The annual and monthly recurring revenue is the driving force behind B2B (or B2B2C) SaaS and subscription-based businesses, but presents a unique set of challenges, particularly in the early and growth stages. While recurring revenue is integral to long-term financial health, early- and growth-stage businesses must establish cash flow and recapture startup and operational costs at a time when they may still be determining product-market fit. Measuring key SaaS metrics can provide critical insights into organizational health, help businesses optimize their sales and marketing, and ultimately position them for long-term growth.
Simplifying the Complexities
Simply put, it’s crucial to understand the total cost of acquiring new customers, what it takes to keep them, and the impact of losing them. There are, of course, financial metrics that can help, and many businesses rightly focus a fair amount of time manually capturing and parsing these metrics. It is a necessary process, and one that, with the right SaaS reporting tools and dashboards, can be greatly simplified when the manual processes overwhelm your team’s ability to deliver timely and accurate data and reporting.
Further, investors are more likely to be attracted to businesses that have a deep understanding of their financial growth metrics and can present them in a clear, concise way. Even if the numbers are not wholly positive, by illuminating the drivers behind them, challenges become more actionable, businesses can pivot, and the transparency helps build the confidence of, and trust with, potential investors.
Let’s take a closer look at the key SaaS metrics you should be tracking and how to calculate them:
What SaaS and Subscription Companies Need to Succeed
In order to succeed, what SaaS and subscription businesses need most is real-time, reliable intelligence about their financial and operational health. Unfortunately, that can be hard to achieve—this critical information often lives in different systems, and it is not easy to aggregate. Using the right automated tools that integrate with their financial software stack and other third-party systems, SaaS and subscription businesses can get real-time access to a broad range of objective, accurate key metrics and granular insights tailored to their specific stage and needs—without the manual effort.
These metrics indicate financial and operational health, illuminate performance trends and the drivers behind them, and inform proactive decision making. Further, the metrics are essential to attracting the investors needed to extend the financial runway, help scale, and report out to existing investors. We outline the importance of and how to achieve automated metrics and deep, granular insights in our new White Paper, “How the Right B2B SaaS & Subscription Metrics Tools Accelerate Growth & Attract Investors.”
Please contact AcctTwo with questions or for guidance about how AcctTwo SaaS Intelligence can help propel the growth of your SaaS or subscription business. If you're ready to leave Excel behind and clearly see your CMRR growth drivers, use this button to find a time to talk to us about getting started.