The ARR blueprint helps you to make sure you are considering the important elements for sales and marketing planning.

1. Sharing ideas for better strategy, planning and results to grow SaaS business in Japan
ARR Blueprint

2. ARR Blueprint
ARR = Volume of
Opportunities x
Average
Deal Size x Closing
Ratio
# $ %
ARR: Annual Recurring Revenue
When you focusing on the growth/new acquisition/upsell, ARR can be simplified as “Volume of
Opportunities”, “Average Deal Size” and “Closing Rate”.
“Churn” is another important number when you think about actual growth, however, we start from this
break down to simplify the acquisition planning process.
This model helps you to cover “what need to be considered” in the planning process as well as review
process of your plan and execution.

3. Every components can be breakdown as following...
=
x
x
#
$
%

4. Let’s deep dive one by one… First is the Volume of opportunities
=
x
x
#
$
%

5. Volume of Opportunities Breakdown
Volume of
Opportunities = Volume of
Responses x
Needs %
Target
Account
%
DMU %
Response(Lead) conversion ratio breakdown
x
Timing
% x
● It can be divided into 2 elements. One is the volume of Responses/Leads and “Conversion rate”
however, “Conversion rate” is useful term but you need to break it down.
● In this model, we breakdown the conversion rate in to “Needs %”, “Timing %”, “Target Account %”
and “DMU(Decision Making Unit) %”.
● Those components are important for your planning to consider how many are you aming but it is
more important when you review the results.

6. Volume of Opportunities Breakdown
Volume of
Opportunities = Volume of
Responses x
Needs %
Target
Account
%
DMU %
x
● Response: To simplify, in this model, we use responses as the same meaning of Inquiry(INQ).
However, If you prefer to use MQL(Marketing Qualified Lead) as the bottom line thats OK but if
your MQL definition contains “Target Account” and/or “DMU” you need to remove them from
right side and replace “Response” to “MQL”.
Timing
% x
Response(Lead) conversion ratio breakdown

7. Conversion rate breakdown
Volume of
Opportunities = Volume of
Responses x x
● Needs %: When you think about the conversion ratio, “What kind of needs are you going after” is the
important element that defines the whole market opportunity size that you are going after. In the
planning phase, you need to make sure that the market size of the need is big enough for you and also,
your strength can be the differentiator.
● As the one of the component of conversion ratio, “How many people/leads/responses had the needs”
is the important fact to track.
x
Needs %
Target
Account
%
DMU %
Timing
%
Response(Lead) conversion ratio breakdown

8. Conversion rate breakdown
Volume of
Opportunities = Volume of
Responses x x
● Timing %: When you think about the “timing” you need to consider “how long a average deal takes
to close”. For example, if you are selling enterprise solution, it may take 18 months or if you are
selling a solution that requires small amount of budget, it may take less than 3 months. The
important thing here is that you need to know how long in advance your sales reps should start
having ongoing conversations with prospects which is the very beginning of the opportunity and
that timing should be included to the definition of the opportunity.For the review process, you need
to track “how many of leads were at the right timing to start sales conversation.”
x
Needs %
Target
Account
%
DMU %
Timing
%
Response(Lead) conversion ratio breakdown

9. Conversion rate breakdown(Target audience)
Volume of
Opportunities = Volume of
Responses x x
In the B2B world, you need to consider the types of accounts and also the types of roles in a company
you need to reach when you think about “target audience”.
The account type can be defined by explicit information such as industry, company size etc.If your
product is something that can be used with/on existing IT assets in a company, you should focus on the
accounts who are using that solution/product and consider how to identify the users.
The role of the people is also important when you think about the target audience so you need to
identify what kind of roles are the key to your business.
x
Needs %
Target
Account
%
DMU %
Timing
%
Response(Lead) conversion ratio breakdown

10. Next is Average Deal Size...
=
x
x
#
$
%

11. Average Deal Size breakdown
Average
Deal Size = Volume of
Licenses or x
License
Price
Volume of
usage
x Usage
Price
● The average deal size can be breakdown as “Volume of licenses” x “License price” or “Volume of
usage” x “Usage price”. “Price” is usually fixed variable so the only thing you can control by
targeting is the “Volume” of licenses or usage you are going to target. Therefore, you need to
consider “what element affect to the volume”. It might be number of employees, it can be the
specific work etc.
● The important fact is that you need to understand the element that affects the volume and
consider how to reach them by targeting. This is really important for your planning and review to
see whether you could reach to the right target.
● If you are charging initial cost, do not forget to include in
the average deal size.

12. Closing rate at last...
=
x
x
#
$
%

13. Closing Rate breakdown
Closing
Ratio =
Coverage
of
DMU
x
Solution
Strength
Sense of
Urgency
x Selling
Skill
x
● Closing ratio is not determined by luck. There are more complex elements but as the bottom line,
the important elements are “Coverage of DMU” within the deal, “Strength of your
solution/product”, “Sense of urgency” in the prospect and “Selling skill” of your reps.
● The sense of urgency can be considered as whether you know the important “Compelling event” in
the prospects.

14. They're influencing each other
As you may realize, each of the elements are
influencing each others. For example, “Needs”
and “Timing” in the “Volume of
Opportunities” influences, “Solution
Strength” and “Sense of Urgency” in the
“Closing Ratio”.
The other example is about “Average Deal
Size”. Its always seems to be good for aiming
big but if you can close more deals and able
to generate high volume of opportunities, its
ok for going after small deals.
The important thing is that you need to think
about each elements one by one but need to
consider how those are influencing each
others.

15. For planning and review
Planning Review
● How many responses would you need to reach
your goal?
● What kind of needs are you going after?
● How long is your average deal takes time to
close?
● What kind of accounts and what kind of
people/divisions would you need to reach?
● Did you acquired enough responses as you
planned?
● How many of them has needs, right time frame,
right audience?
● Which tactic, channel could deliver the right
audience the most?
● Is there any other view to measure the
activities?
● What messages we should deliver or what kind of
challenges we should cover to meet the the
target “Volume”?
● Do have enough sales resources to follow up the
big/small deals?
● Can we meet the goal with the average deal size?
● Did the message helped to reach the target
volume?
● Did our targeting worked to reach the people who
influence the volume?
● Which of our strength is critical to win a deal?
● What kind compelling event we should target?
● Did we trained our sales reps to deliver the right
story to the audience?
● Did we cover the right people during the sales
process?
● Did our strength work?
● Did our message worked to capture the right
compiling event?
● Did we trained our sales reps enough?

16. More contents are available here:
https://www.japanarr.com/
Please send your feedback to:
info@japanarr.com
Thank you for reading!