For Next Month, Which Metric Would You Focus on Improving in a Subscription Business?

As a SaaS business owner, staying on top of key performance indicators (KPIs) is crucial for sustainable growth. But with so many metrics to track, a common question arises: “for next month, which metric would you focus on improving?”. The answer isn’t always straightforward. It depends on your current business health, growth stage, and the biggest roadblocks you’re facing.

Key SaaS Metrics to Track

Before identifying the metric to focus on next, let’s examine a few critical SaaS metrics and why they matter.

1. Monthly Recurring Revenue (MRR)

MRR is the backbone of a SaaS business, reflecting predictable revenue generated each month. Tracking MRR trends can reveal whether your business is growing steadily or experiencing churn issues.

Why it matters:

• Provides a clear picture of revenue health
• Helps forecast future growth and cash flow
• Identifies patterns in customer retention and acquisition

2. Net Revenue Retention (NRR)

NRR measures revenue retention after accounting for upgrades, downgrades, and churn. A high NRR means existing customers are staying and expanding their usage.

Why it matters:

• Strong indicator of customer satisfaction and long-term revenue stability
• Higher NRR correlates with lower customer acquisition costs (CAC)
• Helps pinpoint opportunities for upselling and reducing churn

3. Average Revenue Per User (ARPU)

ARPU calculates the average revenue generated per customer, helping businesses understand pricing effectiveness and customer value.

Why it matters:

• Determines the impact of pricing strategies
• Highlights customer segments with the highest revenue potential
• Guides decisions on upselling and feature pricing

4. Conversion Rate

Your conversion rate measures how effectively you turn visitors into paying customers. Low conversion rates can indicate friction in your sales funnel.

Why it matters:

• Directly impacts revenue growth
• Identifies gaps in onboarding, pricing, or user experience
• Helps optimize marketing spend and sales processes

How to Decide Which Metric to Improve Next Month

Instead of choosing a metric at random, analyze your subscription business’s performance across these key areas. A subscription analytics tool like ProfitKit can help by providing real-time insights into your revenue trends, customer retention, and conversion bottlenecks.

Ask yourself:

• Is revenue stagnating? Focus on increasing MRR or ARPU.
• Are existing customers churning? Improve NRR by reducing churn and increasing expansion revenue.
• Are too few leads converting? Optimize your conversion rate.

The Best Metric to Focus On for Most: NRR

For many SaaS businesses, improving Net Revenue Retention (NRR) is one of the most impactful ways to drive long-term growth. Since retaining and expanding existing customers is typically more cost-effective than acquiring new ones, boosting NRR leads to sustainable revenue increases.

How to Improve NRR

If your analytics indicate that NRR is an issue, here are a few actionable steps to address it:

1. Enhance Customer Success Initiatives
   • Offer proactive customer support to prevent churn
   • Use targeted engagement campaigns to increase product adoption
   • Implement customer feedback loops to refine your service
2. Introduce Upsell & Expansion Opportunities
   • Design tiered pricing plans with compelling upgrade incentives
   • Offer add-ons that enhance customer experience
   • Use personalized recommendations based on usage data
3. Reduce Customer Churn
   • Identify at-risk customers using churn prediction models
   • Offer incentives or custom retention plans to retain users
   • Improve onboarding experiences to ensure early success
4. Utilize Failed Payment Recovery Tools
   • Many customers unintentionally churn due to expired or declined credit cards
   • Implement automated payment recovery solutions to remind users to update payment details through a quick and seamless interface
   • Use cancellation insights forms to gather feedback and address common customer concerns

Final Thoughts

The best answer to “for next month, which metric would you focus on improving?” depends on your unique business needs. This article has focused on analytics for subscription businesses, but most businesses will also need a full suite analytics such as marketing attribution software and a quality CRM for measuring sales performance. Using a tool like ProfitKit can help analyze your subscription data and highlight which metric requires immediate attention. By conducting a rigorous assessment and choosing the right metric to optimize, you’ll ensure sustainable, data-driven growth for your SaaS business.