If you are looking for investors to support your SaaS app company, then you need to be able to show them positive performance. Investors want information that they can use to judge the value of your company and its products, which they get through key performance metrics.
Investors will specifically want to look at engagement metrics since it shows positive progress in connecting with your target audience. These are the four SaaS engagement metrics that investors want to see.
Why Engagement Metrics Matter to Investors
Engagement metrics are important to investors because they are how they judge investments. Imagine that you have $100,000, and you want to make more by using it for investments.
Would you want to give half of your money to a project without knowing that you’ll get your money back?
Wouldn’t you want to see some evidence that their money is going to something that will work?
This is exactly how investors think. To them, engagement metrics are evidence that your SaaS project can succeed, give them their money back, and help them earn more money over time.
Key SaaS Engagement Metrics to Track
There are hundreds, if not thousands, of performance metrics that you can use to demonstrate the performance of your SaaS project. Once you have their attention, they’ll want to see more detailed engagement metrics data. However, you have to focus on a few key metrics to get their attention first. These are the metrics that you should focus on improving to attract investors first.
Monthly Recurring Revenue (MRR) Growth Rate
Monthly Recurring Revenue Growth Rate shows how much money your project makes per month, and how much it increases each month. For example, this is an example of MRR growth rate for a small company:
- January - $1,000
- February - $1,500 - 50% MRR Growth
- March - $2,200 - 68% MRR Growth
Every month, the monthly recurring revenue increases due to more sales or more customer acquisitions that successfully repeat each month, like subscriptions. The rate that your MRR grows each month is the MRR growth rate.
Investors want to see this engagement metric because it is an important indicator that your business is growing. It is retaining customers that produce revenue over time, and it is earning more money than before. For investors, it means that there is positive and sustainable growth in the company.
Customer Retention Rate
Customer Retention Rate is the measure of how well your company keeps the customers that it gets. Customer acquisition costs are always high relative to the cost of retaining customers, so investors always want to see if your company can keep customers. Over time, it costs less and means that your company is strong at generating repeat revenue.
Retention rate is one of the first things that any investor will want to look at. A company that cannot retain customers will spend a lot more on customer acquisitions. That company may also not be providing the value that it promised to customers or just doesn’t offer long-term value to customers, prompting them to go somewhere else for whatever they need.
Customer Lifetime Value (CLTV)
Customer Lifetime Value measures how much your company makes off of customers as long as they stay customers. Even the best companies don’t keep customers forever, so investors want to see how much your company makes off of customers before they stop buying from your company.
If you look at it from a subscription model where customers stay an average of 18 months, the CLTV is the total cost of the subscription plus any additional purchases during those 18 months.
Number of Active Users (NAU)
Another important metric that investors want to see is the Number of Active Users, which measures how many people are using your product. This number is tricky to develop since it measures active users, not user accounts or subscriptions. You have to measure engagement to see which accounts are actively using the SaaS app and which ones are not.
Investors like this metric because it lets them measure interest in your app. Similar to retention metrics, NAU shows if your app is able to maintain engagement with customers over longer periods. That way, your not spending a lot to acquire customers that are not continuing to find value in your services.
Work With SaaS Business Development Experts
Improving your engagement metrics is just one step in successfully attracting and engaging with investors. There is more to do so that you can land the big investors that you need. At KitelyTech, we work with SaaS companies to refine their software and services so that they get the attention of investors. Call us at (800) 274-2908 to discuss your business growth strategy to see how we can help.
