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The most important bottom-up SaaS metrics to track (and how to best visualize them) – Issue 48

👋 Hello, I’m

Lenny⁠

, and welcome to a 🔒 subscriber-only edition 🔒 of my weekly newsletter. Each week I tackle reader questions about product, growth, working with humans, and anything else that’s stressing you out at the office.

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Q: I’m curious what metrics early-stage bottom-up SaaS startups track and how they visualize these metrics –– especially metrics other than MRR and revenue?

With so many tools, potential metrics to track, and perspectives on measuring your progress, it’s no surprise founders often struggle to know where to start.

Not having run a SaaS startup myself, I came at this question from a few directions: crowdsourcing the answer, asking my smartest founder friends, and doing a bit of primary research. Below you’ll find answers to the following three questions

🔬 What metrics should early-stage bottom-up SaaS founders focus on?

🛠 What tools should they use to track their metrics?

🎨 How does one best visualize and share these metrics?

I don’t have all of the answers so I’d love to hear from you. Is there anything below that looks off or incomplete? I’ll use this post as a living document and update it with anything I learn. Just reply to this email, leave a comment, or

hit me up on Twitter⁠

. I would love to make this the most accurate and actionable list of recommendations for founders of bottom-up SaaS companies.

⁠

Leave a comment⁠

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🔬 What metrics should early-stage bottom-up SaaS founders focus on?

Below are the most important metrics ranked in priority order, divided into three buckets: pre-revenue, post-revenue, and additional metrics to track. You don’t need to track all of these immediately — pick a few to start with and add more over time.

Pre-revenue:

1. Retention

User retention: % of new users who are still active 3-6 months later

Logo retention: % of new companies who are still active 3-6 months later

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L7/L30 retention⁠

: Number of days that users are active per week/month

2. Virality within an organization

Invite rate: % of new users who sent at least one invite in the first X days

Invite conversion rate: % of users who receive an invite that sign-up in the next X days

Virality factor: % of new users who have come from an invite

3. Top-of-funnel growth

Traffic: Visits to site/week

MoM user growth: Month over month growth rate in total users

Activation: % new users who “activate”, whatever that means for your product

Post-revenue:

1. Revenue growth

MRR: Total and MoM MRR growth

ARR: Total and MoM ARR growth

New customers: New customers/week

2. Retention

Customer retention: % of new paying customers who are still customers 3-6 months later

Net Dollar Retention: MRR of each cohort at 12 months

3. Monetization

Paid company conversion: % of free companies that convert to paid within X days

Payback period: Average time to pay back CAC

Gross margins: Net sales revenue minus the cost of goods sold

Additional metrics to track and have available:

1. Engagement

DAU/MAU

Key actions per day/week (e.g. tasks created, pics sent)

Average time spent/user/day

2. Virality within an organization

Invite volume: When an invite was sent, median number of invites sent per user

Velocity of virality: Median days from 1 —> N seats at a company

Traction: Number of total companies with at least 3 users signed-up

Leads: Top domain name with most users (to target outreach)

3. Monetization

ARPU: Average revenue per user

User conversion: % of free users that convert to paid within X days

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Quick ratio⁠

: (New MRR + Expansion MRR) / (Contraction MRR + Churned MRR)

Growth spend efficiency: CAC/LTV

Speed to next tier: If usage-based pricing, speed to next tier/plan

Company adoption: Number of users per domain name

4. Funnel conversion

Landing conversion: % visitors click CTA

Activation: % visitors who “activate”, whatever that means for your product

% visitors complete your sign-up flow

% visitors signup

🤓 Further study for later-stage or sales-driven companies

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Redpoint SaaS Startup Key Metrics Template⁠

⁠

How David Sacks built the first bottom-up playbook for enterprise⁠

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Top 5 SaaS Metrics VCs Look At for Series A/B/C⁠

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8 SaaS Growth Metrics Every Startup Should by Tracking⁠

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What are the 2-3 most important metrics to watch for an early bottom-up B2B SaaS business?⁠

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🛠 What tool should founders use to track their metrics AND 🎨 How do I best visualize and share these metrics?

I put a call out on Twitter asking SaaS founders to share their metrics dashboards:

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Below I’ve synthesized the best examples, and grouped them by the tools that these teams use to track these metrics. Surprisingly (though not that surprisingly) Google Sheets was by far the most used tool, followed by Profitwell and Google Data Studio (sitting on top of Google Sheets). If you have any more examples to share,

shoot me a note⁠

1. Google Sheets

Courtesy of

@craigzingerline⁠

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Courtesy of

@garrett_wj⁠

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Courtesy of

@lwcassid⁠

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Courtesy of

@rylandking⁠

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Courtesy of

@JorecelleDGR⁠

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Jerocelle @JerocelleDGR@lennysan @googlesheets This is the latest I have. October 12th 20201 Like⁠

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2. Profitwell

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Jimmy Mackin | CEO of Curaytor @jimmymackin@lennysan I am obsessed with @ProfitWell report. It is the first thing that I check every morning. October 2nd 20201 Retweet33 Likes⁠

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profitwell.com⁠

almost exclusively. It was super helpful in the acquisition to have a 3rd party metric source I'd share a screenshot but I don't think the acquirer would appreciate that 😂

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October 2nd 2020

14 Likes

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3. Google Data Studio

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Other: Mixpanel, Looker, Tableau, Anaplan, Causal, Slack

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Justin Dilley @JustDilley@lennysan I look at a lot of SaaS metrics and this visual is a good summary view. October 2nd 20202 Retweets52 Likes⁠

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droyd.io⁠

for anyone to do it (& more). Will check if I can dm more traditional dashboards from our day jobs though (cc @Brieuc_lambert)

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October 3rd 2020

1 Retweet8 Likes

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October 3rd 2020

9 Likes

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bit.ly/nimrodjam⁠

) is all dashboards should start with this: KPI time series, goal line, and linear progress to goal from start of half. Then current value, and w/w growth abs and %, color coded green/red.

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October 2nd 2020

19 Likes

🤓 More examples

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Open startups by baremetrics⁠

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Open startups by Postmake⁠

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Ghost⁠

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Buffer⁠

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Gumroad⁠

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That’s it for this week! Have any feedback, questions, or additional examples? Leave a comment or reply to this email.

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