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SaaS Metrics 2.0
Article

SaaS Metrics 2.0

A Guide to Measuring and Improving What Matters


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Editorial Rating

9

Qualities

  • Analytical
  • Applicable
  • Concrete Examples

Recommendation

Software as a service (SaaS) executives face a different set of challenges than their counterparts at more traditional enterprises and need a different set of metrics. To help subscription businesses evaluate viability, make stop-or-go decisions, and grow faster and bigger, venture capital investor and serial entrepreneur David Skok, writing on his blog forEntrepreneurs, offers a comprehensive article describing the critical metrics for subscription businesses and ways to improve them. Although long and at times complicated, Skok’s discussion ranks as a must-read for SaaS executives and investors.

Take-Aways

  • Software as a service (SaaS) executives should focus on customer retention above all, because profits, growth and success depend on long customer lifetimes.
  • SaaS businesses experience losses and sometimes cash flow problems in their early years, because it takes time to recover investments in customer acquisition.
  • Usually, a viable SaaS business will have an average customer lifetime value at least triple the typical cost to acquire a customer (CAC), and the business will be recovering the CAC in less than 12 months.

About the Author

Venture capital investor and serial entrepreneur David Skok writes at his blog, forEntrepreneurs.


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