19 SaaS Product Metrics for 2024: Track & Test for Success
Learn the key SaaS product metrics you should be tracking and testing to improve your business.
Nailing the right metrics can make all the difference for your SaaS product.
It’s easy to get caught up in flashy graphs and vanity metrics that make it seem like all is going great — but give you little insight into how your business is really doing.
Are you focusing on the numbers that truly matter?
In this article, you’ll learn which, why, and how SaaS product metrics should be tracked and tested.
We’ll cover:
What SaaS product metrics are
Why SaaS businesses need to track and test them
An extensive list of the most important product metrics to track and test
Best practices for SaaS product metric analysis
Next steps to turn data into actions
Understanding SaaS product metrics
Product metrics are the vital signs of your SaaS product, giving you real-time insights into its health and performance.
They track everything from how users interact with your product, like engagement and retention, to the financials keeping your lights on — think revenue and growth rates.
It's all about finding out what is working, what isn’t, and where there's room for improvement.
The most important metrics are referred to as your Key Performance Metrics — also known as KPIs. They're your performance pulse points, revealing whether you're on track with your business aspirations or need a strategic nudge.
Key examples include: Monthly recurring revenue (MRR), customer lifetime value (CLV), and churn rate. If these sound confusing now, don’t worry — we’ll explain what they are in a dedicated section.
Why bother tracking and testing product metrics?
Here are a few reasons why tracking and testing product metrics is so important for SaaS businesses:
See the full picture: Keeping an eye on metrics like how much money you make every month, how many users stick around, and how much value each customer brings, helps you assess if your SaaS business is headed in the right direction.
Get stakeholders on board: For SaaS companies, scaling is often dependent on external funding or internal resource allocation. Demonstrating your product's potential with solid data can help you get the support you need faster.
Spot trouble early: Certain metrics serve as an early warning system, allowing you to gauge risk and take preemptive action. A sudden dip in engagement or an increase in churn might indicate a problem with your product that needs immediate attention.
Keep things fresh: A culture centered around frequent metric analysis leads to innovation. You can experiment with new features or tweaks to the user experience and directly observe the impact on key metrics. This cycle of experimentation and optimization keeps your product competitive.
Key SaaS product usage metrics to track and test
#1 Customer churn rate
What is it?
The churn rate captures the proportion of customers who decide to stop using your SaaS product over a certain period. It's a direct indicator of customer attrition, providing insight into how many users you're losing.
Why should you track it?
Understanding your churn rate is vital for obvious reasons. But the main one is it offers a clear picture of customer satisfaction and loyalty; a high churn rate almost certainly indicates underlying issues with your product or service that need immediate attention.
How to calculate it:
Churn Rate (%) = (Number of Customers Who Left During Period / Total Number of Customers at Start of Period) * 100
It’s worth noting that not every company defines churn identically — there are many considerations that might add nuance to this equation, especially for products with seasonality or variable customer engagement patterns.
Eppo CEO Chetan Sharma tells an interesting story in this article on metrics about his time as a data scientist at Webflow and how they had a very specific way to calculate churn.
#2 Net promoter score (NPS)
What is it?
NPS is a widely used metric that gauges customer satisfaction and loyalty by asking one simple question: “On a scale from 0 to 10, how likely are you to recommend our product/service to a friend or colleague?”
This question is designed to measure customers' willingness to act as promoters of your product or service.
Why should you track it?
It's a quick and easy way to measure customer loyalty and product endorsement, giving you insights into the health of customer relationships. A higher NPS usually means you’re growing!
NPS can vary widely between industries though, and it’s hard to externally benchmark what a “good” score is. NPS is also not without its critics who argue that it’s a poor metric for measuring customer loyalty or predicting growth.
How to calculate it:
Gather responses to your initial question and classify responses into promoters (score 9-10), passives (score 7-8), and detractors (score 0-6).
