Which KPIs Should SaaS Businesses Monitor in 2026?
‍

The era of "growth at all costs" is over. We have firmly entered the Efficiency Era of tech.

For years, the mandate from VCs was simple: triple, triple, double, double, double. Burn rates were secondary to top-line velocity. Today, the script has flipped. Valuations are no longer driven solely by how fast you can acquire customers, but by the sustainable unit economics underlying that acquisition.

At Stratos, we advise Private Equity funds and software companies on value creation. We constantly see founders drowning in data but starving for insight. To solve this, we utilize the Stratos SaaS Performance Monitor—a consolidated framework that prioritizes survival, scale, and optimization.

Here is how we breakdown the health of a recurring revenue business, and why not all KPIs are created equal.

The Stratos Priority Framework: P0, P1, P2

Before diving into the metrics, you must understand the hierarchy of urgency. A dashboard where everything is red is useless; a dashboard that highlights critical failures saves companies.

1. Growth & Acquisition: The Velocity Check

Acquiring customers is useless if you go broke doing it. In the new economy, we look closely at Revenue Velocity paired with Sales Efficiency.

The Metrics that Matter:

• CAC Payback Period (P0): This is the ultimate litmus test for cash flow. How many months does it take to recover the cost of acquiring a customer? For SMBs, we want to see this under 12 months. If it creeps toward 18-24 months, your capital efficiency is suffering.
• The Magic Number (P1): A sales efficiency classic. It measures Net New ARR against Sales & Marketing spend. A result >1.0 indicates highly efficient growth—meaning you should step on the gas.
• Pipeline Coverage (P2): While tactical, maintaining a 3x-4x ratio of pipeline to quota ensures you don't hit an air pocket in future quarters.

2. Retention & Health: The Engine Room

Retention is the silent killer of valuation. You cannot fill a leaky bucket, no matter how good your marketing is.

The Metrics that Matter:

• Net Revenue Retention - NRR (P0): This is arguably the most important metric in SaaS today. We target >110%. If your NRR is high, you are growing even without adding a single new logo.
• Gross Revenue Churn (P0): Distinct from NRR, this measures pure loss (downgrades and cancellations). High churn here indicates a product-market fit issue or a customer success failure.
• DAU/MAU Ratio (P1): This is your "Stickiness" metric. Are people logging in daily, or just once a month to pull a report? High stickiness usually precedes high retention.

3. Economics & Product: The Reality Check

This pillar bridges the gap between the CFO and the CPO. It ensures that the product roadmap is aligned with financial viability.

The Metrics that Matter:

• LTV : CAC Ratio (P0): The golden ratio of SaaS. We need to see a Lifetime Value that is at least 3x the Cost of Acquisition (3:1). Anything less, and the business model is fundamentally unstable.
• Rule of 40 (P1): The standard for healthy SaaS companies. Your (Growth Rate %) + (Profit Margin %) should exceed 40. This creates a balance: you can burn cash if you are growing massively fast, but if growth slows, you must become profitable.
• Gross Margin (P1): After hosting, support, and implementation, what is left? We target 75-80%+.

4. Technical Health: The Foundation

Often ignored in board meetings until disaster strikes, technical health is a leading indicator of sentiment.

The Metrics that Matter:

• System Uptime / SLA (P0): In SaaS, availability is the product. 99.99% is the standard. Downtime triggers SLA credits (hurting revenue) and kills trust (hurting brand).
• NPS (P1): While subjective, the Net Promoter Score is a strong leading indicator of future churn.
• Ticket Resolution Time (MTTR) (P2): A tactical metric that directly impacts customer satisfaction.

Summary: Building the Right Systems for Scale

As a former COO who led a SaaS scale-up through a $50M exit, I have seen firsthand that scale does not come from hope; it comes from systems.

The Stratos approach is about building the operational engines that drive recurring revenue. By focusing on these P0 and P1 metrics, founders can navigate the shift from "growth at all costs" to "profitable, sustainable growth."

About the Author

Liloye Molin is a Managing Partner at Stratos with a 15-year track record in the tech industry. Before co-founding Stratos, she served as COO of a high-growth SaaS scale-up, leading the business from pre-Series A through to a successful $50M exit. She now advises PE/VC funds on operational value creation and AI-enabled transformation.

‍