Gartner Research

How to Tune Your SaaS Business Model

Published: 12 June 2017

ID: G00321091

Analyst(s): Steve Crawford


Three key performance metrics, across different stages of growth, form the foundation of a successful SaaS business model. Technology business unit leaders (especially those new to SaaS) need to understand these metrics to build, optimize and scale a successful positive-cash-flow SaaS business.

Table Of Contents
  • Key Challenges


  • The Virtuous Cycle of the SaaS Business Model


  • Comparing Traditional Software and SaaS Business Models
    • SaaS Sales Compensation
  • SaaS Growth Phases and Key Metrics
  • Launch to Early Adoption Phase: Customer and Revenue Churn
    • Customer Churn
    • Revenue Churn
    • Predicting and Reducing Churn by Monitoring Usage
  • Scale-Up Phase: Customer Acquisition Costs
  • Expand the Base Phase: Customer Lifetime Value
  • Example Case Study
  • Recommendations

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