Sales
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 Minute Read

Essential SaaS Sales Metrics You Should Be Tracking

Written by
David Scott

If you're not tracking your sales metrics, you'll be in the dark about the most critical parts of your company growth.

Changes to your sales process will be based on guesswork alone.

If you're starting to scale your SaaS sales process to close more leads and increase your ARR, this article is for you.

I'm going to walk you through the most important sales metrics you should be tracking to help you make sales decisions with real data and grow your SaaS business.

By the end, you'll be ready to dive into your existing numbers and make smart decisions in your sales and marketing efforts that are backed by real numbers.

Let's get into it.

Why You Need to Think About Your SaaS Sales Metrics from Day One

The best time to start tracking your sales metrics was yesterday.

The second best time? You guessed it.

Today.

Even though you're ready to hit the Go button on your next marketing campaign, if you aren't tracking your success with the relevant metrics, it'll be hard to know if a campaign is a success or failure.

If you're aware of key sales metrics you'll never know things like:

  • How you can optimize your ad spend
  • How many customers you need to hit your next growth milestone
  • How long it takes for leads to convert into customers

If you don't track how your sales and marketing efforts are performing from day one, you'll quickly start struggling to figure out if your customer acquisition strategies are working as you won't have precise data to tell you.

In the next section, I'll show you the crucial sales metrics SaaS companies like yours should be measuring.

Key Sales Metrics SaaS Companies Should be Tracking

1. Customer Acquisition Cost (CAC)

Firstly, we have Customer Acquisition Cost (CAC).

This is (and always will be) one of the most important metrics to track.

It tells you exactly how much it costs you to acquire a new customer or user for your SaaS.

CAC Formula
CAC = Total Costs of Marketing & Sales Activities / Number of Customers Acquired

Most sales and marketing teams will work this out by dividing the total cost of marketing and sales activities in a given period or campaign by how many new customers were acquired in the same period.

The result will be your CAC.

It's a key sales metric to track. By measuring CAC a campaign-by-campaign basis, you'll be able to determine the campaigns that are most effective (or those that aren't working).

2. CAC Payback Period

Your CAC Payback Period is the time it takes to generate an ROI on your original customer acquisition costs.

CAC Payback Period formula
CAC Payback Period = CAC / Revenue Generated by a Customer

You can calculate it by dividing your CAC by the gross revenue generated by a customer.

If your SaaS has multiple pricing tiers, then you might want to break this metric down on a plan-by-plan basis.

3. Total Contract Value (TCV)

Total Contract Value (TCV) is another key metric to track.

The clue is in the name. TCV refers to the total value a customer brings over the duration of your contract.

TCV formula
TCV = (Monthly Recurring Revenue * Contract Term Length) + Other Contract Fees

This is another metric that can be broken down by each pricing plan you have.

The TCV for customers on your cheapest plan will be different from customers on your most expensive plan.

4. Average Revenue per Account (ARPA)

Average Revenue per Account (ARPA) is useful if you want to track your overall growth trajectory and see trends in revenue.

It's sometimes referred to as:

  • Average Revenue per User (ARPU)
  • Average Revenue Per Customer (ARPC)
ARPA formula
ARPA = MRR / Number of Active Accounts

ARPA does receive criticism because it sometimes gets used out of context.

For example, if most of your customers are on a $10/month plan, but you landed a single enterprise contract at $8000/month, your ARPA will be higher without taking into account that most of your customers are on the lower plan.

I'd recommend tracking ARPA on a pricing tier-by-tier basis, and looking at ARPA alongside other metrics, so it doesn't get taken out of context.

5. Average Selling Price (ASP)

Average Selling Price (ASP) measures the initial price that a customer pays for your solution, excluding any additional upsells that take place during the contract.

It's a useful sales metric you should track for your SaaS because it helps you understand if your CAC is at a sustainable level.

ASP Formula
ASP = Sum of all new business in a period / number of new customers in the same period

ASP is a key metric for sales teams because it gives a good indication of the type of customer your team is interacting with and closing deals with.

If the sum of all new business is, on average, growing month-by-month, you can assume your sales teams are engaging with, and able to close customers willing to commit to larger deal sizes.

Like with other metrics, you should look at this with context, and don't jump to conclusions based on a small data set.