Finally, apply this formula:
NPS = (%Promoters) − (%Detractors)
#3 Customer retention rate
What is it?
This metric shows the percentage of customers who remain engaged with your SaaS product over a given timeframe, highlighting the effectiveness of your retention strategies.
It provides key insights into customer loyalty, satisfaction, and the overall health of your customer relationships.
Why should you track it?
The customer journey doesn't end at acquisition — retention is key! High retention rates tell a great story: Your customers are satisfied, loyal, and appreciate the ongoing value your product delivers.
How to calculate it:
Customer Retention Rate (%) = (Number of Customers at End of Period / Number of Customers at Beginning of Period) * 100
#4 Monthly recurring revenue (MRR)
What is it?
MRR is the stable and predictable income that your SaaS business earns each month from subscriptions.
This metric excludes one-time payments, focusing solely on the revenue generated by your customer base through their regular subscription fees.
Why should you track it?
It's a vital KPI for understanding the financial health and growth trajectory of your business. MRR also helps in forecasting revenue and making key financial planning decisions.
How to calculate it:
MRR = Sum of All Recurring Revenue from Subscriptions for the Month
#5 Customer lifetime value (LTV)
What is it?
LTV is a forecast of the total revenue attributed to a single customer account over the entirety of their business relationship with your company.
It encompasses not just the initial purchase but all subsequent transactions a customer is expected to make.
Why should you track it?
Knowing the LTV helps you make informed decisions about how much to invest in attracting new customers and retaining existing ones. It's also important for optimizing marketing spend and product development resource allocation.
How to calculate it:
LTV = Average Purchase Value * Number of Transactions * Retention Time Period
#6 Customer acquisition cost (CAC)
What is it?
Think of CAC as the price tag of acquiring a new customer. It considers all marketing and sales costs to understand how efficiently you're bringing in new business.
Why should you track it?
Once you understand your CAC, it becomes easier to evaluate the effectiveness of your acquisition strategies. This helps you assess whether the cost of acquiring new customers is justified by the money they generate for your business.
How to calculate it:
CAC = Total Acquisition Expenses / Number of New Customers Acquired During the Period
Bonus - The “ultimate SaaS metric”
The real power in knowing your LTV and CAC numbers is in evaluating the ratio of LTV:CAC. Investor and SaaS guru Dave Kellogg calls this ratio the “ultimate SaaS metric” since “what you pay for something (a customer) should be a function of what it’s worth (their lifetime value)”.
Kellogg recommends that SaaS businesses aim to achieve a LTV:CAC ratio of 3.0 or higher as a good rule of thumb.
#7 Active users (DAU, WAU, MAU)
What is it?
These acronyms stand for daily, weekly, and monthly active users, respectively. Each metric offers a distinct lens through which to view user interaction, capturing everything from regular daily usage to more sporadic engagement patterns.
Why should you track it?
These metrics provide a view into the stickiness of your product and how integral it is to your customer’s daily activities. They are extremely important for understanding user engagement levels and retention.
How to calculate it:
DAU = Number of Unique Users Engaging Daily
WAU = Number of Unique Users Engaging Weekly
MAU = Number of Unique Users Engaging Monthly
#8 Cohort retention
What is it?
Cohort retention is a detailed metric that measures the ability of your product to retain distinct groups, or “cohorts,” of customers over specific periods.
These cohorts can be defined based on their sign-up date, purchase behavior, or any other characteristic that segments them into identifiable groups.
Why should you track it?
This metric not only reveals the percentage of users who remain active after their initial interaction but also provides a better understanding of retention patterns, highlighting the nuances of customer loyalty and product stickiness within each group.
How to calculate it:
Cohort Retention Rate (%) = (Number of Users Retained in Cohort at End of Period / Number of Users in Cohort at Start of Period) * 100
#9 Time in app
What is it?
This metric measures the total duration users spend in your app within a certain period, helping you measure app value and user engagement.
