Retention & Churn Metrics

5 important questions on Retention & Churn Metrics

Why is Monthly Recurring Revenue (MRR) significant in SaaS?

Essential for understanding:
  1. Revenue predictability
  2. Business growth tracking
  3. Financial forecasting
  4. Valuation assessment
  5. Performance indicators

What does Customer Acquisition Cost (CAC) indicate for a SaaS company?

Indicates:
  1. Cost efficiency in acquiring new customers
  2. Impact on profitability
  3. Marketing and sales effectiveness
  4. Budget allocation strategies
  5. Customer retention expectations

How is Churn Rate calculated and why is it important?

Calculated by:
1. (Customers lost during a period) / (Total customers at the start)
It's crucial for:
  • Understanding customer retention
  • Identifying growth limitations
  • Evaluating product satisfaction
  • Informing future growth strategies
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What is Lifetime Value (LTV) and how does it benefit SaaS companies?

Represents:
  1. Total revenue expected from a customer
  2. Insight into long-term profitability
  3. Justification for CAC spending
  4. Customer relationship management decisions
  5. Business sustainability assessments

Why is Average Revenue Per User (ARPU) an essential metric?

ARPU provides insight into:
  1. Revenue generation efficiency
  2. Pricing strategy effectiveness
  3. Comparison across different customer segments
  4. Growth potential assessment
  5. Value perception by customers

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