KPI Metrics
The Tech industry was booming, and SaaS metrics were born. Regardless of the product we were selling, we all started tracking similar KPIs, and some were more relevant to the business than others. Some are particularly flawed regardless of the business. Is there space for KPI development outside of the standard set? I think so! Is there a best in class engineering solution to surface metrics to the Go To Market teams? Most definitely.
PRODUCT ENGAGEMENT
I like to start with engagement metrics because interest in the product sparks potential success in the business. The engagement metric should relate to financial performance. For example, Daily Active Users (DAU, or MAU for monthly) is a common product metric. This metric is valuable if the raw number of active users on your platform is linked to a revenue stream, such as advertising dollars. But it’s the bare minimum amount of usage, basically just logging into the site. If subscription renewals are driving revenue, there might be better product metrics that connect directly to customer satisfaction and likelihood of renewal.
MARKETING, SALES, CUSTOMER SUCCESS, FINANCE
B2C and B2B metrics may have slight differences but all of them involve conversion rates at some point in the funnel. That’s the particularly flawed aspect of common SaaS metrics. When a team is measured on conversion rates prior to billings or bookings won, such as pipeline generation, the wrong incentive is at play. On the other hand, LTV:CAC is popular and for a good reason. You can go far building that into models as an objective to maximize.
Monthly Recurring Revenue (MRR, or ARR for annual) and renewal rates are some of the most common SaaS metrics measured. From a renewal rate perspective, there are different industry benchmarks to consider, and performing above or below the benchmark can be the result of any permutation of success metrics, measured or not.
METRICS LAYER AND ANALYTICS ENGINEERING
Enabling data informed decision making means providing data infrastructure and assets to leaders across the business. If you don’t provide the KPI metrics specifically, you’ll notice a common theme pop up, where the same metric is wrangled by various teams, causing discrepancies and confusion. Inevitably, the KPIs will also be sliced to tell different stories, and the process will repeat itself next quarter.
Avoid the heartburn and build a KPI metrics layer into your data warehouse. Having a set of common metrics available in multiple dimensions allows users to pull from the same data source. The metrics can make their way into the quarterly dashboard or a slide deck without causing alarm, and you’ll have another win in the data world.