” or ARPS, with the “S” meaning “Subscriber” in Stripe’s dashboard) in order to calculate other metrics, like Customer Lifetime Value.
This simple calculation can also reveal a lot of details about how well your pricing strategy is working when tracked over time. So, it’s an important metric for bootstrappers to know, and since it’s pretty easy to track it’s worth keeping it on a monthly dashboard.
ARPU can also be a pretty telling story about a company’s go-to-market and competitive strategy, with low-ARPU products being a strong fit for large numbers of self-serve users, and higher-ARPU products needing more work to sell and manage high-dollar accounts.
Most SaaS businesses bill monthly, so it makes sense to use monthly revenue, and then the only other thing you need to know is how many paid accounts you had that month, which you can grab right out of your Stripe (or whatever payment processor you’re using) dashboard. (Don’t include free or inactive accounts in your calculation to avoid dilution.)
There’s no “right number” for ARPU since SaaS products can vary wildly on pricing, but try to benchmark for your niche and go-to-market strategy. If you can’t find any peers who are forthcoming with data, at least benchmark against yourself over time. Increasing the amount of revenue you bring in per customer is a big win, and frankly, many bootstrappers undercharge for their products.
Check out this post by Mention, a SaaS that helps customers track brand mentions, on how they increased ARPU by 296% by making 3 fixes to their pricing strategy. You gotta track ARPU to track those kinds of wins (or figure out if your brilliant new pricing strategy accidentally screwed the pooch).
LTV (Lifetime Value)
CAC (Customer Acquisition Cost)
Cost of Marketing and Sales/Number of Customers Acquired
Let’s talk about these two metrics together, because they’re typically looked at together — but know that most bootstrappers don’t (and don’t need to) get deep into tracking CAC. That’s because most bootstrappers are focused on no-cost and low-cost growth strategies, and CAC is typically used by businesses spending more money on growth.
We’ll take LTV first. You’re going to find different formulas floating around for LTV. Thankfully for most SaaS businesses, it’s not nearly as complicated to calculate this metric as it is for something like an eCommerce store.
Just keep in mind that the goal is to have an estimate of the average amount of money you make from a customer over the lifetime of their account. And you really want to know that metric so you can make sure your marketing costs make sense. LTV can also help you figure out how long your payback period is on marketing activities (longer payback = higher risk).
A lot of bootstrappers underspend on growth and marketing because it’s not their area of expertise. But using LTV and Cost to Acquire (CAC), which we’ll get to in just a second, can definitely give you more confidence in running some experiments.
If you know the Lifetime Value of a Customer is $379.81, spending $40 to acquire a new one doesn’t seem so unreasonable, right? But spending $400 on one sure would, which was the criticism a lot of number-savvy folks had when D2C brand, Casper went public in early 2020.
And yes, of course, you’re going to favor and put energy into lower-cost acquisition channels, but as we’ll get to later in the analytics section, you need to have a healthy multi-channel strategy for sustained growth. If you’re reliant on a single channel like SEO for growth, something as simple as Google changing their algorithm can tank you, which I can tell you from experience really sucks.
LTV: CAC Ratio
As I mentioned above with CAC, most bootstrappers don’t need to track this metric since they’re not doing major spending to acquire their customers. But there are some more mature bootstrapped companies out there making bigger marketing spends, and they’ll want to keep an eye on their LTV:CAC ratio.
A ratio of 3:1 is considered the “classic” benchmark when it comes to this metric. For bootstrappers, we typically see that benchmark move to 4-6:1. Higher than this and you may not be spending enough on important aspects of running your business, or you may be leaving growth on the table by underspending on marketing or sales.
If you go below 3:1, either there’s a lot of inefficiency in your operations (which isn’t typical for bootstrappers), you’re in a really competitive niche where it costs a lot to acquire new customers, or you’re spending a lot on growth activities that aren’t working.
A final revenue note: Track those expenses
When it comes to accounting, we get it — a lot of bootstrapped SaaS companies start out as side projects, and getting your MVP out the door and landing your first paying customers gets prioritized over things like super tidy accounting.
