What is SaaS Analytics & Why Does it Matter

With approximately 30,000 active SaaS companies operating within a market valued at $197 billion in 2023, it’s obvious that this industry is still evolving and more competitive than ever.

As a SaaS business aiming to elevate your monthly recurring revenue rather than relying solely on transactional value, your success hinges on delighting customers while providing valuable products that keep users coming back for more.

While transitioning to a recurring business model may provide increased financial stability, it’s important to recognize that any decline in customer satisfaction can quickly impact your revenue stream.

On a more positive note, SaaS businesses now have massive amounts of data on customer behavior in relation to their products. When SaaS metrics are diligently monitored and effectively leveraged, companies can enhance their offerings, optimize their pricing strategies, and, most importantly, make well-informed decisions sure to yield exceptional outcomes.

All thanks to the growth of strong SaaS analytics tools.

And we have even more good news to share! The Merchant of Record business model can increase your business success while making things easier for you! Wondering if this is the partner you were looking for?

In this article, we will be looking at:

What is SaaS Analytics?
The 3 Benefits of SaaS Analytics
4 Key SaaS Metrics to Track

What is SaaS Analytics?

SaaS analytics encompasses the collection, analysis, and interpretation of user behavior data, including metrics such as product usage, interactions, and performance.

These key benchmarks are instrumental in enabling SaaS businesses to enhance their customer retention strategies, reduce customer acquisition costs, identify trends, and refine customer segmentation efforts.

Ultimately, the main focus is maintaining user engagement.

Yet, without precise and actionable insights into what truly motivates our customer base, improving their experiences can prove to be an exceedingly challenging endeavor.

The 3 Benefits of SaaS Analytics

Believe it or not, despite the industry’s ongoing pursuit of self-optimization, not all SaaS businesses understand the significance of harnessing internal data sources for their growth.

Rather than proactively leveraging their own business intelligence to make informed decisions and develop effective strategies, they often overlook this invaluable data resource. Here are three compelling reasons why every SaaS company should pay attention and fully capitalize on its SaaS data analytics.

Lowering Operational Expenses

What’s the number one rule to SaaS success?

Keeping SaaS profits high and costs low.

The easiest way to apply this rule is to fully understand the effects of your strategies and operations.

With the help of SaaS specific analytics, you can better grasp what works and what doesn’t, thus avoiding losing time and resources by taking the wrong routes.

But to ensure that your operational efforts are focused and resource-efficient, it’s important to closely monitor your data and fine-tune our strategies to ensure that your experiments actually yield the desired results.

See Into The Future

Your SaaS analytics platform is your crystal ball. And the more complex and robust your SaaS analytics tools are, the more trustworthy your business metrics predictions will be.

With access to multiple data segmentation features and customization options, you’re given the ability to analyze different revenue projections, such as anything from annual recurring revenue to your customer churn rate.

Having the benefit of future business projections, you will be able to take preventive measures, cutting your potential losses and keeping your profits high over long periods of time.

Plus, the beauty of SaaS analytics is that even when you have legitimate business concerns,, you can rely on accurate numbers to show you the way to survival and prosperity.

Enhanced Customer Segmentation

In today’s market, all SaaS companies should consider selling their products on a global scale.

The only problem is that the success of your global expansion strategies rests on how well you can fulfill local expectations.

In other words, you need to master the art of customer segmentation which is anything from providing local payment methods and currencies to translating checkout pages, running specific campaigns, or offering flexible subscription billing options.

Customer data points give you sufficient details as to how you can create personalized product experiences for different user segments. You can track key metrics like customer lifetime value (LTV), monthly recurring revenue(MRR), or churn rate and then confidently create different user groups based on them. Once you have your audience segmented, you can start analyzing them to understand each group’s unique traits and capitalize on them.

It’s what sets us apart that matters, right?

4 Key SaaS Metrics to Track

The SaaS industry is in a continuous process of optimization, so monitoring as many subscription metrics as possible is always a good idea. But, in the absence of a robust SaaS analytics platform, things can get very complicated.

Even so, here are four of the most important metrics you need to keep a close eye on.

Customer Churn Rate: Monitoring your churn rate is particularly important because you need to always be aware of how many clients are canceling their subscriptions. The higher this number is, the more relevant it becomes to fix your customer satisfaction issues. After all, the only way you can have a successful subscription business is by maintaining a healthy customer base.

Customer Lifetime Value (CLTV): If there is one indicator of customer success, then CLTV has to be it. With the help of this metric, you can estimate the total revenue recurring customers can generate using your product. High CLTV paying customers are, as you can imagine, an important customer segment, so knowing who they are makes it particularly relevant when establishing pricing strategies.

Customer Acquisition Cost (CAC): Data does a great job of revealing your business expenses, which is a major help when developing your budget. CAC helps you understand your user acquisition costs and how crucial it is that you track this metric to perform further optimizations meant to keep acquisition costs lower than CLTV.

Monthly Recurring Revenue (MRR): Subscription-based businesses need to keep a close eye on their monthly average revenue per user. And even more so than their annual recurring revenue (ARR). MRR is one of the most important recurring revenue metrics since it gives the SaaS owner great control over the profitability of their product. With valuable insights delivered on a regular basis, you can make adjustments to your business growth strategies in real-time and avoid costly experiments.