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The 3 metrics you must track to measure your SaaS growth
Hello friends, welcome to GrowthShot #57. Today’s theme is:
The 3 metrics you must track to measure your SaaS growth- all in less than 250 words
Let’s dive in
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At the end of each year/quarter you can analyze your performance for that time period. And at the same time, make projections based on the data you have observed.
There are 3 key metrics to consider. It takes into account your revenue, your customers, your LTV, churn and your CAC.
#1. New MRR/ARR added
This metric measures how much revenue “R” is added to your business over “N” period of time by “C” new customers. Where R/C gives you the average revenue per user (ARPU) over “N” months/years.
#2: Churned MRR/ARR
This metric measures the revenue lost “RL” across “N” period of time due to “CL” customers leaving. Calculate churn rate = (Lost customers (CL) / Total customers at the start (C)) * 100.
#3: Expansion MRR/ARR
This metric measures the percentage expansion in MRR by existing customers upgrading/expanding their subscription.
Measure your revenue growth using this formula:
Net MRR = New MRR from new customers + Expansion MRR - churned MRR.
Expansion MRR here is the MRR added across N-period of time by paying customer upgrading to a higher paying tier.
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