But once you’re past that initial launch stage, don’t keep giving yourself an easy out. Some of the revenue metrics we just reviewed are pretty meaningless if you don’t understand your costs.
So do yourself a favor, and open a separate business bank account. There are digital banks just for entrepreneurs opening up globally that are easy to set up, charge low or no fees, and have no minimum balance.
Use something like QuickBooks, or at least set up a spreadsheet to track and categorize your expenses. If you set aside an hour or two for accounting each month, it won’t turn into a gigantic annual hassle. Knowing all the expenses for a product makes your decisions better, too!
And if you’re thinking about a sale someday, be sure a buyer will be able to easily categorize expenses that will definitely pass over to a new owner (like your web hosting, payment processing fees, etc.) and ones that won’t (your health benefits, any company retreats, etc.).
You’ll want to be able to easily share financials in this way to figure out your SaaS valuation. The time and cost of having clear, consistent tracking of expenses will pay off in a clear picture of your business that will make it easier to put a premium value on it. (Just start thinking of accounting as a favor to your future self.)
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Number of Paid Customers
Easy to track via Stripe, or your payment processor dashboard, and used to calculate a lot of other metrics. Enough said.
While we typically only think of getting a new paid customer as an “activation,” it’s a good idea to be tracking both your web to trial conversion rate and your trial to paid conversion rate, particularly if you’re operating on a freemium model.
If your SaaS is a mobile app, you can think of “trials” as people who click the app store links from your marketing site (i.e. track those clicks), and “activations” as new paid customers in your app.
Whatever you decide activation is for your business, just be clear on what you call it and have everyone use the same terminology or it gets confusing for the team.
Number of Customers Who Failed to Renew/Total Number of Paid Customers
There are actually two types of churn: Logo Churn and Revenue Churn. Churn Rate is often used interchangeably with Logo Churn, which is just a measure of how many customers fail to renew their subscription or use your services during a specific time period.
So if we’re looking at it monthly, Churn Rate = the number of customers who failed to renew divided by the total number of paid customers during the same time period.
Revenue Churn is simply a measure of how much money those customers represent. If you want to get nitty gritty, that’s technically Gross Revenue Churn, and Net Revenue Churn would also look at how much revenue you gained over the same time period through upgrades.
Within Logo and Revenue Churn, there are also subtypes of Voluntary and Involuntary Churn. Voluntary is purposeful cancellations, and Involuntary is when a card fails or some other hiccup with auto-renewal causes you to lose a client. This is where Dunning (repeated attempts to charge cards and tailored emails are launched) comes in.
While it’s good to understand all these terms, as a bootstrapper you’re probably going to focus on Logo Churn when it comes to regular tracking.
We’ve been asked a lot in our valuation webinar what we consider a “good” Churn Rate. The answer is, it depends on your business. Some niches have a much higher churn than others — CRMs for example tend to have higher churn than other industries.
But if your monthly churn is over 10% it’s really hard to grow that business unless you have hyper growth. The higher the churn, the leakier your bucket, and the more effort and money you need to put into marketing and growth.
That might be okay if you want to operate your business for a long time, but if you’re looking to sell, it might limit you a bit on the type of buyer who’ll be interested in your company to strategic buyers, competitors, or someone looking for a “bolt-on” SaaS.
That said, we have occasionally bought businesses with higher churn if those businesses had a great growth rate, a low CAC, and a large potential market (or Total Addressable Market — TAM — since we’re nerding out on metric names here).
We’ve also seen some businesses with negative Net Revenue Churn, where upgrades more than offset the cost of customers who didn’t renew, and that’s obviously pretty appealing to a buyer.
You can start tracking a lot of customer happiness metrics early on since support is going to be a massive part of what you’re working on in those early days of your business. And for these, we’d recommend looking at them weekly vs. monthly because it’s such an important function. Plus, if you’re using a tool like HelpScout, which is what we use for our portfolio, it should be easy to grab all of these.
This is also one of the first functions we recommend hiring for so it’s good to get a baseline going to understand how to set goals and expectations for that magical day when you can take this important, but time-consuming task off your plate.
