Dear SaaStr: What Are the Most Important SaaS Metrics in the Early Days?

Dear SaaStr: What Are the Most Important SaaS Metrics in the Early Days?

In the early days, there are probably only 5 metrics that really matter:

1. ARR
2. ARR Growth Rate
3. Burn Rate
4. True Customer Happiness. Probably, measured as NPS (more here: I Was Wrong. NPS is A Great Core Metric. | SaaStr)
5. And once you have at least a little revenue ($1m-$2m ARR or so), net revenue retention / churn.

(NRR and churn aren’t necessarily statistical significant before Year 2-3 and before $1m-$2m in ARR).

All the rest, maybe don’t obsess too much until you are bigger:

• Your CAC and CLTV?  Measure for sure, but what really matters in the early days is keeping the burn rate down.  That summarizes a lot of CAC and CLTV in the early days.
• Your Burn Mutliple?  Important if you have a lot of venture capital, but again, not so much if you have a modest amount of funding.  What matters more is just your absolute burn rate (and Zero Cash Date).  That your burn is modest. More here.
• Churn is important, but in the early days, just drive it down.  You are still learning.

What matters in the early days is:

• Do you have product-market fit? So you can grow fast enough …
• And do your customers love you (so they will beget you more customers)?
• And will you run out of money before you hit escape velocity?

The rest matters, but can be a distraction.  Don’t get lost in secondary metrics and miss the bigger early-stage goals.