Best Startup Metrics

When it comes to measuring the performance of a startup, there are a number of key metrics that are commonly used. Here are a few examples:

1. Monthly Recurring Revenue (MRR) – a benchmark for industry is a 20-30% MoM growth rate.
2. Customer Acquisition Cost (CAC) – measure the cost of acquiring a new customer through sales and marketing efforts, and a benchmark for the industry is CAC < LTV (Lifetime Value of a Customer).
3. Lifetime Value (LTV) – measure the revenue generated by a customer over their entire life with your company, and a benchmark for the industry is LTV > 3x CAC.
4. Net Promoter Score (NPS) – measures customer satisfaction and loyalty, and a benchmark for the industry is an NPS of 50 or higher.
5. Churn rate – measures the rate at which customers are canceling their subscriptions, and a benchmark for the industry is a churn rate of less than 5%.
6. Gross Margins – measures the profit generated by your company after deducting the cost of goods sold, and a benchmark for the industry is a gross margin of 85% or higher.
7. Average Revenue Per User (ARPU) – measures the average revenue generated per user, and is calculated by dividing total revenue by the number of users.
8. Gross Churn – measures the rate of revenue loss due to customer churn, and is calculated by dividing the monthly recurring revenue lost to churn by the beginning of month recurring revenue.
9. Gross Retention – measures the percentage of customers that remain paying, and is calculated by subtracting Gross Churn from 100. A gross retention rate of over 100% is considered best in class, meaning that your business is retaining more revenue from existing customers than it is losing.
10. Customer Acquisition Cost (CAC) – measures the cost of acquiring a new customer, including all sales and marketing expenses, and is calculated by dividing total sales and marketing expenses by the number of new customers.
11. Time to Value (TTV) – measures the time it takes for a customer to receive a return on their investment from using your product, and is calculated by dividing the customer’s total investment by their monthly recurring revenue. A TTV of 2-3 months is considered best in class, meaning that a customer should receive a return on their investment from using the product within 2-3 months. A shorter TTV is typically more favorable, as it indicates that customers are realizing value from the product quickly.
12. Gross Margins – measures the profit generated by your company after deducting the cost of goods sold, and is calculated by subtracting cost of goods sold from revenue. A gross margin of 85% or higher is considered best in class.
13. User Activity – measures the level of engagement of your users with your product, and can be measured by tracking the number of logins, page views, feature usage, and other user interactions. The benchmark for user activity can vary greatly depending on the industry and business model of a SaaS company. However, best in class User Activity metrics for a SaaS company can include: Monthly Active Users (MAUs) – A benchmark of at least 50% of the total user base being active each month is considered best in class; Daily Active Users (DAUs) – A benchmark of at least 20% of the total user base being active each day is considered best in class; Session Length – A benchmark of 10-15 minutes per session is considered best in class; Engagement Rate – A benchmark of 50-60% is considered best in class, indicating that half to three-quarters of users are actively engaging with the product each month.
14. Sales Conversion Rates – measures the percentage of leads that convert into paying customers, and is calculated by dividing the number of paying customers by the number of leads. A conversion rate of 20-30% is considered best in class, depending on the industry and business model.
15. Gross Bookings – A benchmark of 50% quarter-over-quarter growth is considered best in class for early-stage SaaS companies.
16. Gross Retention – A benchmark of 120% or higher is considered best in class, indicating that the company is retaining more revenue from existing customers than it is losing.
17. Sales Efficiency – A benchmark of $1 in sales and marketing spend generating $3 or more in new annual contract value (ACV) is considered best in class.
18. Sales Cycle Length – A benchmark of 60 days or less is considered best in class, indicating that the sales process is quick and efficient.
19. Gross Margin – A gross margin of 80% or higher is considered best in class, indicating a high level of profitability.
20. Expense to Revenue (E/R) Ratio – A benchmark of less than 0.6 is considered best in class, indicating that the company is spending less than 60 cents for every dollar of revenue.
21. Employee headcount – A benchmark of less than 5 employees per $1 million in annual recurring revenue (ARR) is considered best in class, indicating a high level of operational efficiency. 
22. Lifetime Value (LTV) – A benchmark of 3-5 times the customer acquisition cost (CAC) is considered best in class. This indicates that a company is earning more from each customer than it is spending to acquire them.
23. Customer Acquisition Cost (CAC) – A benchmark of less than 4-5 months of the customer’s expected LTV is considered best in class.
24. Net Promoter Score (NPS) – A benchmark of 50 or higher is considered best in class, indicating a high level of customer satisfaction and loyalty.
25. Payment Conversion Rate – A benchmark of 70-80% is considered best in class, indicating that most customers are successfully completing transactions.
26. Average Revenue Per Account (ARPA) – A benchmark of $10,000-$15,000 per account per year is considered best in class for early-stage SaaS companies.
27. Renewal Rate – A benchmark of 80-90% is considered best in class, indicating that a high percentage of customers are renewing their subscriptions.
28. Upsell and Cross-sell Rates – A benchmark of 10-20% of customers buying additional products or services is considered best in class.

