After presenting you with the 10 essential KPIs for measuring SaaS performance, our infographic puts them on stage to help you understand how they fit together. This arrangement can help you sketch out the long-term health and growth potential of SaaS businesses.
The journey begins with the conversion rate, represented as the initial step in the spectrum of SaaS success. Visually, a funnel illustrates the transition from leads to paying clients, underlining the central role of this metric in optimising sales and marketing strategies. If 120 prospects out of 1,000 demos become paying customers, the conversion rate is 12%.
The next step in the visual journey is to define the cost of acquiring these new customers. The calculation is simple: all you have to do is divide the amount spent on sales and marketing (including HR expenses) to sign up these 120 new customers. This gives you the average acquisition cost per customer.
Sales efficiency is visually demonstrated by the ratio of new ARR to sales and marketing expenses. This indicator is one of the sales acquisition analytics highlighted by ScaleX. It also includes revenue from new clients. Knowing the revenue generated by new clients out of total ARR highlights the growth momentum of the SaaS analysed.
The churn rate is an essential aspect of customer retention. This indicator measures the percentage of recurring revenue lost due to customer cancellations or downgrades. It gives an indication of the stability and effectiveness of a SaaS company in terms of customer loyalty, but also reflects a good or bad fit with the market. The churn rate can be offset by upsells, i.e. new revenue generated by existing clients: switching to a higher subscription level, adding options, etc.
NRR is calculated by measuring the revenue retained from existing customers over a given period, taking into account upsells and churn. NRR gives an idea of the overall health and viability of a business, showing its ability to generate revenue growth through customer success and expansion efforts.
The infographic concludes with a visual representation of concentration risk. A scale shows the need to balance revenue dependency across a diversified client base, to avoid over-reliance on a single client or few big clients.
ScaleX supports bankers and corporates in collecting, structuring, and benchmarking this key data. Our software offers a visually consistent and streamlined experience. To find out more or get a demo, please contact us. We'll be thrilled to show you our platform and algorithms.