11 Essential SaaS Sales Metrics You Must Be Tracking for Your Business Growth

Unlike traditional sales models that focus on one-time purchases, SaaS sales models rely on recurring revenue streams. This makes metrics like Annual Recurring Revenue (ARR) and Customer Lifetime Value (CLTV) so important to SaaS businesses. These metrics help SaaS companies understand the big picture and where they are headed directionally as an organization, but the benefits go beyond providing direction. Forbes reports that data driven organizations are 23 times more likely to acquire customers and 6 times as likely to retain customers. 

Whether you’re on the sales team, a RevOps lead, or trying to better understand your organization’s business model, keeping a pulse on sales metrics will help you make data-driven decisions that lead to high-value customers and long-term growth.

While this is not a comprehensive list of all the metrics you could track, this list provides direction as to what SaaS companies find are the most important metrics to track. From here, you can explore other metrics that may be more specific to your team’s or business’ needs. 

Knowing an organization’s recurring revenue helps teams be future-forward. Use these metrics to look at the big picture and understand what levers need to be pulled in order to reach the company’s revenue goals. 

Annual Recurring Revenue (ARR)

1. Annual Recurring Revenue (ARR) shows the development of revenue across time periods, offering the annualized value of recurring revenue from accounts within each period. This metric is incredibly important to SaaS organizations because it shows the business’ revenue trajectory, offering insight into overall business performance. 
   
   How to calculate ARR: 
     ARR = ∑ (Opportunities ARR at the end of the period)  
    
2. Monthly Recurring Revenue (MRR) is the monthly revenue generated from accounts/subscriptions and is a crucial indicator of a business’ predictable income. While ARR provides the big picture, MRR is helpful for digging into more of the operational details, allowing teams to track short-term fluctuations and trends. 
   
   How to calculate MRR: 
   Rolling MRR = ∑ (Opportunities MRR at the end of the period) 
    
3. Customer Lifetime Value (CLTV) is the total revenue a customer is expected to generate over their relationship with your business. CLTV helps organizations forecast revenue growth and is an excellent indicator of customer satisfaction and loyalty. 
   
   How to calculate CLTV: 
   CLTV = Average Revenue Per User (ARPU) * Average Customer Lifespan

Analyzing pipeline creation and conversion helps sales teams and SaaS leaders optimize the sales process. By improving the flow of sales pipeline, teams can more accurately forecast revenue, improve customer relationships, and ultimately drive additional revenue.  

4. Pipeline creation reviews the amount of new opportunities created within a specific time period. Reviewing the sales pipeline helps teams know if there are enough opportunities coming through marketing and other sales avenues. A decrease in pipeline creation is often a red flag to organizations that more efforts need to be focused on customer acquisition.
   
   How to calculate pipeline creation:
   
   Pipeline Creation = ∑(Total value of opportunities that were created during the period)

Pipeline Conversion Rate 

5. Pipeline conversion rates measure the percentage of closed-won opportunities compared to all opportunities within the pipeline during a specific time period. Tracking pipeline conversion rates helps sales leaders identify areas for improvement, increase overall conversion rates, and more accurately forecast future revenue. 
       
   How to calculate pipeline conversion rate:
   
   Pipeline Conversion Rate = Value of Closed Won Opportunities for the Period / Total Value of Pipeline Opportunities during the Period
    

Sales efficiency metrics look at how effectively your sales team is converting leads into customers and generating revenue, all while keeping an eye on costs. By tracking these metrics, you can identify areas for improvement, optimize your sales process by reviewing SaaS sales funnel metrics, and ultimately drive more revenue with fewer resources.

6. Customer Acquisition Cost (CAC): This metric takes into account the marketing and sales dollars that went into finding the lead and bringing them on as a customer. You always want the CAC to be lower than the Customer Lifetime Value. If not, pricing or marketing and sales tactics need to be adjusted.
   
   How to calculate CAC:
   
   CAC = Total Customer Acquisition Costs (within a specific period) / Number of Customers Acquired (within a specific period)
   
   Sales Cycle Length
    

7. Sales Cycle Length is the average amount of days it takes to close a deal. Sales cycle length is a tell-tale sign of efficiency and whether or not there are blockers within the funnel that are slowing down the sales process. According to research by HubSpot, the average SaaS software sales cycle is 84 days long. If you could shorten the cycle by 2, even 1 week, companies could offer a better customer experience with fewer bottle necks and sales reps are able to spend more time closing deals.
   
