10 Essential SaaS Metrics Every Founder Must Track

Introduction: Why Tracking the Right SaaS Metrics Matters

Scaling a SaaS business isn’t just about acquiring more customers—it’s about understanding key performance metrics that drive growth, retention, and profitability.

Many startups focus solely on revenue, but without tracking the right SaaS metrics, they risk high churn, inefficient spending, and missed opportunities for expansion.

To truly outsmart competitors and dominate your niche (just like we discussed in 10 SaaS Growth Hacks for 2025), you need data-driven insights that reveal what’s working—and what’s not.

Whether you’re refining your pricing model, improving customer retention, or optimizing acquisition strategies, these 10 essential SaaS metrics will help you make smarter decisions and drive sustainable growth.

Now, let’s dive into the must-track SaaS KPIs every founder needs to monitor—and how to improve them.

1. Monthly Recurring Revenue (MRR)

MRR is the heartbeat of any subscription-based business. It represents the predictable revenue you generate from active customers each month.

Tracking MRR helps you understand revenue trends, forecast growth, and make informed financial decisions.

Why It Matters:
A growing MRR means your business is scaling, while a declining MRR signals potential retention or acquisition issues.

Without clear visibility, you might underestimate churn impact or overestimate revenue stability.

How to Improve It:

• Focus on reducing churn by improving customer experience and engagement.
• Experiment with upsells, cross-sells, and pricing tiers to increase revenue per user.
• Attract higher-value customers through targeted marketing and value-driven messaging.

By keeping a close eye on MRR, you ensure your business stays financially healthy and poised for long-term growth.

2. Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) measures how much you spend to acquire a new customer. It includes marketing, sales, and operational expenses tied to bringing in new sign-ups.

Keeping CAC under control is crucial—spending too much to acquire customers can lead to unsustainable growth, while spending too little may limit your reach.

Why It Matters:
If your CAC is too high compared to your Customer Lifetime Value (CLV), your business might struggle to turn a profit.

A low CAC, combined with a strong retention strategy, means you can scale efficiently and maximize return on investment.

How to Improve It:

• Refine your marketing strategy to focus on high-intent leads rather than broad, unfocused campaigns.
• Improve conversion rates by optimizing your website, landing pages, and onboarding process.
• Leverage organic growth channels like content marketing, SEO, and referrals to acquire customers at a lower cost.

A sustainable CAC ensures that every dollar spent on acquisition contributes to long-term profitability and business growth.

3. Customer Lifetime Value (CLV or LTV)

Customer Lifetime Value (CLV) measures the total revenue a customer generates for your business throughout their entire relationship with you.

It’s a critical metric because the longer a customer stays and the more they spend, the more profitable your SaaS business becomes.

Why It Matters:
A high CLV means your customers find ongoing value in your product, leading to better retention and sustainable revenue growth.

If your CLV is too low, it could indicate issues with engagement, pricing, or churn. Ideally, your CLV should be significantly higher than your Customer Acquisition Cost (CAC) to maintain profitability.

How to Improve It:

• Enhance your onboarding process to ensure customers quickly see value and stay engaged.
• Introduce upsells, cross-sells, or premium tiers to increase customer spending over time.
• Build long-term relationships through proactive customer support, loyalty programs, and personalized engagement.

By increasing CLV, you maximize the return on every customer acquired, making your SaaS business more resilient and profitable in the long run.

4. Churn Rate

Churn rate measures the percentage of customers who cancel their subscriptions within a given period.

In the SaaS world, retaining existing customers is just as important as acquiring new ones—if not more.

A high churn rate can quickly erode revenue and limit long-term growth.

Why It Matters:
Even if you’re adding new customers, a high churn rate means you’re constantly replacing lost revenue. This makes it harder to scale efficiently.

Understanding why customers leave and addressing their concerns can dramatically improve retention and profitability.

How to Improve It:

• Identify churn reasons by collecting feedback from customers who cancel.
• Improve customer engagement through onboarding, proactive support, and personalized experiences.
• Introduce loyalty incentives like discounts for annual plans or exclusive member benefits to encourage long-term commitments.

Lowering churn ensures that your growth efforts don’t go to waste and that your revenue remains stable over time.

5. Net Revenue Retention (NRR)

Net Revenue Retention (NRR) measures how much revenue you retain from your existing customer base over a specific period, factoring in expansions (upsells, cross-sells) and contractions (churn, downgrades).

A high NRR indicates that your product continues to deliver value, leading to long-term customer loyalty and revenue growth—even without acquiring new customers.

