While many SaaS businesses focus heavily on user acquisition, they often overlook the important factor that drives sustainable, long-term growth: retention. A user who leaves after just one month is far less valuable than one who continues to engage with your platform for a year or more. By prioritising retention, you can increase revenue, boost client lifetime value (LTV), reduce churn, and foster stronger brand loyalty.
In this article, we’ll explore how to develop a retention-first content strategy that improves onboarding, encourages feature adoption, maintains long-term engagement, and drives renewals.
Why SaaS Metrics Matter
SaaS metrics are essential for understanding the health and performance of your business. They help you track progress, spot bottlenecks, and identify areas for improvement. By using these metrics, businesses can make informed product and marketing decisions, aligning strategies with data-driven insights to drive growth.
These metrics also provide clarity when preparing for scale, helping you understand the business’s ability to grow, sustain profitability, and manage investor conversations. For marketers and founders, these metrics serve as tools for making smarter decisions, measuring performance, and scaling effectively.
Core SaaS Growth Metrics to Track
When it comes to tracking SaaS growth, several metrics are particularly important in evaluating success:
Monthly Recurring Revenue (MRR): MRR represents your predictable monthly subscription revenue. It’s important for tracking growth, retention, and the overall health of your recurring cash flow.
Annual Recurring Revenue (ARR): This metric is simply MRR annualised (MRR x 12), and it’s often used as a key metric in investor discussions to demonstrate growth potential.
Churn Rate (Client & Revenue): Churn measures the percentage of clients or revenue lost within a given period. This metric reveals how well your product fits with customer needs and how effectively you retain users.
Client Lifetime Value (LTV): LTV estimates the total value a client will bring to your business before they churn. This metric is essential for forecasting growth and assessing the sustainability of your business model.
Client Acquisition Cost (CAC): CAC measures how much it costs to acquire a new client. By comparing CAC to LTV, you can assess how efficiently your marketing and sales efforts are working.
LTV:CAC Ratio: The LTV to CAC ratio helps assess the return on investment in client acquisition. A healthy LTV:CAC ratio (typically 3:1) indicates a strong balance between client acquisition costs and long-term value.
Net Revenue Retention (NRR): NRR tracks the percentage of recurring revenue retained plus any expansion from existing users. It’s a strong indicator of how much your business is growing without relying on new clients.
Gross Margin: This metric reveals the difference between your revenue and the direct costs of providing your product or service, such as support and hosting. It’s a critical indicator of profitability potential.
Activation Rate: The activation rate measures how many users complete a key onboarding milestone. It is a strong predictor of long-term engagement and retention.
Product Qualified Leads (PQLs): PQLs are leads who have used your product and shown an intent to upgrade. In product-led growth (PLG) models, these leads are especially valuable.
Bonus: Marketing-Focused SaaS Metrics
In addition to core growth metrics, there are several marketing-focused metrics to track:
- Traffic-to-Lead Conversion Rate
- Lead-to-Client Conversion Rate
- Organic vs Paid Signups
- Client Retention by Acquisition Channel
- Attribution-Driven ROAS
By tracking these alongside your core metrics, you can gain a deeper understanding of how your marketing efforts are impacting your SaaS growth and revenue.
Metric Benchmarks for SaaS Startups
As a benchmark, here are some healthy targets for key SaaS metrics in the early stages:
- MRR Growth: 10–20% month-over-month (MoM)
- Churn Rate: <5% monthly
- LTV:CAC Ratio: 3:1 or better
- Net Revenue Retention (NRR): 100–120%+
- Activation Rate: 30–60%+
These benchmarks can help you understand what good growth looks like and prioritize key areas of focus for your team.
How to Track These Metrics Efficiently
Tracking SaaS metrics effectively requires the right tools to gather and analyse data. Some of the best tools for tracking key metrics include ChartMogul, Baremetrics, and ProfitWell, which help you monitor Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR). These platforms offer a clear view of your revenue performance, helping you identify trends and growth patterns.
For tracking user behaviour, Google Analytics 4 is invaluable. It provides insights into how users are interacting with your site, allowing you to make informed decisions based on their actions and preferences. CRM platforms like HubSpot and Salesforce also play a critical role in managing client relationships and tracking engagement throughout their lifecycle.
Additionally, tools like Looker Studio, Mixpanel, or custom dashboards allow you to dive deeper into your data. They offer detailed insights into user behaviour and help with advanced reporting, making it easier to track and analyse complex metrics.
Common Mistakes When Tracking SaaS Metrics
While tracking SaaS metrics is crucial, many teams make common mistakes that can hinder their ability to accurately measure success. One of the most frequent errors is focusing too much on vanity metrics, such as traffic or likes, without understanding their actual business impact. These metrics may look good but do not always translate to tangible growth or revenue.
Another mistake is overemphasising MRR growth while ignoring churn rates. Churn is a critical metric for understanding the health of your client base and neglecting it can give a false sense of progress. It’s essential to balance MRR growth with retention efforts to ensure sustainable long-term growth.
Many teams also fail to segment their metrics by pricing plan or acquisition channel. This oversight can lead to a lack of insight into which client segments are driving revenue and where your marketing efforts are most effective.
Finally, inconsistent definitions of key terms, like “active user,” can create confusion and inconsistencies across divisions. Without clear and standardised definitions, it becomes difficult to compare data and draw accurate conclusions. To avoid these mistakes, it’s important to establish consistent definitions for all metrics and ensure alignment across teams.
How Ruby Digital Helps SaaS Brands Scale with Data
At Ruby Digital, we help SaaS brands leverage data to drive scalable growth. Our approach starts with aligning paid media and SEO strategies to key metrics like Customer Acquisition Cost (CAC), Return on Ad Spend (ROAS), and Lifetime Value (LTV). This focuses your marketing efforts on what delivers the best results for sustainable growth.
We also specialise in analytics implementation, and the creation of custom report dashboards personalised to your specific business needs. This enables real-time tracking of your most important metrics, giving you the insight you need to make informed decisions.
Funnel and cohort analysis are crucial tools in reducing churn. By closely examining how users progress through your product and identifying where they drop off, we can refine your user experience to improve retention and lifetime value.
Additionally, we help SaaS brands create lifecycle content that nurtures users through every stage of their journey. From onboarding to ongoing feature adoption and engagement, this content plays a key role in boosting activation, adoption, and retention.
Tracking the right SaaS metrics is essential for transforming guesswork into actionable growth strategies. By measuring what truly matters, acquisition efficiency, user behavior, and revenue retention, you empower your team to make smarter decisions in marketing, product development, and investments. These data-driven insights provide the foundation for scaling your business and reaching new heights of success.
