Where does SaaS Analytics fit in? Why is it important?

SaaS analytics is the method of tracking data that software-as-a-service companies use to make data-driven, actionable decisions. Due to its growth potential and technological advances, SaaS applications have become a crowded market. It is almost certain that companies that disrupt their corner of the SaaS industry will use data to analyze the landscape and carve out their niche.

As SaaS companies compete in a crowded ecosystem, they must understand, analyze, and meet their KPIs. In order for SaaS companies to be able to handle enormous volumes of data when querying and reporting, their data analytics systems must be scalable.

There is constant optimization in the SaaS industry. There are many companies that fail to realize the importance of internal data sources to their growth. In spite of this, SaaS companies don't proactively analyze their own business intelligence. Look at these four data points to make the most of your data analytics.

Churn analysis

SaaS analytics tools can reveal your worst churn in real-time. While most analytics tools provide basic insight into the churn, SaaS-specific analytics allow you to dig deeper. By identifying the source of your churn, you can stop it at the source and even automate certain processes to increase customer retention.

Cost-savings

By using SaaS business intelligence, you can keep your operations as streamlined as possible. Having a good understanding of what works and what doesn't will save you money and time.

Future-focused

By investing in a top-tier SaaS business intelligence tool, you'll be able to understand important market trends and fine-tune how you respond to them. Using these features, you can project revenue from each customer segment (including things like churn timelines) and take preventative measures.

Segmenting customers

Segmenting customers is more valuable than most people realize. When you segment customers based on their industry, MRR, LTV, or even churn rate, you can better understand their behavior, and then optimize your customer targeting and user experience. With customer segmentation, customers will receive a more personalized experience, which will increase revenue and customer loyalty.

Here are some key metrics that every SaaS business should track based on what they observe in their data and how they can use SaaS analytics tools.

Churn Rate: Churn rates are important indicators of a company's health and stickiness. As a percentage of remaining customers divided by the number of customers leaving over a certain period, the churn rate is calculated.

ARR: Associated with growth are the annual recurring revenue (ARR) and the monthly recurring revenue (MRR). All recurring items in a subscription make monthly recurring revenue. The annual revenue is calculated by multiplying the MRR by 12. Tracking monthly and annual recurring revenue metrics can help you plan for the long term and the short term.

Customer lifetime value: The total amount of money you can expect to receive from a customer during their lifetime. LTV is more accurate than metrics like conversion rate when predicting your company's revenue and profit in the future.