A brief note — while RJ Metrics chose to label the KPIs discussed here as SaaS related, we regard SaaS as a delivery model, not a business model. Since these KPIs measure revenue and monetization, we regard them as subscription metrics, not SaaS metrics.
In any case, the expanding use of cloud computing by businesses around the world is making Software as a Service (SaaS) a ubiquitous delivery model. SaaS and other delivery models that dovetail with subscriptions promise recurring revenue streams and maximized value from your customer relationships. But to measure those things, companies will need to establish new KPIs.
Familiar KPIs like number of transactions or average cart value are no longer adequate. To assess the health of your business, KPIs like monthly and annual recurring revenue, customer acquisition costs and customer lifetime value must all be compared and measured on a regular basis.
Understanding how these new, more complex KPIs interact with each other is a challenge. The infographic below came from RJ Metrics’ attempt at creating a unified dashboard for the health of their entire enterprise. Tristand Handly of RJ Metrics explains, “Drawing up a conceptual model of how your business works and how all of your KPIs interact is a good way to make sure that everyone is looking at the business the same way.”
They created a flow chart to help keep track of the most important subscription metrics. Handly calls their approach Metric Decomposition, and explained their process further on the RJMetrics Blog.
Learn more about essential subscription KPIs for your business by downloading our complimentary white paper, Mapping and Measuring the Subscriber Journey.