Customer Happiness (aka Conversation Happiness)
Suggested Benchmark: 80%
One of the easiest ways to track how you’re doing with customers is to allow them to use support ratings to tell you how you’re doing.
After a support ticket closes, the customer should be prompted with a one-question survey that asks how the conversation went. Depending on which platform you use to manage support, this could be measured by emojis or words like “Great,” “Okay,” and “Not Good.”
While this metric doesn’t give you a specific reason why the customer rated the conversation the way they did, it allows you to get an overall picture of how you or your team is performing, and look a little deeper into why you may have received a negative rating.
It’s tempting to set a goal of 100% here, and there’ll be weeks you hit that customer-love high, but it’s best to set a realistic goal. Sometimes you’ll get a bad rating because you don’t offer a feature someone wanted, or someone was just having a bad day. Going with an achievable 80% means you (or your reps) won’t feel disheartened by those small setbacks.
Median First Response Time
Suggested Benchmark: 4–6 hours
The time it takes you to reply to a customer is a big part of your first impression. If someone is reaching out, it’s because they have an issue or question your product, whether it’s something minor or a bug that’s impacting customers across the board.
Having a standard for reply time is necessary as you develop your customer happiness team. It can also tell you it’s time to hire if you’ve been handling it yourself and your metric is consistently slipping off benchmark. Tracking median vs. average here means you won’t ding yourself or your team for one-off delays here and there.
If you are finding that this metric is higher than you’d like, consider the hours you or your support rep are working and answering tickets. If it’s not during your product’s peak usage hours, it should be (note — this is why it’s best to hire a support person in the same time zone/area as the majority of your customer base).
Across our portfolio, we range anywhere from 2 hours to 12 hours depending on the product, the number of customers, the types and frequency of requests, etc. So this one’s a bit personal and should be tracked in tandem with your customer happiness ratings.
We’ve seen products with documented response times under 5 minutes, and less than 2 hours is really typical because some founders work 24/7/365.
That’s awesome (for your customers… maybe not for you or your family!). We recommend 4-6 hours as a benchmark because it can be expensive to keep those super low numbers as your customers’ expectation as you grow and move yourself off the service desk, so do think about the long-term when you set a goal.
Suggested Benchmark: 12 hours
Keeping track of Resolution Time allows you to pinpoint the areas of your business that may need some improvement. If a feature is constantly breaking, or someone on your team is hard to get a hold of, it may take a lot longer to resolve an issue for your customers.
Or if it’s taking your support agent a long time to get back to customers, their workload might be too big, or they may need to adjust their working hours to better accommodate the times tickets are coming in.
Again, this one’s really going to depend on your specific product, its complexity, and your stage of growth. We use 12 hours across many different products and find it’s enough time for most questions on most SaaS products.
Replies to Resolve
Suggested Benchmark: < 3
This one isn’t rocket science — the fewer (helpful) replies you have to a customer before you resolve an issue, the better. But, there’s a lot to learn from this metric if it isn’t where you’d like it to be.
First off, support should always try to resolve the issue within the first reply. If they are consistently unable to do so, it might be a matter of communication issues within your team, something that needs to be improved within your product, or some training needs.
Tracking replies to resolve is also a great way to determine if you should be investing in support automation. If you’re constantly replying to issues that could easily be answered with a support doc or tutorial video, you can set up canned responses to point users to those resources.
This will give you enough room in the average to cover more complex conversations but keep your goal towards more immediate resolutions.
Positive App Reviews
Suggested Benchmark: >1/week
Customers don’t hold back on the internet — especially when it comes to reviews. One of the quickest ways to gauge how your users feel about your product is by monitoring what they have to say online.
And if you’re noticing you aren’t getting reviews, it’s time to come up with a strategy. Because more reviews do equate to more paying customers, especially if your business is platform-specific, like a Shopify, iOS, or Android app.
It doesn’t need to be complicated — simply asking users for a review after a positive support conversation is a great place to start. Just be careful to follow the terms of any platforms when it comes to review requests. You can even set triggers in your support desk or email platform based on “positive” indicators to fire off an automated email to ask for reviews and really get ahead on this metric.
