How do you benchmark and evaluate the performance of your saas licensing model?

1 Define your objectives

Before you can measure the performance of your licensing model, you need to define what success looks like for your SaaS business. What are your main objectives and how do they align with your licensing strategy? For example, do you want to maximize customer acquisition, retention, or lifetime value? Do you want to increase usage, adoption, or upsell opportunities? Do you want to optimize pricing, profitability, or scalability? By setting clear and specific objectives, you can identify the most relevant metrics and targets to track and improve your licensing model.

2 Choose your metrics

When benchmarking and evaluating your licensing model, you can choose from a variety of metrics depending on your objectives. Revenue metrics, such as monthly recurring revenue (MRR), annual recurring revenue (ARR), average revenue per user (ARPU), or revenue churn, are important to consider. Additionally, customer metrics such as customer acquisition cost (CAC), customer lifetime value (CLV), customer retention rate (CRR), or net promoter score (NPS) are also essential. Lastly, product metrics such as active users, engagement, adoption, or utilization should be taken into account.

3 Collect your data

To benchmark and evaluate your licensing model, you need to collect and analyze data from various sources and tools. You can use your own internal systems, such as billing, CRM, or analytics platforms, to gather data on revenue, customer, and product metrics. You can also use external sources, such as surveys, feedback, or reviews, to gather data on customer satisfaction and loyalty. You should collect your data regularly and consistently, and make sure it is accurate and reliable.

4 Compare your results

Once you have collected your data, you can compare it to your objectives, targets, and benchmarks. You can do this by looking at historical trends and patterns to see if your licensing model is improving or declining. Additionally, you can assess your performance against industry standards, best practices, and benchmarks in your market. Lastly, you can run tests, trials, or experiments to see how changing your licensing model affects your outcomes.

5 Adjust your strategy

Based on your comparison, you can identify the strengths and weaknesses of your licensing model and decide if you need to adjust your strategy. Refining aspects such as pricing, packaging, or features can help optimize results if your model is performing well but could be improved. Alternatively, revamping your model completely, such as switching from a flat fee to a usage-based model, may be necessary if it is performing poorly or not meeting objectives. Lastly, if your licensing model is performing as expected and meeting objectives, you should retain it but monitor it closely to ensure it stays relevant and effective.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?