Customer Acquisition Cost (CAC)
Your CAC is a metric used to measure the cost associated with acquiring each new customer. It includes the total amount spent on marketing, sales, and other activities related to capturing and converting leads into paying customers. The goal here is to ensure that your CAC does not exceed the lifetime value of your customers. To calculate CAC, divide all costs associated with customer acquisition by the number of customers acquired over a certain period of time.
Retention Rate
Retention rate measures how many users remain active after they sign up for a service or purchase an item from you. Retention rate is important because it shows how successful you are at keeping users engaged in order to eventually convert them into loyal customers who will continue using your services year after year. To calculate retention rate, divide the number of active users at any given time by the total number of users who signed up within a certain period of time (e.g., monthly).
Monthly Recurring Revenue (MRR)
MRR measures the revenue generated from subscription-based products or services that generate recurring payments from customers on a monthly basis. MRR helps you understand whether or not you are achieving your growth goals and allows you to forecast future revenue with greater accuracy. To calculate MRR, take all subscription fees collected per month divided by total number of subscribers during that same period of time.
Conclusion:
Measuring success is an important part of managing any SaaS product; without data-driven insights about what’s working and what isn’t, it can be difficult for business owners and executives alike to make informed decisions about their products’ future strategies and growth plans. By utilizing metrics such as Customer Acquisition Cost (CAC), Retention Rate, and Monthly Recurring Revenue (MRR), CEOs, CTOs and Founders can gain valuable insights into their SaaS products’ overall performance - allowing them make more informed decisions about which strategies are working best for their products' success going forward.
