In this episode of the "Foundations" podcast, the hosts explore essential SaaS business metrics that go beyond the basics. They start by discussing Conversion to Payment, pointing out its limitations as an isolated success metric and stressing the need to look at Customer Acquisition Cost (CAC) and Lifetime Value (LTV) alongside it. The conversation then shifts to other vital metrics like the "Magic Number," which calculates net new Annual Recurring Revenue (ARR) against sales and marketing expenses, the Rule of 40 that combines growth rate with profit margin, and various engagement metrics, including NPS, Monthly Active Users (MAU), Daily Active Users (DAU), and time spent on the platform. The episode wraps up by answering a listener's question about the difference between activation and engagement, clarifying the contrast between initial product usage and ongoing user interaction. Overall, listeners will gain valuable insights into utilizing these metrics to evaluate SaaS company performance and growth while recognizing the importance of context and the pitfalls of over-analysis.