If you’re already tracking your Customer Happiness, an easy way to start gathering reviews is to automate follow up with people who rate their conversation highly. “Glad we were able to help! If you have a moment, would you leave us an honest review on (whatever platform)?”
Suggested Benchmark: >1/week
This typically isn’t something a tool will measure for you, but it’s a great idea to track how often you’re able to earn a paying customer or upgrade a member during a support conversation. Setting this as a goal also means you don’t get complacent about cancellations.
For more on this topic, check out our full guide to 10 things we think startup founders get wrong about customer happiness (and how to fix them).
This is an area that doesn’t get mentioned much on other SaaS metrics posts, and that’s a real shame because it should be a driver for a lot of your growth and marketing decisions.
If you don’t have Google Search Console set up in your Analytics account you are missing out on this for sure, and about 50% of all accounts I’ve reviewed either don’t have it set up at all or it’s set up wrong.
We want to help you fix that. Join us for a webinar on Jan. 21 where our Head of Growth, Marvin Russell will walk through our standard Google Analytics and Console set up.
Until then, here’s what we look at in Google Analytics for our properties. These are worth adding to your list because analytics gives you a ton of free insight to improve your business if you just take a little time to set it up properly and look at it regularly.
SERP (Search Engine Ranking Position)
for Your Highest-Converting Keywords
Pay attention to the second part of that metric, “for your highest-converting keywords.” Don’t just blindly go after page ranking, make sure you’re being intentional about it by identifying the handful of keywords that actually convert for you, and go after those. Aim to get on the first page of results, and then keep an eye on your rank with a tool like whatsmyserp.com or ahrefs.
Now repeat after me (our Growth Team calls this their “Content Oath.” Okay, not really, but they do follow these principles.):
- “The goal of content is not traffic. It’s trials and activations.”
- “I will never sit down and write without doing keyword research first.”
- “If I have limited time, it’s better to spend it improving a page or blog post that I already know converts.”
Number of Visitors by Channel
(Referral, Organic, Direct, Social, etc.)
Like I said above, traffic isn’t really an actionable goal, but it’s helpful to know where your visitors are coming from because when we get to the next two stats, you want to know if it’s a trickle or a fire hose for the channels that actually convert for you and then you can put more attention into bringing in more traffic for the ones that convert.
Trials by Channel
Which specific channels actually bring you new trials? Put your effort and budget into growing those, and you’ll see results.
Activations by Channel
Same idea as trials by channel, but keep an eye out for sneaky channels that bring in trials that don’t convert, or that are noticeably lower than your average trial to conversion rate because killing these darlings can save you a lot of time and money. We recently overhauled a Google Ads campaign on one of our properties to fix this issue.
It’s also worth mentioning that you should set up a unique URL for a confirmation page that customers are served after they enter billing information, and then set that URL up as a goal in Google Analytics. It’s super common to skip both of these steps and it means you can’t tie any of your Google Analytics info back to understanding what makes customers convert.
Landing Page Conversion Rates
Experiment with these a bit, because your blog may convert great for an email list, and that email list in turn may work well for converting to trials, and those trials convert into paid customers.
On the other hand, you might find that “how to” posts convert immediately to trials, so you don’t need a “soft” CTA on those types of posts and you can shorten your funnel.
Every CTA on your site should have a corresponding trackable goal or event set up in Google Analytics. It’s easy to set up goal conversion tracking for your main non-sale conversions like email sign-up, free account/trial sign-up and product activation. These can help you understand your conversions from site visitor to member, trial member or email subscriber. Check out this guide on conversion tracking with Google Analytics from SureSwift Alumni Founder, Lilia Tovbin.
To see how landing pages are performing for you, in your dashboard, go to Behavior > Landing Pages, and now look at them for your different goal conversion rates. Typically there’ll be a handful of pages that outperform their peers.
Your first instinct might be to improve the pages at the very bottom of the list. If you’ve actually marketed these pages and they’ve gotten some traffic and no conversions, don’t bother. If anything, look for opportunities to 301 redirect these duds to a page that does better.