Why It Matters:
A SaaS business with an NRR above 100% is in a strong position because it means expansion revenue outweighs losses from churn.

This allows for sustainable growth without constantly relying on new customer acquisition.

If NRR is low, it may indicate issues with retention, pricing, or customer engagement.

How to Improve It:

• Focus on expansion revenue by offering upsells, add-ons, and premium tiers that increase customer spending over time.
• Proactively address churn risks by identifying early warning signs, such as decreased product usage or negative feedback.
• Improve customer success initiatives to help users get the most value from your product, increasing long-term retention.

By optimizing NRR, you ensure that your business can grow steadily without excessive reliance on new customer acquisition.

6. Average Revenue Per User (ARPU)

Average Revenue Per User (ARPU) measures the amount of revenue generated per customer over a specific period, usually monthly or annually.

It’s a critical SaaS metric that helps gauge pricing effectiveness, customer value, and overall business growth.

Why It Matters:

ARPU directly impacts your company’s revenue potential and long-term sustainability.

A low ARPU might indicate that customers are choosing lower-tier plans or that pricing isn’t optimized.

A high ARPU suggests strong monetization and a well-structured pricing strategy.

How to Improve It:

• Introduce tiered pricing to encourage users to upgrade to higher-value plans. Offering premium features or usage-based pricing can increase ARPU.
• Upsell and cross-sell effectively by promoting add-ons, premium support, or additional features tailored to customer needs.
• Improve customer retention since long-term subscribers contribute more revenue over time. Enhancing onboarding, engagement, and customer success efforts can lead to higher ARPU.
• Leverage data-driven personalization to offer relevant upgrades or personalized pricing structures based on usage patterns.
• Reduce discount dependency to prevent lowering the perceived value of your product. Instead, focus on delivering value that justifies the price.

By tracking and optimizing ARPU, SaaS businesses can maximize revenue per customer while ensuring sustainable, long-term growth.

7. Conversion Rate (Trial to Paid or Free to Paid)

Conversion rate measures the percentage of users who move from a free trial or freemium plan to a paid subscription.

This metric is crucial for SaaS businesses because it directly impacts revenue growth and customer acquisition efficiency.

A high conversion rate indicates that your product effectively demonstrates its value, while a low rate suggests friction in the user journey.

Why It Matters:

If your free users aren’t converting into paying customers, you might be attracting the wrong audience, your onboarding process may be weak, or your pricing might not align with perceived value.

Improving conversion rates can lower Customer Acquisition Cost (CAC) and boost revenue without needing to increase marketing spend.

How to Improve It:

• Enhance the onboarding experience by guiding users to an “aha moment” quickly. The sooner users see value, the more likely they are to upgrade.
• Limit trial restrictions strategically—giving too little access can prevent users from experiencing the product’s full value, while giving too much might reduce urgency to upgrade.
• Use personalized in-app messaging to nudge users toward paid plans based on their usage behavior.
• Offer time-sensitive discounts or incentives to encourage conversions before the trial ends.
• Leverage email nurturing campaigns to educate users on premium features and provide social proof, such as case studies or testimonials.
• A/B test pricing and trial durations to find the optimal balance between engagement and urgency.

By refining the conversion funnel, SaaS businesses can turn more trial users into paying customers, ensuring predictable revenue growth.

8. Lead Velocity Rate (LVR)

Lead Velocity Rate (LVR) measures the percentage growth of qualified leads month over month.

It’s a forward-looking metric that helps SaaS businesses predict future revenue growth based on how quickly they’re generating new potential customers.

Unlike revenue-based metrics, which reflect past performance, LVR focuses on pipeline momentum, making it a key indicator of long-term success.

Why It Matters:

A consistently growing LVR means your sales and marketing efforts are effectively generating interest and demand.

If LVR stagnates or declines, it signals potential issues in lead generation, market demand, or sales processes.

Since SaaS businesses rely on continuous customer acquisition, tracking LVR ensures that you have a steady stream of prospects to convert into paying customers.

How to Improve It:

• Invest in content marketing and SEO to attract high-quality inbound leads over time. Educational blog posts, webinars, and lead magnets (e.g., ebooks, whitepapers) can help generate organic interest.
• Optimize lead nurturing workflows by using email sequences, remarketing ads, and personalized outreach to move leads down the funnel faster.
• Refine your ideal customer profile (ICP) to ensure you’re targeting the right audience with paid ads, outbound sales, and organic marketing efforts.
• Align sales and marketing teams so that lead generation efforts translate into actual conversions. Defining clear lead qualification criteria can prevent marketing from passing low-quality leads to sales.
• Leverage automation and AI to speed up lead scoring, outreach, and follow-ups, ensuring no potential customers fall through the cracks.

