There are many Key Performance Indicators (KPIs) or metrics that you need to track to analyse your business performance. The study of these metrics is based on a detailed analysis of huge datasets. Today, if you want to delve into these datasets, reading only the excel sheets would not help. There are advanced tools and established companies offering business intelligence services to help you make better data-driven decisions.
SaaS reporting and analytics involve the study of cash inflow, customer interaction, and how does this customer interaction at different touch-points ultimately affect the recurring revenue of a SaaS company. This holistic overview enables analysts to devise methods to improve policies to run their business.
SaaS Metrics and Their Role in Business Performance
When you are analyzing the situation of cash flow in your business, reading and understanding metrics is a mandatory part. SubscriptionFlow is one of the reliable subscription platforms having integrated business analytics software that provides you with a visual representation of key metrics. Following are the metrics that you must study and track for accurate SaaS reporting and analysis:
Monthly Recurring Revenue (MRR)
MRR is the revenue that you earn every month from your subscription business. One of the reasons for the success of the subscription business is the predictability of MRR. You can study the monthly recurring revenue report of previous months and compare it with this month’s report so as to devise an effective plan to increase MRR in the coming months.
Churn MRR is a subset of the revenue earned by a SaaS business. It is the amount of money lost by a business because of those customers who cancel subscriptions.
Lifetime Value of a Customer (LTV)
LTV shows the amount that customer invests in your business to have monthly or yearly subscriptions. SaaS businesses track this metric. It will show that how customer acquisition is costlier than customer retention. LTV is always higher than the cost that a business has to spend to acquire a customer. If your LTV is constantly increasing, it shows your customers are getting what they want. LTV as part of your SaaS reporting shows where your business stands among the competitors. Make LTV part of your SaaS report and streamline your cash inflow.
Annual Recurring Revenue (ARR)
As MRR is the revenue that a SaaS company earns in a month, ARR is the revenue earned by a company in a year. An increase in customer churn rate will reduce your ARR because once the subscriber has gone, it is difficult to convince him to subscribe once again when competitors in the market are already waiting to acquire such customers.
Both ARR and MRR are equally important for your SaaS reporting and analytics. A SaaS report providing a detailed overview of ARR will show you the performance of your SaaS business and ways to improve revenue and reduce churn.
Customer Acquisition Cost (CAC)
The cost that your SaaS business has to bear to acquire customers is CAC. The cost to acquire a customer change with time but it is never less than the customer retention cost. With the CAC metric, you can devise your policies to reduce churn because customer acquisition is the first phase of the customer journey that ends at the churn.
Other than churn, you can analyse CAC with LTV to improve your pricing strategy. Your target should be the increase in the amount that customer invests with you (LTV) than CAC.
Average Revenue Per User (ARPU)
Many people avoid analyzing ARPU but this SaaS metric shows the amount that you can earn from each subscriber. Based on the analysis of this metric, you can improve customer experience to prolong the customer journey with you and ultimately succeed in reducing churn.
ARPU is usually calculated by dividing the revenue that your company earns by the SaaS subscribers that you have. You need to increase the LTV and reduce customer churn to earn more revenue.
Active Users (AU)
To make AU part of your SaaS reporting & analytics, you need to consider:
- Monthly Active Users (MAU)
- Daily Active Users (DAU)
AU including data analysis about MAU and DAU offers you a deeper insight into your clientele. SaaS report having DAU analysis can greatly help SaaS startups because they need to monitor their clients on daily basis.
There are a lot more metrics but you will not need them all at once. As your business grows, you need to expand the study more metrics. However, all metrics are important for accurate SaaS reporting and analytics. The study of these metrics helps you understand the customer journey and SubscriptionFlow is the platform from where you get not only robust subscription management tools but also business analytics software. You can contact SubscriptionFlow team to get a consultation regarding SaaS reporting and analytics in detail.