Instead, look at the ones that are working, and make them even better. Can you rank higher? Can you bring in more traffic to it? Focusing on making your wins even more win-y will give you the most bang for your buck.
Bounce Rate and Exit Rate
(Site and Page)
Bounce Rate and Exit Rate often get confused in analytics, so let’s take a second to unwind them.
Bounce Rate is the percentage of single-engagement sessions, or how many people came to only one page, then left your site without any further action.
Exit Rate is the percentage of exits on a page, or how many people visited a page last before leaving the site.
A high Bounce Rate might mean there’s a problem, like:
- The content didn’t match the expectation someone had based on the search result or link they clicked.
- The site’s design has an issue like the type is too small, hard to read, or the overall design looks out of date.
- The page loads too slowly or doesn’t work well on the device the person’s using.
A high Exit Rate usually points to a problem in your conversion funnel. The person came to your site and looked at multiple pages, but then they just left. For high Exit Rates:
- Look at where your CTA’s are placed. Are they “sticky” (as in always visible)? Or do they disappear on scroll?
- Does the page not even have a CTA?
- What kind of CTA are you using? If a hard CTA page has a high Exit Rate, try a soft CTA like an email list, or a download.
Note that if your SaaS is a mobile app, that’s going to change how you look at this information, because you want people to leave your site, go to the app store, and download your app.
In this case, your benchmarks for Bounce and Exit Rate will be a bit different than those of someone who has a free trial signup right on their website, and typically you’ll just want to keep an eye on them for any huge movements.
People are impatient. And search engines are, too. If your site or a specific page takes forever to load, fix that before you worry about other analytics stats because you’ll probably get dinged both on Bounce rate and on SEO. If you want to nerd out on page speed benchmarks, check out this chock-full-of-tasty-data post from backlink.io, or just run a speed test on your site and if it comes back needing improvement, use this list of fixes from Moz.
Find out what types of devices people are on when they visit your site and then compare trial rates and conversion rates. If you get a ton of mobile visits, you need to make sure all of your content is mobile friendly, and spend some time really looking at your conversion rate on mobile.
If your customers are more desktop oriented, that doesn’t mean you don’t need a responsive website, but it should have some outcomes for your content strategy.
Device type can also help you if you’re setting up ads. If you know your users come from mobile, run ads on mobile. If you know they don’t, then don’t.
A final note on analytics: Don’t put all your eggs in one channel basket.
For sure you want to maximize your top channels, but if you only focus on organic traffic and there’s an algorithm update, you could get your head crushed. It’s happened to us, and it sucks.
So, you should use Google Analytics to inform your growth plan, and it’s important to have a channel-centric plan, but don’t rely only on organic traffic (or any single channel) alone to minimize your risk.
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You can’t manage what you don’t measure. If we have a specific activity we want to work on for one of our businesses, we’ll typically create a weekly metric for a team member. It’s a really simple way to make sure things get done.
For example, we haven’t historically been good at checking on our Google Ads really regularly. We set them up, and we do check them, particularly when we create a new campaign, but this is a great area to start accumulating waste since Google and other advertisers won’t stop funneling budget to ads that get clicks (i.e. cost you money) but don’t convert.
So knowing we wanted to be more active here, we assigned a team member a weekly metric: “Monitor all Ad Words accounts” with a goal of “100%” each week. Boom. That activity happens like clockwork now, and we get more out of the dollars we spend on ads.
If there’s something you know you need to be working on for your business, set a metric, and track it weekly. Then take a look at these types of one-offs quarterly to see if you still need them, or if it’s time to switch them up.
Don’t assign one person (including yourself) ten of these, though. We try to limit these ‘special project’ types of metrics to 2-3 per team member so they’re meaningful and doable. Priority didn’t have a plural form until the 1900s for a reason.
In our opinion, most of these stats should be tracked monthly for Founders with early-stage SaaS and weekly for Founders with mid- or later-stage businesses ($10k+ in MRR) because it gives you a better framework for spotting trends and acting on them and you’ll have enough data coming in to make that meaningful.
