Monitoring the right SaaS sales KPIs is essential for achieving your sales goals.
Key Performance Indicators (KPIs) provide insights into the different areas of your sales process. They let you understand your strengths, and weaknesses, and identify areas for sales improvement. If you’re not monitoring the right KPIs, then you won’t be able to make informed decisions to improve your sales performance.
This guide breaks down some of the most important SaaS sales KPIs you need to know.
Best Saas Sales KPIs To Keep Track Of
Following the right SaaS sales KPIs is essential for being able to measure and optimize the performance of your entire sales engine. Here are some of the best sales KPIs for SaaS that you should follow – offering insights into various areas of your sales process.
Monthly Recurring Revenue (MRR)
MRR represents the predictable and recurring revenue generated from subscription-based services every month. It’s a crucial metric for SaaS companies, as it reflects the stability and growth potential of the business you have with each customer.
Most SaaS companies charge on a subscription-based model, which is why following MRR is so important. As a SaaS salesperson, you can’t just look at the once-off cost of deals. Instead, you should consider the entire customer lifetime value of each sale you make.
You can calculate MRR by looking at the monthly subscription rate of your SaaS product. Compare this to the term of the contract to see just how much value you get from each customer. If customers are not locked into a contract, then you’ll want to make sure your customer success team is effective, which will help you capitalize on all MRR.
Churn Rate
When looking at MRR, you’ll want to compare it to your churn rate. These two SaaS sales KPIs need to be looked at side-by-side to help you understand just how much value you’re getting from each client.
The churn rate measures the percentage of customers who cancel or do not renew their subscriptions within a specific time frame. Minimizing churn is essential for sustainable growth, as it directly impacts MRR and customer lifetime value (CLV).
You can figure out this SaaS sales KPI by dividing the number of churned customers by your total number of customers at the beginning of a set period. Multiply this by 100 to get your churn rate as a percentage.
Generating more revenue for your business is not only about selling more software, but it’s also about decreasing your churn rate. As it can be five times more expensive to sell to new customers compared to your existing ones, keeping your churn rate low is crucial for generating sustainable revenue for your business.
Customer Lifetime Value (CLV)
CLV estimates the total revenue a customer is expected to generate throughout their relationship with your SaaS company. A high CLV indicates that your customer base is loyal and valuable to the business.
You can determine CLV by understanding your MRR and churn rate. Add together the total amount of revenue generated by a customer and divide this by the number of months the customer has been with your business. This will give you the customer’s average monthly revenue. You can determine CLV for each specific customer, or you can figure out CLV averages for your business.
It’s important to understand what kind of CLV you can expect from each SaaS customer when you make a new sale. This will give you a realistic idea of how much revenue the customer will generate – beyond what they initially pay when closing the deal.
Customer Acquisition Cost (CAC)
It costs money to sell to new customers. Anything spent on your marketing and sales efforts adds to the cost of customer acquisition. So even if you’re generating a lot of revenue, it might not be as impactful for your business as you think if it costs too much to acquire new customers.
CAC calculates the average cost of acquiring a new customer. Keeping CAC low is crucial to maintaining profitability and ensuring that customer acquisition efforts are efficient.
This is one of the most important SaaS sales metrics to help you optimize the ROI of your sales and marketing efforts. Continually working on lowering your CAC will help you boost sales efficiency and make your sales engine more profitable.
Conversion Rate
The conversion rate measures the percentage of leads that convert into paying customers. This is one of the most important SaaS sales KPIs for improving sales performance and revenue growth.
Ultimately, the higher your conversion rate is, the better. While you can look at conversion rate in terms of leads becoming customers, you can also get a lot more granular with this sales metric. Every stage of the customer journey includes conversions, and improving conversion rates at each stage will ultimately boost your sales.
For example, each time a customer signs up for a product demo, this is a conversion. Each time they download a marketing resource or follow through with an action, you can count it as a conversion.
Understand each conversion in the customer journey and find ways to boost your conversion rate in each area. This is important for getting more customers out at the end of your sales funnel.
Average Revenue Per User (ARPU)
ARPU calculates the average revenue generated per individual customer. It helps to gauge the value of each customer and track changes in pricing or upselling effectiveness.
ARPU is not as specific as CLV. While CLV determines the exact amount of revenue each customer generates, ARPU helps you understand the average amount you can expect from each new customer. Knowing this is important for predicting revenue and finding new ways to maximize how much each customer spends.
Sales Pipeline Value
When it comes to m monitoring SaaS sales KPIs, looking at your sales pipeline value will be one of the metrics you monitor the most.
This SaaS sales KPI measures the total value of all deals in your sales pipeline. Tracking the pipeline value allows you to forecast revenue and identify potential bottlenecks in the sales process.
It’s important to understand the value of your sales pipeline over a specific period and compare this to the actual value of sales you close out of that pipeline. This will help you identify any issues in your close rate, and help you predict just how much value your pipeline loses over time.
Sales Cycle Length
Sales cycle length measures the time it takes for a lead to convert into a paying customer. Reducing the sales cycle can lead to increased efficiency and revenue generation.
The more efficient your sales cycle is, the faster you’ll be able to close more deals and generate more revenue. A reduced sales cycle length also helps you reduce the CAC and improve the return on investment of your sales efforts.
Customer Satisfaction (CSAT) and Net Promoter Score (NPS)
These two SaaS sales metrics are slightly different, but they both help you achieve the same thing. They’re also incredibly important metrics to monitor if you want to boost the CLV of each customer.
CSAT and NPS gauge customer happiness and loyalty. Satisfied customers are more likely to stay with your SaaS product and refer others, contributing to organic growth.
These are key metrics that customer success teams look at when trying to boost customer retention.
Customer Retention Rate
The customer retention rate measures the percentage of customers who continue their subscriptions over a given period. The opposite of customer retention is customer churn.
Improving customer retention leads to higher MRR and more sustainable revenue growth. As most SaaS businesses rely on monthly recurring revenue, maximizing your retention rate is key to generating more long-term value for the business.
Upsell and Cross-Sell Rate
These KPIs track the percentage of customers who upgrade their subscriptions or purchase additional features or products after their initial purchase. Upselling and cross-selling can significantly boost revenue from existing customers, helping you increase MRR and CLV.
Not all SaaS companies focus on upselling and cross-selling. However, it’s one of the most effective ways of boosting revenue if you have the opportunities available. These should be important metrics to monitor alongside customer acquisition.
Sales Team Performance Metrics
While it’s useful to monitor individual SaaS sales KPIs for each customer or area of revenue generation, you also need to understand specific metrics that relate to your sales team members.
Assess individual and team-level metrics like lead-to-customer conversion rates, sales quota attainment, and average deal size to identify top performers and areas for improvement. Look at this at a team level and an individual level to help you understand where you can improve sales performance.
Conclusion
As a sales leader, you must keep an eye on these SaaS sales KPIs. The better you understand performance in each area of your sales process, the more you’ll be able to improve your sales results.
If you want to boost your conversion rates in selling SaaS, you’ll need to use the right tools. Book a demo with Saleo to see how using the sales demo experience platform can help maximize software sales.