Popular SaaS Metrics by Function

Sales:

• Lead conversion rate: A benchmark of 10-15% of leads converting into opportunities is considered best in class.
• Win rate: A benchmark of 40-60% of opportunities resulting in closed deals is considered best in class.
• Average deal size: A benchmark of $50,000-$100,000 is considered best in class for early-stage SaaS companies.

Marketing:

• Cost per lead: A benchmark of $50-$100 per lead is considered best in class.
• Traffic to lead conversion rate: A benchmark of 2-5% of website visitors converting into leads is considered best in class.
• Marketing Qualified Lead (MQL) to Sales Qualified Lead (SQL) conversion rate: A benchmark of 20-30% of MQLs converting into SQLs is considered best in class.

Customer Success

• Gross retention rate: A benchmark of 120% or higher is considered best in class, indicating that the company is retaining more revenue from existing customers than it is losing.
• Net Promoter Score (NPS): A benchmark of 50 or higher is considered best in class, indicating a high level of customer satisfaction and loyalty.
• Average handle time: A benchmark of less than 5 minutes for each customer interaction is considered best in class, indicating efficient and effective customer support.

Product Development

• Time to market: A benchmark of less than 6 months for each new product release is considered best in class, indicating a fast and efficient product development process.
• Feature adoption rate: A benchmark of 60-70% of customers using each new feature is considered best in class, indicating high levels of customer engagement and satisfaction.
• Product churn rate: A benchmark of less than 10% of customers discontinuing use of each product is considered best in class, indicating a high level of customer loyalty and retention.

Finance

• Gross Margins: A benchmark of 60-80% is considered best in class for SaaS companies, indicating high levels of profitability.
• Operating Expense to Revenue Ratio: A benchmark of less than 70% is considered best in class for SaaS companies, indicating efficient use of resources.
• Burn Rate: A benchmark of $50,000-$100,000 per month is considered best in class for early-stage SaaS companies, indicating a balanced use of funding and resources

Human Resources

• Employee Turnover Rate: A benchmark of less than 15% is considered best in class, indicating a low level of employee churn and high levels of job satisfaction.
• Employee Satisfaction Score: A benchmark of 80% or higher is considered best in class, indicating high levels of employee engagement and motivation.
• Time to Hire: A benchmark of less than 30 days for each new hire is considered best in class, indicating an efficient and effective recruitment process

 Operations

• Server Uptime: A benchmark of 99.9% or higher is considered best in class, indicating reliable and stable performance for customers.
• Mean Time to Resolution (MTTR): A benchmark of less than 4 hours for each technical issue is considered best in class, indicating fast and efficient problem-solving.
• Customer Satisfaction Score: A benchmark of 80% or higher is considered best in class, indicating high levels of customer satisfaction and loyalty.

 Product Management

• Feature Velocity: A benchmark of releasing 2-3 new features per month is considered best in class, indicating a fast and efficient product development process.
• User Feedback Rating: A benchmark of 80% or higher of users providing positive feedback on new features is considered best in class, indicating high levels of customer engagement and satisfaction.
• Product-Market Fit: A benchmark of 60-70% of customers using each new feature is considered best in class, indicating a strong fit between the product and market needs.

It’s important to note that these benchmarks can vary greatly depending on the size, stage, and specific needs of a SaaS company, and each company should evaluate its own metrics against its goals and industry benchmarks, and adjust accordingly.