By improving LVR, SaaS companies can maintain a strong pipeline of potential customers, ensuring sustainable growth and predictable revenue.

9. Burn Rate & Runway

Burn rate refers to the rate at which a SaaS company is spending its available cash, while runway represents how long the company can operate before running out of funds.

These two financial metrics are critical for both bootstrapped and venture-backed startups, as they determine sustainability and the urgency of achieving profitability or securing additional funding.

Why It Matters:

A high burn rate with a short runway can put a SaaS business at serious risk, especially if growth isn’t keeping pace with expenses.

If cash reserves deplete too quickly, the company may need to cut costs, raise prices, or seek funding under unfavorable conditions.

On the other hand, a controlled burn rate ensures financial stability, allowing the business to focus on sustainable growth rather than short-term survival.

How to Improve It:

• Optimize operational expenses by identifying non-essential costs and reallocating resources to high-impact growth initiatives.
• Improve customer retention to maximize revenue without increasing acquisition costs. Reducing churn helps stabilize cash flow and extends the runway.
• Diversify revenue streams by introducing new product offerings, upsells, or pricing adjustments to boost recurring revenue.
• Monitor CAC (Customer Acquisition Cost) closely and ensure that customer lifetime value (CLV) is significantly higher than acquisition costs.
• Secure funding strategically—if external funding is needed, raising capital before the runway becomes critical allows for better negotiation leverage.
• Automate processes and optimize team efficiency to reduce payroll and operational costs without sacrificing productivity.

By maintaining a healthy burn rate and extending runway, SaaS businesses can scale with confidence while minimizing financial risk.

10. Product Engagement Metrics (DAU, WAU, MAU, Retention Rate)

Product engagement metrics help SaaS companies measure how actively users are interacting with their platform. Key engagement metrics include:

• DAU (Daily Active Users): The number of unique users engaging with your product daily.
• WAU (Weekly Active Users): The number of unique users engaging with your product weekly.
• MAU (Monthly Active Users): The number of unique users engaging with your product monthly.
• Retention Rate: The percentage of users who continue using your product over a given period.

These metrics provide deep insights into user behavior, helping businesses understand whether their product is truly valuable to customers.

Why It Matters:

High engagement indicates that users find your product valuable and are incorporating it into their daily workflows.

If DAU, WAU, or MAU numbers are low or declining, it could signal usability issues, lack of compelling features, or poor onboarding.

Retention rate is particularly important for SaaS businesses since recurring revenue depends on users staying engaged over time.

How to Improve It:

• Enhance onboarding: A seamless onboarding experience ensures users quickly see value in your product, increasing engagement from the start.
• Personalize the user experience: Use behavioral data to tailor recommendations, notifications, and feature suggestions based on individual user activity.
• Encourage feature adoption: Highlight underutilized features that provide significant value through tooltips, email campaigns, and in-app guides.
• Use gamification elements: Leaderboards, achievement badges, and progress tracking can boost user interaction and make your product more engaging.
• Optimize for mobile and multi-device access: Ensure users can access and interact with your platform across different devices for a seamless experience.
• Leverage user feedback: Conduct surveys, analyze support tickets, and monitor feature requests to continuously improve the product experience.

By tracking and improving product engagement metrics, SaaS businesses can increase user satisfaction, reduce churn, and drive long-term growth.

Conclusion: Track, Analyze, and Optimize for SaaS Growth

Understanding and tracking the right SaaS metrics is not just about collecting data—it’s about using that data to drive smarter business decisions.

By focusing on these 10 essential SaaS metrics, founders can gain a clearer picture of their company’s health, identify growth opportunities, and proactively address challenges before they become critical.

Metrics like MRR, CAC, CLV, and churn rate directly impact revenue and profitability, while engagement indicators such as DAU, WAU, and retention rate reveal how well users are adopting and staying loyal to your product.

Additionally, financial metrics like burn rate and runway help ensure long-term sustainability.

If you want to scale your SaaS business efficiently, consistently optimizing these key performance indicators (KPIs) should be a core part of your strategy.

Whether you’re working on reducing churn, improving customer acquisition, or maximizing lifetime value, the right data will guide your decisions and give you a competitive edge.