Baremetrics is used by hundreds of companies to monitor the health of their business and improve key metrics. Benchmarks work by using this completely anonymized dataset to see how your company stacks up against other similar subscription companies. Cool, right? 😎👉👉
How am I grouped with other startups?
How can I improve my metrics?
Monthly Recurring Revenue
Monthly Recurring Revenue (also known as MRR) is the holy grail of SaaS metrics. If Up and to the right is the goal of any growing business, then MRR is the measuring stick.📏
Improving your MRR can be done in two ways: Increase revenue or decrease revenue lost to churn. Easy as that, right? 😂
If you are in the Lower Quartile of the User and Revenue Churn benchmarks, start with tackling churn. Growing MRR is near impossible if any new revenue you add is lost to churn.
LTV is the best metric to answer the question: How much can I spend to acquire a customer? Naturally, that's quite an important consideration!
ARPU and User Churn are the two drivers of this metric. You can increase your LTV by either charging more or reducing user churn.
Simply put, the longer folks stick around and the more they pay, the better off your business.
Churn is perhaps the most difficult metric to improve. The reasons for folks leaving are wide, and by the time someone cancels, it's often too late to get feedback on what you could have done better or differently.
Some churn can be avoided quite easily. Failed Charges often make up a huge percentage of your churn, so tackle that first!
NPS surveys are a great way to get valuable feedback from your customers before they churn. It is one of the single best predictors of churn.
A general rule of thumb is the more customers the better; however, that doesn't always hold true.
If you're not charging a whole lot of money each month, it can be really hard to move the needle on a metric like LTV. Acquiring customers is challenging, and not all that rewarding if you don't make much from them over their lifetime.
You should also take the market size into the equation. If your product is very niche, and you only charge $10 a month, your total earnings will peak very early. Low price, high volume pricing can only work in a handful of industries.
This metric is the best way to see the relationship between new customer acquisition and churn. Any number below 1.0 is bad, as you are churning more revenue than you're adding. The higher above 1.0, the better, though it's common for young companies to have a much larger quick ratio than established ones.
How you improve your quick ratio depends first on identifying whether your biggest issue is churn or adding new customers. Then, work to address either of those things and you should soon begin to see the hard work pay off in an improved quick ratio.
Failed Charges are the worst. But it's not just a cost of doing business, you can prevent churn due to failed charges with Recover.