The document provides an overview of key metrics, terms, and growth strategies for building a billion dollar SaaS unicorn company. It discusses 11 important SaaS metrics including MRR, ARR, CAC, LTV, NPS, churn, cohort analysis, and revenue per employee. It also outlines typical growth phases like the "T2D3" model of tripling revenue twice and doubling revenue three times to hit benchmarks like $2M, $6M, $18M, and $72M in ARR. Finally, the document emphasizes the importance of product-market fit and conducting customer interviews in the early "lean startup" phase.
5. I. Key Terms & Metrics for SaaS
1. Cash Flow
2. MRR/ARR
3. CAC & LTV
4. SEI
5. ACV
6. NPS
7. Churn
8. LVR
9. TtV
10. Cohort analysis
11. Revenue per Employee
If you only read one article on SaaS metrics this is it:
http://www.forentrepreneurs.com/saas-metrics-2/
For an alternate look at metrics:
https://updata.com/insights/saas-metrics-framework/
For Developing a KPI dashboard for a SaaS company:
http://christophjanz.blogspot.de/2013/04/a-kpi-dashboard-for-early-stage-saas.html
Leading
Indicator
Leading
Indicator
Note:
For those that are on their first time building a
SaaS business with institutional investor backing,
here are some of the key terms you are going to
need to learn and track.
31. 54%
Co's offer
PS along w/
Subscriptions
25%
Co's give quota
relief for PS but
no commissions
Avg. PS Rev
as % 1st
Year ACV
25%
3
Months new
ISR Ramp Time
60%
$2.2-2.5k 6
$150-180k
4-5x
$130k
$630-720k
1:7
3x
1:5
50%
50%
60%
30% $80-100k 60%35 1:75
2
70
60%
40%
10
$70k
1:2
20%
80%
36% 93%
8.5%
6%
55%
40%
87%
13%
15%
30%
30:70
66%
91%
50%
90% = 81%
2%
6 40% $5.5-7k 3-4
$200-330k $800k-1.3M$220k
3-5x 4:15x
Co’s give quota
relief on 1st
year ACV only
Co’s pay
~ nothing for 2+
yrs on contract
Avg. quota
achievement
Avg.
commission on
NBB ARR quota
Avg.
commission on
upsell ARR
Co’s pay full
commission
for upsells
Co’s offer
add’l team
bonuses
NBB from
new logos
NBB from
net upsells
Conversion
rate: SQL to
opportunity
Conversion rate:
Opportunity
to closed deal
Ratio vertical mkt
territories: geo
Co’s offer trials
(try-before-
you-buy)
Months new
BDR ramp time
Calls/contacts
per day
Cold calls
MQL
follow up
Target # of
SQL’s/wk
OTE: 60/40
Base/Variable
Ratio
BDR : FSR
of BDR teams
report to mktg
Promoted
from BDR
MRR
per deal
ARR
quota per Q
Closed
deals per Q
ARR annual
quota
Ratio
ISR quota:salary
Beg. Q pipeline
coverage
Ratio
Manager : ISR
Ratio
SEs : ISR
OTE:
50/50 B/V
Co’s compensate
on Cust. Sat
(e.g. NPS)
Co’s compensate
on renewal ARR
AMs
responsible
for upsell ARR
Time spent
on customer
support
OTE:
70/30 B/V
Co’s give bonus
for cust. case
study/press
Avg. acct
renewals per Q
Avg. Ratio
AMs : customers
Median
annual gross
$ retention
Retention
equiv. in
SMB vs. VSB
Churn in VSBs is
uncontrollable
on avg.
Median renewals
commission
rate
Months new
FSR ramp time
Promoted
from ISR
MRR
per deal
Closed
deals per Q
ARR quota
per Q
ARR annual
quota
Ratio
FSR quota:salary
Beg. Q Pipeline
Coverage
Ratio
ISR:FSR
OTE:
50/50 B/V
1:3
Ratio
SE: ISR
30-50%
Avg.
