Question

How can SaaS startups meaningfully measure retention?

Answer 1

Here are some ways SaaS startups can measure retention:

1. Monthly Recurring Revenue (MRR) Churn Rate: This metric measures how much revenue is lost due to customer churn. It is calculated by dividing the MRR lost from churned customers by the total MRR at the beginning of the month.

2. Net Promoter Score (NPS): NPS is a customer satisfaction metric that measures how likely customers are to recommend a product or service to others. It can be used to gauge customer loyalty and retention.

3. Customer Lifetime Value (CLV): CLV is the total revenue a customer is expected to generate over the course of their relationship with a company. By tracking CLV, SaaS startups can identify their most valuable customers and focus on retaining them.

4. User Engagement: Measuring user engagement can provide insight into how often customers are using a product and how engaged they are with it. Tracking metrics such as daily active users (DAU) and monthly active users (MAU) can help SaaS startups understand how often customers are using their product.

5. Customer Feedback: Collecting feedback from customers can provide valuable insights into what is working well and what needs improvement.