Best Books on SaaS Metrics Every Startup Owner Should Read
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The importance of tracking the right metrics is crucial in the startup industry. If you measure your progress, you know how to improve your product, therefore, your business grows.
Nowadays there are dozens of online resources on how to grow a SaaS startup for beginners. In case you need more in-depth information you shouldn’t neglect the power of a traditional book.
This article reviews the five best books on SaaS metrics that will help you not only find useful and relevant ways of measuring your business, but also give valuable lessons and advice on how to run a successful startup.
Below you will find the list of books for startup business that is definitely worth your attention. Some of them are exclusively about the ways of measuring business progress, and others also contain valuable insights into growing a successful SaaS company. All of them are must-reads for a startup owner.
Scaling Lean: Mastering the Key Metrics for Startup Growth
by Ash Maurya
Imagine you have an idea of a perfect SaaS. You study the market, learn customers' pains and needs, and create an MVP. Your next question is how to understand that your business is going to be profitable?
Scaling Lean gives a useful scheme for making a prosperous startup. The book reveals key metrics that allow for measuring the effectiveness of your project and show the product's profitability to investors. Tracking these indicators lets you influence the course of events if something fails in your business process.
Ash Maurya teaches you to:
- estimate the feasibility of the startup business model in 5 minutes
- identify the growth factors with a traction metric, instead of constantly monitoring the revenue statistic
- divide your launch plan into stages and set the right risk priorities at each stage by using the 10X Staged strategy
- set goals, find strategies to achieve these goals and test the strategies with LEAN sprints
Scaling Lean answers how to use metrics to measure the progress of your startup, helps to find a focus and teaches how to conduct effective experiments to test your business model correctly.
The essential SaaS metrics guide: how to grow your subscription business by measuring it the right way
by Leonardo Faria
It is not a problem for an entrepreneur to make a good product. However, very often they don’t know how to grow their business and lift it to the next level. The Essential SaaS Metrics Guide states that you should be able to collect and analyze the relevant business data to constantly improve the product.
SaaS differs from a traditional business and requires different ways of operating with pricing, order management, metrics, and profits. Monitoring the revenue statistic is not enough to understand in which direction to move your business. Faria provides us with a clear collection of ways to measure the development of your SaaS product.
The book gives:
- General information about the subscription-based business model. You’ll learn about the SaaS economics, distinctive features of SaaS subscription business, the change in customers’ behavior, the reason many companies shift to SaaS, and so on.
- Faria states that cloud-based software allows you to better track the customers’ needs to provide customers with valuable updates.
- The list of core metrics for subscription business. The book gives advice on which metric to use at different stages of your business (super early, early and growth stage). As well, it gives a full description of six key SaaS metrics plus their formulas and characteristics.
One more valuable advice from this essential saas metrics guide is:
“It’s important keep in mind that it’s crucial that you identify your key custom metrics and measure them together with the industry standard metrics.”
To sum up, this book is clear, quick to read, and is good for a basic understanding of business metrics related to SaaS companies.
Lean Analytics: Use Data to Build a Better Startup Faster
by Alistar Croll and Benjamin Yoskovitz
Lean Analytics offers useful information on how to check the value of your startup idea, find the correct audience, make your business profitable, and let people know about it.
In their book, the authors divide business models into six categories including SaaS. They give detailed characteristics for each of them and provide the reader with appropriate metrics for each category. Also, the book introduces the lean analytics stage, explains what must be done during this stage and accompanies this information with numerous examples.
This book helps to understand how to track various important indicators. It is a clear guide for entrepreneurs on how to find a focus, set priorities and not try to improve everything at once.
Lost and founder: a painfully honest field guide to the startup world
By Rand Fishkin
Lost and Founder is one of the best books for tech startups that reveal all the truth about launching a new project. It is a combination of a personal story with valuable start-up insights.
The author is a founder and a former CEO of Moz — a SaaS company that offers a variety of tools for running SEO campaigns. Today it is a $60 million revenue business, but it wasn’t an overnight success.
We got used to reading amazing stories about a guy who dropped out of college but had a brilliant idea and after overcoming several struggles he started a million dollar company known all over the world. Rand tells us a different story, honest, painful, but realistic.