If you see a spike in growth one week, it’s much easier to attribute it to a specific activity than it will be if you’re trying to dig into it 3 or 4 weeks (or months) later.
Similarly, if you see your Churn Rate spike one week, it’s much easier to act and put immediate effort into win backs and customer outreach than it will be weeks down the road when your customers will probably have moved on to a competitor.
You don’t need a super expensive stack to track anything listed in this guide. I use Stripe’s out-of-the-box dashboard (which is pretty limited, but it’s free), and ProfitWell (because it’s free and directionally accurate).
For a bootstrapped founder I personally don’t see the value in a suite of expensive additional tracking tools although most of the businesses we look at have used one of them.
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If you’re entering a conversation with a buyer, you can expect them to ask for metrics. And if you get past an early, high-level conversation with a buyer and are handing over detailed financial info, you’ll probably want to ask for a mutual NDA. These are super common, and a reputable buyer should be able to initiate this for you, so don’t be afraid to ask.
In early conversations, buyers will be looking for a snapshot to see if you fit their buying criteria. Expect to get questions on your monthly revenue, your month-over-month (MoM) and year-over-year (YoY) growth, and your monthly churn.
After this early stage, if you’re both still thinking this is a potential fit, a buyer will want more detailed SaaS Metrics (anything mentioned in this guide is fair game) from you to further narrow fit, come up with a valuation range, and hopefully offer you a Letter of Intent (LOI).
If you’re thinking seriously about a sale, here are 5 tips to help you set yourself up for success.
1. Take the time to set up or look again at your SaaS metrics platform with a buyer in mind.
That means looking for consistently filled out data, and looking for any metrics that have discrepancies with what’s showing up in your payment gateway(s). Being able to point any of those out and explain them will really streamline conversations. You should also really try to minimize gaps between what’s “real” and what shows up in your metrics dashboard.
2. Have a trusted friend or advisor who knows a bit about SaaS take a look at your metrics.
Do they have questions or see something you don’t?
3. If you haven’t tracked cohorts of your users, you should.
Whether it’s for a sale or to inform your own priorities, knowing what has happened with different user cohorts is a fantastic, data-driven way to summarize how you’ve found customers over time and delivered value (and, if not, then you can investigate why they churned to inform your product and marketing strategy).
4. Don’t wait to sell until all your metrics are perfect.
Yes, clean SaaS metrics help make for a smooth sale. But, as you refine your solution you might bring churn down, but your growth might slow as well and your sale value might stay the same.
In terms of getting to an exit, it’s okay for there to be issues for the next owner to attack that show up in SaaS metrics. Just be honest about where you see issues and why you prioritized them as you have.
5. You can ask a buyer for hard numbers, too.
Don’t get burned by a buyer that doesn’t have the cash to buy your business.
Every year we hear about these situations from bootstrappers, and it’s heartbreaking for a founder because even a smooth sale takes some time and effort (and sometimes money, if you hire an accountant or a lawyer to help with the process), and there’s no point in putting that in if your buyer is still pitching their investors for the cash they’re going to use to buy your business.
Past an early conversation, and particularly if you get to LOI, it’s completely within your right to ask for proof of cash and references from other people who have sold to them.
You should also ask about things like:
- Typical closing time
- Your transition time/the term they require you to stay on the product
- What will happen to your team if you have one
- Any holdbacks or earnouts
- How many LOIs a buyer sends vs. how many they close
Anecdotally, we’re hearing from founders we talk to that there are buyers out there moving to LOI very quickly. That’s cool, and we like to move fast, too — it’s in our name 😉 — but we also really want founders to know that when we go to LOI we have the cash and full intention to close on those terms. (It’s almost standard practice these days for buyers to renegotiate terms between LOI and close, and we think that’s a bad standard. It’s not fair to founders and not where we want to be.)
So depending on the buyer, an LOI may signal “I definitely want to buy your business.” Or it might signal, “I just don’t want you talking to other buyers for a while while I learn more and try to find the cash.”
Know your buyer before you sign, because one convo probably isn’t enough for you to decide if a buyer is right for you, even though getting an LOI is an exciting milestone.