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Behind every successful SaaS business is a wealth of SaaS metrics.

This presentation gives you a broad overview of the key metrics you should be measuring to fully understand how your business is growing.

Metrics like Monthly Recurring Revenue (MRR), Customer Churn Rate, MRR Churn Rate and Customer Lifetime Value (LTV) can often be measured in a number of ways. We show you the intricacies of all of them.

  • MB

    Morgan Brown

    almost 2 years ago #

    If you haven't checked out ChartMogul yet and are managing a subscription business, you are missing out.

  • AD

    April Dunford

    almost 2 years ago #

    This is great.
    Question (if the folks are on here) - on Chart 8 you say "segmentation is the key to meaningful Churn metrics". By segmentation are you talking about the "churn classification" that you have on chart 12 or is there another segmentation I'm not seeing in the deck?
    I'm working with a company where we have many customers that would be in the "happy churn" bucket due to the nature of the product but generally start again as customers later (it's used on a project by project basis) - we're looking at how best to smooth that out (with pricing/packaging/terms) but also at how to represent that in our reporting so that investors don't mistake that "happy churn" for the not so happy kind of churn. Any advice on that?

    • ES

      Ed Shelley

      almost 2 years ago #

      Thanks for the comment @aprildunford!

      Actually, segmentation is a huge topic that we don't go into in huge detail in these slides. It's really referring to viewing your churn metrics on the level of a user segment, rather than just looking at a big high-level number. i.e.:
      - "What's my customer churn per marketing channel?"
      - "What's my customer churn per pricing plan?"
      I'm sure you can see that the answers to the above are WAY more insightful and actionable than an overall churn rate percentage.

      Cohort Analysis is also a form of segmentation - which is covered in the slide deck.

      With regards to happy churn - that's a difficult one, because in reality it *is* churn, and you have no guarantee that the user will reactivate. I think you're quite right in trying to address that with product / pricing, and there are a number of different options there. What if that "happy churn" could be replaced with a downgrade to a cheaper plan? At least then you've retained them as a paying customer

      Makes sense to split out "happy churn" in your reports, but I think investors will still see this as a significant risk for your business.

      • AD

        April Dunford

        almost 2 years ago #

        Thanks!
        The segmentation thing is a biggie imo - what we're looking at metrics (including churn) per market segment (i.e. are there certain types of customers that churn less, pay more, refer more, grow more) so we can get more focused in our marketing efforts on the more valuable segments.
        wrt the "happy churn" issue I was talking about, downgrade isn't possible (hard to describe here but we can't go that way) however, changing the terms on the contract does seem to work in many cases (yearly terms vs monthly for example) to help bridge the small gaps. We've got other experiments running too.
        Thanks again!

        • NF

          Nick Franklin

          almost 2 years ago #

          Probably the simplest and most important type of segmentation to do when calculating your churn rate is to segment by monthly plans (as mixing in the annual plans will skew the outcome otherwise).

        • JK

          Jaana Kulmala

          over 1 year ago #

          I'm with FirstOfficer.io, not ChartMogul, but I've done custom segmenting for some of my customers.

          How we do that is to use MixPanel or KissMetrics to find out the customers in the wanted segments. Then list the customer ids and pull the cohorts (or metrics, depending on the need) from FirstOfficer DB. It's a simple way to see if the original assumptions of the market segment were right.

          What comes to your 'happy churn' issue, I'm with Nick. One of the reasons investors like tools like FirstOfficer, ProfitWell, ChartMogul and BareMetrics is that they get numbers that are not 'prettified'.

          For example in this 'happy churn' case both churn rate AND new MRR would need to be adjusted. If you exclude someone from churn, you don't get to calculate them into acquisition anymore. People don't really do it consciously, but they usually 'forget' to adjust for the things that don't work for their benefit.

          It's better to just report the churn percentages without happy churn and acquisition without happy returners separately for your investors.

          ChartMogul guys, I love the slides, great work!

    • MB

      Morgan Brown

      almost 2 years ago #

      @mr_ed any insights on @aprildunford's question?

  • VV

    Victor van der Veen

    almost 2 years ago #

    Really interesting. Got me sharp again

  • KT

    Kevin Tran

    almost 2 years ago #

    Thank you for the simple presentation. It was definitely insightful. Something to consider especially since I am in the early stages of developing a SaaS. Good to keep these metrics handy.

  • FA

    Faisal Al-Khalidi

    almost 2 years ago #

    Really great overview of key SaaS Metrics. Thanks for putting this together @mr_ed and the ChartMogul team.

  • EI

    Elco Ian

    almost 2 years ago #

    Looks great!

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