10 Critical SaaS Metrics: Are You Tracking the Right Ones?

Operating in today’s highly competitive SaaS world isn’t easy. Companies must continuously adapt—keeping a close eye on market trends, monitoring competitors, and refining their offerings. 

To navigate this landscape effectively, tracking key SaaS metrics is crucial. These metrics provide clear insights into a company’s performance, helping teams make smarter decisions and drive sustainable growth.

In this guide, Lollypop highlights 10 B2B SaaS metrics every team should know. We break down what each metric means, how to calculate it, and how it can support better performance.

Let’s get started!

What are SaaS Metrics?

SaaS metrics are essential performance measurements that help businesses assess how well their SaaS product is performing. They track everything from revenue and growth to customer satisfaction and usage behavior, offering critical insights for strategic planning, resource allocation, and long-term sustainability.

Why are SaaS Metrics Important?

Since SaaS businesses operate on a subscription model, which means their success hinges not just on acquiring customers, but on retaining them, engaging them, and maximizing their long-term value. That’s where SaaS KPI metrics come in. They help companies understand how well their product is performing, how happy customers are, and where needs to improve.

Here’s a closer look at the key benefits of tracking these metrics for SaaS companies​:

1. Evaluate Business Performance

SaaS metrics provide a comprehensive view of business health, from Monthly Recurring Revenue (MRR) to customer churn and Gross Revenue Retention (NRR). By consistently tracking performance, companies can maintain flexibility, benchmark progress, and set achievable goals to drive sustainable growth.

2. Make Data-Driven Decisions

Rather than relying on gut feeling, SaaS metrics empower teams to make strategic decisions grounded in real data. Whether it’s adjusting pricing, optimizing marketing spend, or refining the onboarding process, key metrics like Customer Acquisition Cost (CAC), Lifetime Value (LTV), or LTV/CAC ratio enable more informed decisions across all business functions.

3. Improve customer satisfaction

Metrics such as Net Promoter Score (NPS) or product usage data help identify what customers love and what frustrates them. This enables teams to iterate on features, enhance support, and personalize experiences, all of which contribute to stronger customer relationships and brand loyalty.

4. Reduces Churn and Boosts Retention

High churn rates can undermine growth, even with strong customer acquisition. SaaS metrics help identify the root causes of customer attrition, whether it’s ineffective onboarding, disengagement, or unmet needs. With visibility into these behaviors, companies can proactively intervene with re-engagement campaigns, improved UX, or loyalty programs to keep customers coming back.

5. Foster a culture of ongoing improvement

By regularly reviewing and acting on SaaS metrics, organizations create a feedback loop that drives constant learning and iteration. This approach promotes accountability across teams, makes performance more visible, and strengthens a mindset focused on growth. Over time, it nurtures a culture where continuous innovation is encouraged, leading to better results and long-term success.

Top 10 SaaS Performance Metrics to Track

In this section, you will explore a list of 10 Popular Metrics from fundamental SaaS metrics benchmarks​ to SaaS growth KPIs. For a quick overview, you can look through the downloadable SaaS metrics cheat sheet​ below:

1. Average Revenue Per Account (ARPA)

Average Revenue Per Account (ARPA) is a key SaaS financial metrics​ that measures the average monthly revenue generated from each active customer. 

ARPA provides insight into how much value each customer contributes on average and helps track revenue trends over time. It is especially useful for segmenting customers (e.g. SMBs vs. enterprise), comparing pricing models, and evaluating the impact of upselling or downgrades.

How to calculate ARPA:

For example: Suppose the MRR of your SaaS company is $10,000 and the number of active accounts is 250. Given that, the ARPA would be:

ARPA = $10,000 / 250 = $40

This means, on average, each account brings in $40 per month for your business.

2. Recurring revenue

Recurring revenue is the key SaaS revenue metrics that represents the consistent income a business earns from customers monthly or annually. 

There are 2 common types of recurring revenue:

• Monthly Recurring Revenue (MRR): The total revenue generated from all active subscriptions within a month. It provides a short-term view of the company’s financial health, helping businesses track month-to-month growth and cash flow.

• Annual Recurring Revenue (ARR): The total recurring revenue generated from active subscriptions over a year, smoothing out short-term fluctuations and providing a broader perspective on the company’s performance over an extended period.

For example: If your SaaS platform currently has 100 active users, each paying $50/month on average. 

• MRR = 100 x $50 = $5,000. 
• ARR = $5,000 x 12 = $60,000.

