As the SaaS industry continues to evolve, the competitive landscape demands that founders stay vigilant in tracking the right metrics. In 2025, data-driven decision-making is not just advantageous but essential for SaaS founders who want to understand their product performance, drive growth, and ensure customer satisfaction. By closely monitoring critical metrics such as Daily Active Users (DAUs), Monthly Active Users (MAUs), Net Promoter Score (NPS), and Annual Recurring Revenue (ARR), founders can make more informed decisions, prioritize effectively, and respond swiftly to market dynamics.
This guide explores the significance of these essential metrics and how they can shape the success of a SaaS product.
1. Daily Active Users (DAU) and Monthly Active Users (MAU)
What DAU and MAU Measure:
DAU and MAU are two primary metrics that measure user engagement. DAU represents the number of unique users who interact with your product daily, while MAU shows how many unique users engage with the product over a month. Together, these metrics provide insights into how often users return to your product.
Why They Matter:
For SaaS businesses, high DAU and MAU numbers indicate a loyal user base and consistent engagement. Tracking these metrics also helps founders identify trends, measure the effectiveness of new features, and understand user behavior. A strong DAU-to-MAU ratio (usually between 20-30%) signals high engagement, which is a crucial factor in achieving product-market fit and driving sustainable growth.
Real-World Example:
Slack, one of the most popular collaboration tools, monitors DAU and MAU meticulously. By tracking DAU/MAU ratios, Slack identifies engagement trends, allowing it to refine its platform to meet evolving user needs. In fact, high DAU and MAU figures were a key reason behind Slack’s high valuation during its IPO.
2. Net Promoter Score (NPS)
What NPS Measures:
NPS is a customer loyalty metric that indicates how likely customers are to recommend your product to others. Calculated based on a single-question survey, NPS provides a numerical score ranging from -100 to 100.
Why It Matters:
High NPS scores signal customer satisfaction and advocacy, two vital components for organic growth and long-term retention. A high NPS can also indicate product stability and maturity, while a low NPS highlights areas needing improvement. By consistently tracking NPS, SaaS founders can make data-driven decisions to enhance customer experience and reduce churn rates.
Real-World Example:
Zoom, the video conferencing platform, achieved a high NPS score in the early days of its growth. This strong customer endorsement contributed to its rapid adoption during the pandemic, showcasing how a high NPS can drive substantial organic growth.
3. Annual Recurring Revenue (ARR)
What ARR Measures:
ARR represents the predictable revenue a company expects to generate annually. ARR includes recurring payments such as subscription fees but excludes one-time charges.
Why It Matters:
ARR is one of the most critical financial metrics for any SaaS business, as it offers insights into long-term revenue projections and growth stability. A steady increase in ARR reflects successful customer acquisition and retention, demonstrating the product’s value to its users. ARR also helps founders and investors understand the financial health of the SaaS business, allowing them to assess revenue growth over time.
Real-World Example:
Salesforce, a global leader in CRM software, is known for tracking ARR closely. ARR has not only helped Salesforce plan for long-term growth but has also provided investors with a reliable gauge of the company’s performance, making it one of the most valuable SaaS companies in the world.
4. Customer Acquisition Cost (CAC)
What CAC Measures:
CAC is the total cost of acquiring a new customer, including marketing, sales, and other related expenses.
Why It Matters:
CAC is crucial for assessing the efficiency of your marketing and sales strategies. When founders know their CAC, they can calculate how much they’re spending per new customer and measure profitability by comparing CAC with the customer’s lifetime value (LTV). A low CAC indicates that your customer acquisition strategies are cost-effective, while a high CAC may necessitate adjustments to optimize spending.
Real-World Example:
HubSpot is renowned for its inbound marketing strategy, which has helped maintain a low CAC. By optimizing for organic growth through content marketing, HubSpot achieved substantial customer acquisition without heavy spending, making it a model for efficient SaaS growth.
5. Customer Lifetime Value (CLV or LTV)
What CLV Measures:
CLV estimates the total revenue a company expects to earn from a single customer over the entire relationship.
Why It Matters:
CLV helps SaaS founders evaluate the profitability of different customer segments. By comparing CLV with CAC, founders can assess whether they’re achieving a sustainable balance. A high CLV/CAC ratio indicates a profitable customer relationship, while a low ratio may suggest the need for adjustments in either customer acquisition or retention strategies.
Real-World Example:
Spotify, the music streaming service, has been successful in maximizing CLV by focusing on customer retention through personalized playlists, curated recommendations, and exclusive content, keeping users engaged over long periods and maximizing the revenue potential from each customer.
6. Churn Rate
What Churn Rate Measures:
Churn rate is the percentage of customers who stop subscribing or using the product over a specific time period.
Why It Matters:
High churn can indicate dissatisfaction, lack of engagement, or competitive threats. For SaaS companies, minimizing churn is vital as it directly impacts ARR and long-term growth potential. By identifying the reasons behind churn, SaaS founders can take proactive steps to improve the product or customer support and ultimately retain more users.
Real-World Example:
Dropbox, a popular file-sharing platform, tracks churn rate carefully and uses insights from its data to introduce new features or improve existing ones. This proactive approach has helped Dropbox reduce churn and maintain a loyal user base.
7. Monthly Recurring Revenue (MRR)
What MRR Measures:
MRR is the recurring revenue generated from subscriptions each month. It can be further segmented into new MRR (from new customers), expansion MRR (from upselling), and churn MRR (revenue lost from cancellations).
Why It Matters:
MRR provides a month-over-month view of revenue, helping founders track short-term growth and make more immediate decisions. It’s especially useful for recognizing trends in customer acquisition and retention, forecasting cash flow, and assessing the effectiveness of promotional activities.
Real-World Example:
Netflix leverages MRR to track its subscription growth and forecast revenue. By monitoring MRR closely, Netflix adapts its marketing and product strategies based on user data to boost retention and acquisition.
8. Customer Retention Rate
What Customer Retention Rate Measures:
This metric calculates the percentage of customers who continue using the product over a specific time.
Why It Matters:
A high customer retention rate indicates that the product consistently meets user needs. Retention is often more cost-effective than acquisition, making it crucial for long-term profitability and growth. High retention rates often correlate with high customer satisfaction, suggesting that the product is delivering on its promises.
Real-World Example:
Shopify, an e-commerce platform, has a high retention rate among small and medium-sized businesses due to its continuous improvement of features, high-quality support, and scalability. This focus on retention has helped Shopify achieve impressive revenue growth.
9. Product Usage Metrics
What Product Usage Metrics Measure:
Product usage metrics refer to various indicators that reveal how users are interacting with your product. These can include session length, feature usage frequency, and time spent on specific functions.
Why They Matter:
Understanding product usage is key to refining the user experience. By identifying popular features and underused functionalities, founders can prioritize improvements and add value where it matters most. This insight also informs marketing and product development efforts to drive adoption and engagement.
Real-World Example:
Zoom uses product usage metrics to improve its interface and identify which features resonate most with users. For example, the frequent use of video conferencing over other features allows Zoom to focus on improving video call quality.
Conclusion
In a rapidly evolving SaaS landscape, tracking the right product metrics is essential for making informed decisions, improving customer satisfaction, and sustaining growth. From DAUs and MAUs to NPS and ARR, these metrics provide SaaS founders with a clearer picture of user engagement, financial health, and overall product performance. By understanding and acting on these insights, founders can drive a SaaS product to greater success in 2025.
If you’re a founder looking for support to bring your SaaS vision to life, don’t hesitate to get in touch with Skywinds Solutions. Our agency helps founders develop digital products that stand out in competitive markets.