Almost at the very beginning, the author states: “The first time you play a new video game, you’ll suck.” This statement shows the style of Fishkin's writing and his vision for launching a tech startup.
Lost and Founder is not only a personal story about the thorny way of Moz, it is a practical guide for start-up entrepreneurs. Here you can find:
- The truth about being a startup founder (Chapter 3). A CEO’s job is more about enabling other people to complete tasks, rather than doing them yourself. As your project is growing, you will probably hire a well-qualified team (better than you are). Your task will be not to fulfill your brilliant ideas, but to make sure other people do everything correctly. That’s not so romantic and more about troubleshooting.
- An honest look at pivoting. (Chapter 4) Very often shifting to a new strategy is viewed as a panacea in case of failure in the start-up’s strategy. Fishkin says that if you managed to achieve at least some progress in what you do, it’s better to stick to your plan and not to pivot.
- Sources of fundings and ways of making money (Chapter 6,7,8). These chapters tell how to search for sources of financing, how to get them, and what to do with the money once it is in your hands. As well, you can find very valuable information about the venture capital business mode in these chapters.
- Discussion of SaaS metrics (Chapter 9, 17). The book doesn’t give you a list of top ways to measure the progress of your business, but there is plenty of useful advice on how you do it.
Here is an extract from Lost and Founder:
“Pro Tip: If you have any type of subscription or recurring revenue, make sure you measure LTV (Lifetime Value—the total revenue customers spend during their relationship with your firm) by referral source(s) and by the number of visits prior to conversion. If your stats look like Moz’s, you’ll probably want to adopt a similar, slow-burn conversion process.”
- Advice on when to sell a startup (Chapter 13). There are plenty of stories when popular businesses denied the million-dollars offers, decided to stay independent and eventually built a world-changing corporation. Rand Fishkin gives an honest view of selling a startup.
Lost and founder gives a realistic look at what is actually happening when you start a tech company. There isn’t one separate chapter completely dedicated to metrics, however, you can find them discussed alongside with other valuable lessons.
From impossible to inevitable
By Aaron Ross and Jason Lemkin
Every entrepreneur dreams of increasing their income fast and efficiently spending minimum time. Is growing twice or even five times larger possible for a startup?
The authors believe that it is not only possible but doesn’t require luck or unbelievable efforts. They say you need to follow the template that was created based on the fastest-growing companies’ experience.
From impossible to inevitable is a guide in marketing and sales that discusses real cases of both the author’s success and growth strategies of well-known organizations (Zenefits, Salesforce, EchoSign).
The book gives you a template of growing your business that can be divided into seven parts:
- Be the best in your niche. From impossible to inevitable recommend to find a specific issue and become the best in solving it. It’s better to satisfy one type of client rather than try to be good for everyone.
- Constantly generate leads. The book divides leads into three types and gives advice on how to generate each of them. Create a marketing strategy, use the right metrics, and monitor customer satisfaction rates to attract more customers.
- Improve your sales system. As the company becomes larger, more problems occur. It is better to make money not from small, but from solid deals. Ross and Lemkin recommend finding a good sales director and expanding your sales team to increase the size of your deals.
- Make your customer buy more. A good way to increase the profit is to sell each customer more than once.
- Get ready for trouble. Startups are always about difficulties. From impossible to inevitable states that an entrepreneur should be prepared for troubles and understand that it takes time to become successful.
- Hire dedicated employees. If you want to grow your business, you should find an initiative team that is passionate about their job.
- Motivate yourself and do your best at work. Remember that everything is in your hands.
The authors guide you on each of seven steps and tell how to put them in practice. Of course, in this detailed guideline, you will find useful information on SaaS metrics.
To sum up
Monitoring the right metrics helps to examine your financial performance and shows the real overall state of your business. Metrics can explain to your team members what factors are important for the company growth and how to achieve business goals.
We hope the above list will become an effective solution for your business growth strategy.
In case you’ve already read a lot of information on this topic but still struggle to apply the techniques in practice, think about asking a professional for help. Read about the growth product manager.