Software-as-a-service (SaaS) is a great business model that provides recurring revenue for vendors, continual upgrades for users, and fewer hassles for customers. When looking at a SaaS business, there are three critical numbers to watch:
- Churn — the percentage of customers that leave monthly/annually (the equivalent is looking at the renwal rate of customers)
- Current customer revenue growth — the growth of revenue from up-selling existing customers
- New customer sales — the number of new customers signed up and the corresponding revenue
These are the three most important metrics to monitor for a SaaS business.