By quantifying the aggregate time spent, it offers insights into the depth of interaction and the overall attractiveness of your application's features and content.
Why should you track it?
How long users stick around with your product reveals their engagement level. Use this valuable data to identify trends and opportunities to enhance the user experience.
How to calculate it:
Total User Time Spent = Sum of Active Time Spent by All Users Over a Specific Period
#10 Average contract value (ACV)
What is it?
This metric measures the average revenue generated per customer contract, providing insights into the value each contract brings to your business over a specific period.
Why should you track it?
Understanding the ACV helps identify trends in your sales and customer engagement strategies.
It lets you differentiate between high-value and lower-value contracts, guiding strategic decisions around sales focus, customer support, and product development to maximize revenue.
How to calculate it:
ACV = Total Revenue from Contracts / Number of Contracts over a Specific Period
#11 Average revenue per user (ARPU)
What is it?
ARPU is a financial metric that averages the revenue generated per user, offering insights into the value each customer brings to your business.
Why should you track it?
It helps you understand your user base's revenue impact, identify opportunities for upselling, and improve revenue strategies.
By analyzing changes in ARPU, you can also assess the effectiveness of your marketing efforts and refine your approach to maximize revenue per user.
How to calculate it:
ARPU = Total Revenue in Period / Total Number of Users in the Same Period
#12 Burn rate
What is it?
This metric indicates the rate at which a company spends its money reserves before generating a positive cash flow.
It essentially measures how quickly a business is using up its financial resources to cover operating expenses and growth initiatives in the absence of incoming revenue.
Why should you track it?
It's critical for assessing the financial health and runway of your company, and guiding decisions on budgeting, spending, and fundraising.
Understanding your burn rate is essential for projecting future cash needs and ensuring the business can sustain operations until it becomes profitable or secures additional funding.
Of course, you’ll need to assess this metric in the context of your overall company strategy and stage of growth. A high burn rate may be expected for an early-stage startup or an aggressive growth period, but not desirable in the long run.
How to calculate it:
Burn Rate = Cash Balance at Beginning of Period - Cash Balance at End of Period
#13 Sales-qualified lead (SQL)
What is it?
An SQL represents a qualified opportunity. They've demonstrated interest and fit your target market, making them sales-ready and primed for the next step in the sales cycle.
Why should you track it?
SQLs are the lifeblood of an optimized sales funnel. They ensure sales reps invest their energy in high-quality leads, dramatically increasing the chances of conversion.
How to calculate it:
SQL Count = Number of Leads Meeting Sales-Qualified Criteria
#14 Marketing qualified lead (MQL)
What is it?
This metric identifies potential customers who have shown interest in your products or services and are considered more likely to become buyers, based on specific criteria set by your marketing team.
Why should you track it?
Tracking MQLs enables you to assess the effectiveness of your marketing campaigns and strategies in generating high-quality leads.
How to calculate it:
MQL Count = Number of Leads Meeting Marketing-Qualified Criteria
#15 CAC payback period
What is it?
This metric shows how fast a business earns back the money spent on acquiring a new customer. It serves as a key indicator of the efficiency and effectiveness of the company's customer acquisition strategies and overall ROI in marketing and sales efforts.
Why should you track it?
By tracking the customer acquisition payback period, you can optimize cash flow, identify areas to improve your acquisition strategy, and ensure your business model is built for long-term success.
How to calculate it:
CAC Payback Period = Customer Acquisition Cost (CAC) / (Monthly Recurring Revenue (MRR) per Customer * Gross Margin)
#16 Number of user sessions
What is it?
This metric tracks the total number of interactions users have with your app within a given timeframe, indicating engagement levels.
Why should you track it?
It sheds light on how often users come back and interact with your app's features. This knowledge is key to understanding user behavior and making improvements to your app's functionality.
How to calculate it:
Average Sessions per User = Total Number of Sessions in Period / Number of Unique Users in the Same Period
#17 Customer satisfaction score (CSAT)
What is it?
