SaaS Metrics Glossary for Founders

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SaaS Metrics

Activation Rate

The percentage of new users who complete a key action indicating they've experienced the product's core value.

SaaS Metrics

CAC Payback Period

The number of months required to recover the cost of acquiring a customer through their subscription payments.

SaaS Metrics

Churn Rate

The percentage of customers or revenue lost over a specific period, measuring how quickly you're losing business.

SaaS Metrics

Customer Health Score

A composite metric combining usage, engagement, and sentiment signals to predict customer renewal likelihood.

SaaS Metrics

Feature Adoption Rate

The percentage of users actively using a specific feature, measuring whether features deliver value.

SaaS Metrics

Freemium Conversion Rate

The percentage of free users who upgrade to paid plans, measuring the effectiveness of a freemium model.

SaaS Metrics

LTV:CAC Ratio

The ratio comparing customer lifetime value to acquisition cost, indicating whether your unit economics support sustainable growth.

SaaS Metrics

Logo Churn vs Revenue Churn

Logo churn counts customers lost; revenue churn counts dollars lost. They reveal different aspects of retention health.

SaaS Metrics

Magic Number

A sales efficiency metric measuring how much new ARR is generated for each dollar spent on sales and marketing.

SaaS Metrics

NPS (Net Promoter Score)

A customer loyalty metric measuring willingness to recommend, calculated as the percentage of promoters minus detractors.

SaaS Metrics

Net Dollar Retention (NDR)

The percentage of recurring revenue retained from existing customers over a year, including expansion and accounting for churn.

SaaS Metrics

Product Qualified Lead (PQL)

A user who demonstrates buying intent through product usage, predicting higher conversion likelihood than marketing leads.

SaaS Metrics

Quick Ratio (SaaS)

A growth efficiency metric comparing revenue added (new + expansion) to revenue lost (churn + contraction), showing net growth quality.

SaaS Metrics

Rule of 40

A benchmark stating that a SaaS company's growth rate plus profit margin should equal or exceed 40% to be considered healthy.

SaaS Metrics

Time to Value (TTV)

The duration between a user signing up and experiencing meaningful value from the product for the first time.

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