   How to calculate sales cycle length:
   
   Average Sales Cycle Length = Total Sales Cycle Duration (in days) of Closed Opportunities/ Total Number of Closed Opportunities
    
8. Lead Conversion tracks the percentage of leads that convert into paying customers at each stage of your sales funnel. Analyzing lead conversion rates helps you pinpoint weaknesses in your funnel and identify opportunities to improve lead nurturing and qualification.
   
   How to calculate Lead-to-SAL Conversion Rate:
   
   Lead-to-SAL Conversion Rate (%) = Leads Created that were sales accepted/ Total Leads Created in the time period
    

While acquiring new customers is important, in SaaS models retaining current customers is just as critical. Analyzing retention through metrics such as active accounts, logo retention rates, and churn rates can help you identify customer satisfaction and address any hiccups with your products and services before it’s too late. 

Active Accounts Waterfall

9. Active Accounts is the number of customers actively engaged and using your product each month. Active users are important to track because declining activity may mean that your customers are not enjoying your product, are having trouble onboarding, or are no longer interested and are likely to churn.
   
   How to calculate active accounts:
   
   Active Accounts Waterfall = Start of Period Active Accounts + New Accounts - Churned Accounts
    
10. Logo Retention Rate (LRR) is the percentage of customers that remain active over a specific period. LRR is an excellent measure of customer loyalty and satisfaction. A high LRR improves the Customer Lifetime Value and offers predictable revenue growth for the years ahead.
    
    How to calculate logo retention rate:
    
    Logo Retention Rate = Starting Active Accounts - Churn Starting Active Accounts
     
11. Churned Accounts is the number of customers who canceled their subscriptions within a given period. Measuring churned accounts is important for B2B SaaS businesses to track the success of their customer retention efforts and identify trends in customer activity. 
    
    How to calculate churned accounts:
    
    Churned Accounts = ∑ (Active accounts in the preceding period with no ARR in the current period)
     

Having access to data is only helpful if you know how to take those key SaaS metrics and make data-backed decisions. Here are a few strategies to help you analyze data and put the data to use.

• Create Actionable Steps: Use these sales metrics to build actionable goals and KPIs for your team. Are your pipeline conversion rates low? Create a KPI for the quarter that focuses on optimizing the different stages within the pipeline.
• Analyze Trends: Understanding trends can help you know whether something is due to seasonality or is a business concern. For example, if you notice that your Active Customer metric is trending downward during a high-engagement season, this is a sign that there is waning engagement among your customer base. You can then provide customers with additional resources or request feedback on product improvements before the customers churn.
• Segment Your Data: Segmentation can shine a light on specific areas of the business that need additional support. For example, let’s say as a whole your sales cycle length is trending downward, but when you segment by product type, you find that one product line is greatly decreasing the average length. This tells you that you need to dive into the sales process for that product. The sales team may need more training on that product line or perhaps the product needs to be repositioned by the marketing team. Try segmenting by product, region, or industry to help you access deeper insights.
   

Sales metrics are key to understanding business performance, but there are a few common mistakes that people make when incorporating these metrics into their business practice. Follow these tips to help keep your data accurate and your team focused.

• Clean Your Data: CRM data hygiene is critical for accurate data. Clean out your CRM and other data platforms every six months to ensure there are no duplicates and that new data entries are being appropriately tagged.
• Stick to a Few Core Metrics: Determine as a company and as a department what your core metrics will be, and the fewer the better. Tracking too many metrics can lead to confusion and misaligned priorities. While you can keep an eye on more than a few metrics, making sure that all team members know the core metrics they’re charging toward will help with overall team alignment.
• Avoid data Silos: Each GTM team has a variety of tools that they use to track performance, but that means the data is often in different locations. Try using a revenue analytics tool to help you consolidate data for a single source of truth. 

In B2B SaaS, sales metrics are a necessity for understanding revenue generation, customer health, and sales efficiencies. Sales metrics can be your guiding light, helping you and your team make data-informed decisions that lead to greater growth for your company.

Use the above list of metrics and tips to help you navigate the hundreds of possible metrics out there. From this list, you can hone in on the metrics that are most important to your organization, department, or team. 
 

To help you evaluate your sales metrics, consider Sightfull, a revenue analytics platform that enables GTM teams to get more out of their data. By providing a host of easy-to-use metric templates, users can integrate their data and access insights in minutes. Explore Sightfull today.