6. Lead Velocity Rate (LVR)

Lead Velocity Rate (LVR) is another popular metric for SaaS sales and marketing teams to track.

LVR is one of the best indicators of growth there is, as it measures the growth in leads from one month to the next.

If your LVR grows month-over-month, it means demand for your solution is increasing.

LVR Formula
LVR = (Number of qualified leads this month – Number of qualified leads last month) / Number of qualified leads last month x 100

You should always be keeping your eye on your LVR. It's a real-time indicator of growth, unlike revenue metrics that are lagging indicators. You can easily see if you have fewer leads than usual for where you are in the month and take action to generate new leads.

It's useful to look at LVR alongside revenue metrics like MRR. If your LVR is increasing, but real revenue isn't, then it may indicate a problem in your sales process.

7. Lead Conversion Rate (LCR)

Lead to Conversion Rate (LCR) is a good indicator of how well your sales funnel is performing.

LCR Formula
LCR = (Leads converted to sales / Total Leads) x 100

Assuming your LVR is consistent or growing, your lead conversion rate will show you how effectively you can close new leads.

If your LVR is high but your Lead Conversion Rate is low, you can focus your efforts on increasing your conversion rate so your marketing efforts can pay off more.

You may want to calculate conversion rate through individual stage in your sales funnel to assess where blockers are and where you should be focusing on to unlock new growth.

8. Monthly Recurring Revenue (MRR)

Finally, we have Monthly Recurring Revenue (MRR).

MRR Formula
MRR = Number of customers * Average billed amount

For most SaaS companies, this is their North Star revenue metric.

It indicates your total predicted revenue for the coming month. It's one of the best indicators of business health and one of the main reasons people choose to start a SaaS business in the first place.

If you give customers the option to pay on an annual basis, then simply divide your yearly plan by 12 to make that fit into your MRR models.

As long as you can maintain and grow your MRR, your SaaS business will be in a great place.

Tools to Help You Measure Your SaaS Sales Metrics

Measuring your sales metrics is key, but it shouldn't be a time drain.

Consider using sales tracking tools to help you get a clear overview of your most important metrics and trends.

Here are some of our favourites:

1. Baremetrics

Track Sales Metrics with Baremetrics

Baremetrics is a great revenue and sales tracking tool for SaaS brands.

It integrates with all of the popular billing tools like Stripe and Braintree and gives you a clear overview of revenue trends and many of the sales metrics we've looked at in this article.

You'll be able to track metrics, including:

  • Monthly Recurring Revenue
  • Average Revenue per Customer
  • Customer Lifetime Value

It's a tool that gives anyone a clear overview of how their business is performing at any moment in time.

2. Pipedrive

Track Sales Metrics with Pipedrive

Pipedrive's Sales Tracking feature is another strong option.

It's focused heavily on sales metrics rather than revenue numbers, but combining it with a revenue tracking system like Baremetrics will give you a crystal clear overview of how your sales team is performing.

You'll be able to see information on how many new deals were won in a period, how many new deals were started, and everything else you need to calculate metrics like LVR and LCR.

3. Chartmogul

Track Sales Metrics with Chartmogul

Chartmogul is another revenue tracking tool perfect for SaaS companies who want more insight into their revenue and sales metrics.

It enables you to track key metrics like MRR, churn rate, CLTV, and easily see them in clear, concise dashboards.

You can filter revenue by your pricing plans to get a true picture of your sales metrics and see how closely your sales efforts tie into your revenue trends.

Wrapping Up

Tracking your SaaS sales metrics is critical if you expect to know whether your sales and marketing efforts are working.

If you don't have visibility into your revenue trends, you'll be unable to make essential decisions without relying on guesswork.

The metrics in this article are some of the most important for any Software-as-a-Service company.

You can use them to forecast growth, see new trends, and understand how quickly you're growing.

If you're ready to scale up your sales efforts, Leadiro can help. Our tool gives you instant access to qualified leads and lets you easily identify your ideal customers wherever they are.

Start your free trial today.

This article was first published on
April 17, 2020
updated

David Scott

Senior Director - Projects, Marketing, Technology – With over 15 years’ experience in marketing, sales & lead generation David leads the strategic projects of the group.

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