3. Churn rate

Churn rate is an essential SaaS marketing metric​, tracking the percentage of customers or revenue a business loses within a given timeframe. High churn signals issues with SaaS product-market fit, customer satisfaction, or value delivery.

There are 2 common types of churn:

• Customer Churn Rate: This shows the percentage of customers who canceled their subscriptions within a specific timeframe. A high customer churn rate often suggests that customers do not find sufficient value in the service or that competitors may offer better alternatives.

• Revenue Churn Rate: This reflects the percentage of lost revenue from churned accounts, adjusted for any expansion revenue (like upsells or cross-sells).

For example: Imagine your company starts the month with 200 active customers and an MRR of $10,000. Throughout the month, you lose 20 customers, which accounts for $1,000 in MRR from cancellations, but you gain $500 in upsell revenue.

• Customer Churn Rate = 20 / 200 = 10%
• Revenue Churn Rate = ($1,000 – $500) / $10,000 = 15%

4. Gross Revenue Retention (GRR)

Gross Revenue Retention (GRR) is the key saas business metrics​. It measures the percentage of recurring revenue a business retains from existing customers over a specific period.

GRR focuses solely on losses due to cancellations and downgrades, excluding any expansion revenue such as upsells or cross-sells. A high GRR shows strong retention and SaaS product-market fit; a low GRR suggests issues with churn or decreasing customer value.

How to calculate GRR:

For example: If your company began with $40,000 in Monthly Recurring Revenue (MRR) and experienced $3,000 in cancellations and $2,000 in downgrades throughout the month, the formula for Gross Revenue Retention (GRR) would be:

GRR = ($40,000 – $3,000 – $2,000) / $40,000 = 87.5%

This means you retained 87.5% of your revenue from existing customers, excluding any expanded revenue.

5. Annual Contract Value (ACV)

Annual Contract Value (ACV) is a key SaaS revenue metric that reflects the revenue generated from a customer contract in one year, excluding one-time fees like onboarding or setup charges.

ACV helps SaaS companies understand the long-term value of a customer account and supports revenue forecasting, segmentation, and sales planning. It’s especially useful in enterprise SaaS, where contracts often span multiple years, allowing teams to benchmark the revenue potential of different customer segments.

How to calculate ARPA:

For example: Suppose a customer signs a 2-year contract worth $24,000, which includes a $4,000 one-time setup fee.

ACV = ($24,000 – $4,000) / 2 = $10,000

This means the contract contributes $10,000 per year in recurring revenue for the business.

6. Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is an SaaS sales metric that​ calculates the average amount of money your company invests to acquire a new customer. It takes into account all marketing and sales expenses (e.g., advertising, promotions, sales team salaries, etc) and divides that by the number of new customers acquired. 

By calculating CAC, businesses can evaluate the cost-effectiveness of their customer acquisition strategies and determine how much they should invest to achieve long-term profitability.

How to calculate CAC:

For example: If your company spent $50,000 on sales and marketing in one quarter and brought in 250 new customers, the calculation would be:
CAC = $50,000 / 250 = $200
This means it cost your business $200 to acquire each new customer during that quarter.

7. CAC Payback Period

The CAC Payback Period is an SaaS ecommerce metric, measuring how long it takes to earn back what you spent to acquire a new customer. In other words, it shows how many months of gross profit it takes to cover your Customer Acquisition Cost (CAC).

A shorter payback period means faster ROI and stronger cash flow, which is crucial for sustainable growth, especially in subscription-based models.

How to calculate CAC Payback Period:

For example: Let’s say your SaaS company spent $100,000 on Sales and Marketing in a given month to acquire new customers. During that same period, those new customers generated $20,000 in Monthly Recurring Revenue (MRR). Your Gross Margin—after subtracting costs like hosting or onboarding—is 80%.
CAC Payback Period = $100,000 / ($20,000 × 80%) = 6.25 months

This means it takes approximately 6.25 months to recover your acquisition cost per customer, after which they begin contributing to your profit.

8. Customer Lifetime Value (CLTV or LTV)

Customer Lifetime Value (CLTV or LTV) is the key financial metric for SaaS companies​. It calculates the overall revenue a business can gain from a customer during their entire engagement, focusing on the enduring impact of each customer.

Understanding LTV helps businesses make smarter decisions about how much they can afford to spend on acquiring and retaining customers. It guides Marketing budgets and overall growth strategies by ensuring customer acquisition costs (CAC) are aligned with long-term profitability.

