Key Performance Indicators (KPIs)

A KPI is a quantifiable measure used to evaluate how successful an organization/team/ employee, etc. is in meeting objectives for a specific business goal. In its simplest form, a KPI is a form of performance measurement. 

Difference between KPIs and metrics

A metric is simply a measurement, generally related to a business process. KPIs are metrics related to specific business goals and are generally used to set targets for performance. 

Simply put, every KPI is a metric, but not every metric is a KPI. 

Common SaaS KPIs

Some of the most commonly used KPIs in SaaS businesses include ARR/MRR (Annual/Monthly Recurring Revenue (MRR), Churn, CAC (Customer Acquisition Cost), CLV (Customer Lifetime Value, etc). 

Best practices

1. The challenge with KPIs is that there are dozens of metrics that can be measured, but KPIs need to be far more focused based on the current business goals. 
2. KPIs must have specific timeframes associated with the targets. One way to look at KPIs is to check if they pass the SMART (Specific, Measurable, Attainable, Relevant, Time-bound) criteria.
3. Let KPIs evolve: Make sure that you update KPIs to fit the evolving needs of the business and teams.