Thinking of it as a customer happiness meter, CSAT uses surveys to capture how satisfied users are with your product or service.
Why should you track it?
It provides direct feedback from your customers about their experience, allowing you to adapt and improve your product to better meet their needs.
How to calculate it:
CSAT (%) = (Number of Positive Responses / Total Number of Responses) * 100
#18 Average feedback response rate
What is it?
This metric measures the percentage of users who respond to feedback requests or surveys, which indicates how willing they are to engage with your product team.
It serves as a crucial indicator of user engagement and openness to communication, highlighting the effectiveness of your outreach efforts and the overall health of your user community.
Why should you track it?
High response rates signal an invested user base willing to roll up their sleeves and contribute to product development through feedback. Tracking this metric can help you refine your feedback collection strategies to ensure higher participation rates.
How to calculate it:
Survey Response Rate (%) = (Number of Users Who Completed the Survey / Number of Users Asked to Participate) * 100
#19 Feature fit index (FFI)
What is it?
FFI gauges how much users would miss a particular feature by measuring their reaction to potentially losing it.
Why should you track it?
Understanding what features are most valuable unlocks smarter resource allocation. This lets you prioritize development efforts on what truly matters to your customers.
How to calculate it:
FFI (%) = (Number of Users Who Would Be Disappointed by Removal of a Feature / Total Number of Survey Respondents) * 100
Best practices for SaaS product metric analysis
Make sure you’re analyzing your SaaS product KPIs correctly and follow these quick tips:
Start small with goals: Don't run before you can walk. Aim for realistic increases in trial conversions or reductions in churn rates. Celebrate the small wins and adjust your strategies as you achieve new milestones.
Check in regularly: In the world of SaaS, things change very quickly. Make it a habit to review your metrics periodically, either weekly or bi-weekly. You’re looking for trends, not just taking snapshots.
Pick the right tools for the job: Forget drowning in spreadsheets that don’t give you the insights you actually need. Go for smart analytics and experimentation tools that turn data into actionable feedback by uncovering what actually drives changes in these key metrics.
Keep your data clean: Bad data equals bad decisions. Make sure your data is neat and accurate. No more mixing up. Standardize how you collect it and monitor its flow through your business.
Make data everyone's best friend: Tools and numbers only make a difference if everyone's going to use them. Encourage data-driven decisions and experimentation across your organization. Build a culture where data is king.
Next steps
So there you have it — a comprehensive overview of the most essential metrics for SaaS products that you should track and test. But, with metrics being so important to your company’s success, a critical question arises:
How do you find insights from your product metrics without getting lost in the data?
Enter Eppo, the experimentation-first platform that helps you turn metrics into actions.
See your product through the lens of data
Eppo provides a clear overview of the data you should use to track your SaaS product’s performance. By seamlessly integrating with your existing data warehouses (like Snowflake, BigQuery, and more), it consolidates your data into a unified source of truth.
This clarity enables you to track vital metrics — such as trial conversion rate, churn rate, and user engagement — over time and across different user cohorts, illuminating the path toward product optimization and full-scale growth.
Conduct experiments safely and rigorously
Identifying an area for improvement is just the beginning. With Eppo, you can thoughtfully design and carry out experiments to explore potential solutions. How? Eppo's approach to randomized testing ensures that your experiments are unbiased and inclusive, offering a birds-eye view of their impact.
This method is essential for understanding the broader effects on key metrics, such as improving retention rates or increasing trial conversions, across your entire user base. Eppo delivers a framework for conducting these experiments with precision and zero risk.
Make informed, strategic product decisions
The rich insights yielded by Eppo's experiments arm you with the evidence needed to make confident product decisions. This data-driven approach guides you in creating or modifying features and experiences that genuinely resonate with your customers.
In essence, Eppo not only helps measure current performance but also equips you with the tools to forecast the impact of future changes. Every decision is grounded in solid data.
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