What is a KPI and what should I track in my SaaS app?

So you have a good idea on how to build your SaaS app, but you don’t know how to see if it is going well or not - other than looking in your bank account.

By using some simple KPI’s you can stop wondering and know how well your app is performing.

KPI - Key Performance Indicators

To someone coming from the economy world they talk about KPI:s (key performance indicators) all the time. KPI is a way of measuring how your business or web app is doing.

What should I track in a SaaS App?

I like to measure three things in all of my apps.

• Monthly Recurring Revenue
• Churn rate (how many are leaving each month)
• Lifetime Value (LTV: how much is each customer worth during their lifetime as a subscriber)

There are lot of other KPI’s that you could measure, but if you are currently not measuring anything these are the most important KPI’s to add.

Churn rate should be low. Monthly recurring revenue (MRR) should increase and customer lifetime value (LTV) should be higher than your costs to get a customer to sign up for your service.

If all three of the above looks good you probably have a good SaaS app. If one of more of them are getting worse you know what to work on.

I am amazed by how many web app owners there are that does not track any of the three KPI’s above. If you don’t track anything you are just guessing. That is not a smart way to run a business.