How to calculate LTV:

For example: If a SaaS business has an ARPA of $300 per month, a gross margin of 75%, and a monthly churn rate of 6%, the LTV would be: 

LTV = $300 × 75% / 6% = $3,750.

This implies that each customer is anticipated to contribute $3,750 in revenue during their entire engagement with the company.

9.  LTV/CAC Ratio

The LTV/CAC Ratio compares the lifetime value of a customer (LTV) to the cost of acquiring that customer (CAC). It helps evaluate how efficiently a company is turning customer acquisition into long-term profit.

A higher ratio indicates strong customer profitability relative to acquisition costs, while a low ratio may signal high spending or low customer retention. Ideally, SaaS companies aim for a ratio of 3:1 — meaning they earn $3 for every $1 spent acquiring customers.

How to calculate LTV/CAC Ratio:

For example: If your LTV is $2,000 and your CAC is $800, the ratio would be:

LTV/CAC = $2,000 / $800 = 2.5

This means your business earns $2.5 in customer value for every $1 spent on acquisition.

10.  Net Promoter Score (NPS)

Net Promoter Score (NPS) is a popular metric used to assess customer loyalty and satisfaction by asking a straightforward question: 

“How likely are you to recommend our SaaS product/service to a friend or colleague?”

Customers provide a rating from 0 to 10, which then places them into one of three groups:

• Promoters (9–10): Loyal customers who are likely to continue buying and actively recommend your brand.
• Passives (7–8): Satisfied but not overly enthusiastic customers, who are at risk of switching to competitors.
• Detractors (0–6): Dissatisfied customers who may share negative opinions, potentially harming your reputation.

To calculate NPS, subtract Detractors (%) from the Promoters (%). Based on the result, scores are categorized into 4 ranges that reflect the general sentiment of your customers:

• 70 to 100 (Excellent): You’ve built a highly loyal customer base that actively promotes your brand—this is world-class performance.
• 30 to 70 (Strong): Most customers are happy and likely to recommend you, but there’s still room to improve the overall experience.
• 0 to 30 (Average): Customer sentiment is mixed—some are satisfied, but too many are indifferent or at risk of churning.
• -100 to 0 (Poor): A majority of customers are unhappy, and your business may be facing serious issues with satisfaction or trust.

For example: If you conduct an NPS survey with 250 people:

• 150 are Promoters (60%)
• 70 are Passives (28%)
• 30 are Detractors (12%)

Then your NPS would be:  NPS = 60% – 12% = 48

This NPS score (=48) falls in the “Strong” range, indicating a healthy level of customer loyalty with room to grow.

Read more: Top 7 SaaS Design Trends to Elevate B2B Products

Final thoughts

Through this blog, you’ve gathered the most important SaaS metrics to track!

That said, not every SaaS business tracks the same metrics. The ones that matter most often depend on a company’s business model, growth stage, and long-term goals. As those factors shift, the metrics should evolve too, ensuring they stay aligned with what matters most.

If you looking for guidance on tracking the right metrics or how to build an innovative SaaS product design​, Lollypop – A Terralogic Company – is here to support! As a global  UI/UX  SaaS Design Agency, we go beyond visuals—combining AI SaaS and technology to deliver end-to-end SaaS design and development solutions that truly drive business impact.

Get in touch with us for a FREE consultation and discover how we how we can future-proof your SaaS product!

Frequently Asked Questions (FAQs) 

1. Why Do SaaS Companies Report on Different Metrics?

SaaS companies report on various metrics tailored to their specific business models, growth stages, and strategic priorities. For instance, early-stage startups might focus on metrics like Monthly Recurring Revenue (MRR) and Customer Acquisition Cost (CAC) to gauge growth potential, while mature companies with long-term contracts might focus on ARR (Annual Recurring Revenue) and ACV (Annual Contract Value) to assess contract value and long-term stability.

2. What is the rule of 40 in SaaS metrics?

The Rule of 40 is a key financial metric for SaaS companies, which asserts that the combined revenue growth rate and profit margin should be at least 40%. This rule balances the trade-off between growth and profitability, suggesting that if a company is growing rapidly, it may afford to operate at a loss, and if growth is slower, focusing on profitability becomes essential. ​

3. What is a Magic Number in SaaS?

The SaaS Magic Number is a metric that evaluates the efficiency of a company’s sales and marketing spend in generating new recurring revenue. It is calculated by dividing the increase in quarterly recurring revenue by the sales and marketing expenses from the previous quarter. A higher Magic Number indicates more efficient use of sales and marketing resources, typically suggesting a strong return on investment in customer acquisition.