The SaaS business model continues to thrive in 2024, as companies across industries increasingly recognize its scalability, cost-effectiveness, and accessibility. However, as SaaS gains more popularity, it also brings confusion—especially regarding which SaaS performance metrics are crucial for understanding business health and driving sustainable growth.
Over the years, we’ve worked with numerous SaaS companies and observed that many struggle to grow quickly due to one common misconception: SaaS business models are often mistaken for traditional ones. In reality, SaaS businesses face more complex financial dynamics, primarily due to their reliance on sustained growth, which differs significantly from traditional businesses.
Today, companies are focusing more on “efficient growth” rather than “growth at any cost.” Access to capital has become more challenging, and SaaS companies must navigate this evolving landscape carefully by monitoring the right SaaS performance metrics.
While most companies track standard metrics like Customer Churn, MRR, or CAC-to-LTV Ratio, advanced SaaS performance metrics can offer even deeper insights into your business performance. These metrics help uncover bottlenecks, highlight opportunities for optimization, and ensure long-term success.
In this article, we will explore advanced SaaS performance metrics that go beyond the basics to help you understand the bigger picture. Each metric offers unique insights into operational efficiency, growth potential and customer behavior.
What is a SaaS Performance Metric?
Before diving into the details of the most critical SaaS metrics, it’s important to first understand what a SaaS performance metric is. Simply put, a SaaS metric is a key measurement that helps gauge the health of specific areas within your SaaS business. Since SaaS companies operate under a unique business model, it’s essential for those invested in their success to closely monitor the relevant SaaS metrics to ensure growth and sustainability.
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10 Advanced SaaS Performance Metrics
Here we have listed 10 advanced SaaS performance metrics you should be tracking for SaaS business success.
1. Customer Engagement Score (CES)
Customer engagement is an indicator of how actively your customers are using your product. The Customer Engagement Score (CES) aggregates various user behaviors—such as logins, feature usage, session duration, and customer feedback—into a single score.
Tracking CES allows you to identify highly engaged users who are more likely to renew or upgrade, as well as those who might be on the verge of churn. This SaaS performance metric is a crucial part of user retention and product optimization strategies.
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2. Expansion MRR
While Monthly Recurring Revenue (MRR) is a fundamental metric, Expansion MRR takes things a step further by measuring the additional revenue generated from existing customers through upsells, cross-sells, and add-ons. It’s essential to track because it indicates how effectively your product can grow within your existing customer base.
High Expansion MRR shows that your customers are finding continued value in your product, making it an excellent metric for sustainable growth. In terms of SaaS performance metrics, it’s particularly useful for companies focused on increasing customer lifetime value through retention and upselling.
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3. Net Promoter Score (NPS)
While often considered a basic metric, the Net Promoter Score (NPS) offers advanced insights when combined with other SaaS performance metrics. NPS measures customer loyalty by asking customers how likely they are to recommend your product. When segmented by customer cohorts, it helps in identifying trends across different product features or service plans.
Tracking NPS in relation to SaaS performance metrics like CES or Customer Expansion can give you a holistic view of both user satisfaction and potential growth opportunities.
4. Time to Value (TTV)
The Time to Value (TTV) measures the amount of time it takes for a new customer to realize the value of your product after initial purchase or signup. A shorter TTV indicates a smoother onboarding process and a product that is easy to use.
For SaaS companies, reducing the TTV can significantly boost customer satisfaction and retention. By analyzing this SaaS performance metric, companies can optimize their onboarding process and identify which features provide the most immediate value.
5. Product Stickiness
Product Stickiness refers to how often and for how long customers are using your software. It’s calculated by comparing the number of daily active users (DAU) to monthly active users (MAU).
The higher the ratio, the more “sticky” your product is—meaning customers rely on it frequently.
Tracking stickiness allows you to gauge the success of user engagement strategies and ensure that your product remains a key part of the user’s daily workflow. This advanced SaaS performance metric is essential for improving long-term retention rates.
Read More: Top 10 Benefits of SaaS Development for Your Business
6. Feature Adoption Rate
SaaS companies continuously roll out new features to stay competitive, but are customers using them? The Feature Adoption Rate shows how many customers are using newly introduced features or upgrades.
Tracking this SaaS performance metric helps you understand which features bring the most value to users and which ones need more promotion or redesign. It also indicates the success of your product development efforts.
7. Customer Support Efficiency
While often overlooked, Customer Support Efficiency is a key SaaS performance metric that directly impacts customer satisfaction and retention. Metrics like average response time, first-contact resolution rate, and the number of tickets handled can give you a clear picture of how effective your support team is.
An efficient support team not only resolves issues but also helps maintain a positive customer experience, reducing churn and increasing the likelihood of renewals.
8. Revenue per Customer (RPC)
Revenue per Customer (RPC) focuses on how much revenue each individual customer generates, often calculated monthly or annually. Unlike ARR or MRR, which track total recurring revenue, RPC allows you to understand the profitability of each customer.
This SaaS performance metric is crucial for pricing strategy and customer segmentation, helping businesses identify which customer segments are the most valuable and where there may be opportunities to upsell or optimize pricing.
You might like to read:
- What is SaaS Development [Types, Benefits & Challenges]
- How to Start a SaaS Company (Step-by-Step Guide)
- The SaaS Development Lifecycle: 6 Key Stages Explained
9. Gross Margin
Gross Margin is one of the most critical SaaS performance metrics for financial health. It reflects the profitability of your product by calculating the difference between revenue and the cost of goods sold (COGS). High gross margins indicate that you’re running an efficient operation, while low margins could signal issues with product delivery or high operational costs.
Gross Margin is a critical metric for SaaS companies because it can inform decisions around pricing, scaling, and investment in new features.
10. Customer Health Score (CHS)
Customer Health Score (CHS) is an aggregate metric that evaluates the likelihood of customer churn based on engagement levels, product usage, support interactions, and other relevant factors. This predictive metric helps you proactively identify customers at risk of leaving, allowing for timely interventions to improve retention.
Monitoring CHS as part of your overall SaaS performance metrics strategy helps keep your finger on the pulse of customer satisfaction and retention.
Wrapping Up
Tracking the right SaaS performance metrics is essential for sustainable growth and success. By focusing on advanced metrics such as Customer Engagement Score, Expansion MRR, and Time to Value, SaaS businesses can go beyond the basics to truly understand the health and trajectory of their business. These advanced SaaS metrics offer deeper insights into customer behavior, operational efficiency, and product performance, providing the actionable data needed to drive strategic decisions.
To ensure your SaaS company stays ahead of the competition, consistently monitor these metrics and refine your strategies for optimizing customer experience, revenue and growth.
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