Master SaaS Metrics: Retention, ARR per Head

Sep 3, 2025

Discover effective strategies for tracking SaaS growth metrics like retention, ARR per head, and churn to scale your business efficiently.

The SaaS industry is constantly evolving, and as we navigate 2025, the pressure to balance rapid growth with operational efficiency has never been greater. Tech leaders, particularly in mid-sized SaaS, fintech, and e-commerce firms, face unique challenges: scaling teams wisely, optimizing resources, and extracting meaningful insights from their data.

Jonni, a co-founder at Resend, sat down for a discussion about SaaS's core metrics, operational frameworks, and the personal journey of transitioning from an individual contributor to a founder. The conversation sheds light on key metrics like retention and ARR per head, as well as strategies for scaling while staying grounded in thoughtful decision-making.

This article dissects the conversation, offering insights and actionable advice for founders and operators aiming to achieve sustainable growth and operational excellence in the SaaS world.

The State of SaaS in 2025

The SaaS landscape has matured significantly over the past decade, with legacy players dominating spaces like email infrastructure and other foundational tools. Yet, this presents opportunities for disruptors like Resend. As Jonni points out, many established SaaS companies have struggled to adapt quickly due to their size and operational inertia - like oil tankers unable to pivot with agility.

Startups, on the other hand, are more like a flotilla of yachts, maneuvering rapidly to address market shifts. Resend embodies this philosophy by reimagining an "ancient" technology - email. By focusing on transactional and product emails and prioritizing a frictionless experience for developers, Resend has carved out a niche that aligns with modern needs, including the rise of "vibe coders" and non-technical developers.

Lessons for SaaS Leaders

Agility is a Competitive Advantage: Small, nimble teams can outpace larger competitors by iterating quickly.
Focus on Frictionless Experiences: Whether it's reducing steps in a signup flow or removing unnecessary hurdles, a seamless user experience can be a powerful differentiator.
Adapt to New Audiences: With the rise of non-traditional developers, creating accessible tools - even for those unfamiliar with underlying concepts like databases - can open up new markets.

Why ARR Per Head Matters

For Resend, the transition from seed to Series A funding marked a pivotal shift in focus. At seed stage, the priority was survival - ensuring there was enough runway to validate the business. Post-Series A, the focus shifted to efficiency and scaling wisely.

One key metric that now defines their decision-making is ARR per head. This metric measures how much annual recurring revenue (ARR) is generated per employee, serving as a proxy for operational efficiency.

Why It’s Important

Measures Scaling Efficiency: As companies grow, maintaining or improving ARR per head ensures that the team is contributing proportionally to revenue growth.
Prevents Overhiring: Using ARR per head as a guide reduces the risk of bloated teams and runaway burn rates.
Focuses on Value Creation: It aligns hiring and resource allocation with measurable outcomes.

For Jonni and his team, ARR per head is a core health metric that underpins their strategy. It ensures their growth is not just fast, but also sustainable.

Retention: The Ultimate Indicator of Product-Market Fit

Jonni emphasizes a fundamental truth about SaaS: retention tells the real story of whether your product is delivering value. While metrics like churn rate or customer lifetime value (LTV) are commonly discussed, Jonni highlights the importance of retention tables to truly understand customer behavior over time.

The Power of Retention Tables

Retention tables allow businesses to track cohorts of customers over time, identifying patterns in usage and revenue. By graphing these tables, Resend uncovered critical insights:

Stabilizing Retention: A drop-off in the first three months followed by stabilization indicated that their core users were finding long-term value.
Product Validation: When retention for one product line showed a continuous decline, it signaled a fundamental issue - either the product wasn’t meeting user needs, or the wrong users were being targeted.

By revisiting these tables every three months, the team could spot trends, validate changes, and refine their approach.

Actionable Takeaway

Regularly analyze retention tables to uncover:

Customer drop-off points: Where are you losing users, and why?
Segment-specific trends: Are certain customer groups behaving differently?
Impact of product changes: Did a new feature or pricing change improve retention?

The Art of Prioritization

Scaling a SaaS business often means juggling competing priorities, and Jonni shared valuable insights on how Resend approaches prioritization.

Balancing Dreams and Discipline

Early-stage startups often face the temptation to chase every opportunity. However, as Jonni notes, being "thoughtfully disciplined" is critical. Here’s how Resend approaches the challenge:

Democratic Roadmapping: Input is gathered from all teams, from engineering to support, ensuring a wide range of perspectives.
Reality Checks: Before committing to goals, the team reviews past performance to ensure they’re setting realistic expectations.
Opportunity Cost Analysis: For every potential project, Jonni asks, "What else could we do with this time or budget?"

This process prevents overcommitment and ensures resources are allocated to initiatives with the highest potential impact.

Leadership in a Remote World

Jonni’s leadership philosophy has been shaped by the challenges of running a fully distributed team. Building relationships and fostering a sense of connection are crucial to maintaining productivity in a remote environment.

Key Strategies for Remote Leadership

One-on-One Check-Ins: Jonni makes a point to schedule casual, agenda-free chats with team members he doesn’t work with closely. This helps build relational equity and surface valuable feedback.
Regular Off-Sites: To foster deeper connections, Resend organizes team-wide and department-specific off-sites twice a year.
Inclusive Meetings: Recognizing that not everyone speaks up in group settings, Jonni ensures quieter team members have a voice through other channels.

Why It Matters

Strong relationships are the foundation for collaboration, creativity, and trust - all of which are essential for a high-performing team.

Personal Growth: From Operator to Founder

For Jonni, the transition from individual contributor to founder has been transformative. He likens it to becoming a parent - shifting from personal achievements to finding fulfillment in the success of others.

Key Lessons in Leadership

Servant Leadership: As a founder, success is about enabling your team to thrive, even if you don’t get the credit.
Balancing Ambition with Restraint: Know when to dream big and when to focus on execution.
Staying Grounded: Maintaining a clear boundary between work and personal life helps sustain long-term motivation and perspective.

Key Takeaways

Agility Wins: In SaaS, being nimble and responsive to market needs is a significant advantage over legacy players.
ARR Per Head Is a Crucial Metric: Use it to measure scaling efficiency and ensure sustainable growth.
Retention Tables Drive Insights: Analyze trends over time to identify drop-off points and validate product-market fit.
Prioritize Thoughtfully: Use democratic input, realistic goal-setting, and opportunity cost analysis to focus on what matters most.
Build Relationships in Remote Teams: Foster connection through one-on-one check-ins, off-sites, and inclusive meeting structures.
Leadership Is About Empowerment: Success as a founder means enabling your team, not seeking personal recognition.
Measure Trends Over Time: Data often reveals its insights through anomalies, so track metrics consistently and ask "so what?"

Conclusion

The dynamic conversation with Jonni underscores the importance of thoughtful discipline, operational efficiency, and human connection in scaling a SaaS business. By focusing on core metrics like ARR per head and retention, while fostering a culture of collaboration and empathy, leaders can navigate the challenges of 2025 and beyond.

For SaaS founders and operators, the lesson is clear: sustainable growth isn’t about doing everything - it’s about doing the right things, the right way, at the right time.

Source: "Master SaaS metrics that matter: Retention analysis, funding transitions, and growth discipline" - Baremetrics, YouTube, Aug 26, 2025 - https://www.youtube.com/watch?v=w2J1XhggwwM

Use: Embedded for reference. Brief quotes used for commentary/review.