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. Probably, 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).  More here.

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.

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