NPS score
BUS DEV
REPS (BDR)
INSIDE SALES
REPS (ISR)
FIELD
REPS (FSR)
NEW BUSINESS
BOOKINGS (NBB)
RETENTION
ACCOUNT MANAGERS PROF. SERVICES
INSIGHT’S PERIODIC TABLE
OF SAAS SALES METRICS
MQL = Marketing Qualified Lead
SQL = Sales Qualified Lead
Net Upsells = Upsells less customer downgrades
OTE = On-Target Earnings
SMB = Small-Medium business < 1000 employees
VSB = Very Small Business < 50 Employees
MRR = Monthly Recurring Revenue
ARR = Annual Recurring Revenue
ACV = Annual Contract Value, equ. to ARR Quota
SE = Sales Engineer/Solution Architect
B/V = Base Salary/Variable Salary
Legend:
https://www.insightpartners.com/ideas/metrics/
42. Step 1: Acquisition
Users come to the site/app from various channels:
• Affiliate
• Develop affiliate program, create rewards scheme
• Identify target affiliates
• Apps & Widgets
• Create widget to embed in other websites, facebook, outlook, email
• Build API for others to build on top of, encourage open development, create revenue sharing model
• Free tool
• Biz Dev
• Identify and calling/networking with target industries e.g. Jones Lang
• Channel partnerships
• Blog
• Create original blog content
• Share useful content relevant to target users e.g. Hubspot
• Create videos and podcasts
• Share features e.g. Producthunt, Facebook like, twitter tweet, LinkedIn share, stumble upon,
• Campaigns & Contests
• Running online contests, giving away gifts
• Sponsor Hackathons and local events
• Industry events ( raffle off free subscription to capture interested individuals)
• Advertising
• TV, Radio, Print
• Online paid adverting e.g. Google Adwords, Facebook Ads, industry, online publications
• Software review sites: (G2 Crowd, Capterra)
43. Step 1: Acquisition Contd…
Users come to the site/app from various channels:
• Domains
• Registers multiple domains focused on specific elements
• Email
• Obtain targeted email lists, send out emails e.g. SalesLoft
• Pay email marketing firms e.g. constantcontact
• PR
• Press releases
• Placement on sites like Yahoo News, Google News
• Mentions on tech websites e.g. Techcrunch, mashable,
• Communication and relationship with journalists
• Communication and relationships with tech bloggers, magazine writers,
• Develop a PR package to download
• Paid PR
• SEM & SEO
• Find most relevant and popular terms and embed in website
• Get linked/mentioned on other websites
• Create backend tools e.g. web analytics, log file analyzing
• Social Networks
• Facebook, Twitter, LinkedIn pages
• Youtube, Pinterest, Instagram
• Startup blogs and networks e.g.
• Tapping into IRL networks
Metrics to Track by source:
- Quantity(#)
- Cost ($)
- Conversion (%)
45. Step 3: Retention
Users comeback to visit site multiple times:
• Emails & Alerts
• Lifecycle emails e.g. 3 day, 1 week, 1 month
• Status emails e.g. best of week/month
• Event based emails “something happened”
• Easy to unsubscribe
• Easy to read emails (Important info in subject, small body)
• Blogs, News Feeds, Twitter Feeds
• Track Impressions
• Track commentary
• System Events & Time-based Features
• Release features with maturity /demand of customers
• Release features around events
• Cohort Analysis
• Conduct cohort analysis
(dist. of visits over time, rate of delay, customer lifecycle)
Metrics to Track:
- Source
- Quantity
- Conversions
- Visitor Loyalty
- Session Length
46. Step 4: Referral
Users like product enough to refer others:
• Viral Loops
• Create incentive for sharing e.g. rewards
• Create same-side networking effect so users benefit from inviting others
• Make sharing easy
• Track viral growth(Growth factor = X*Y*Z where X = % of users who invite others, y = avg
number of people invited, Z = % users who accepted invitation). Track growth of different
channels
• Emails, Widgets & Social
• Make it easy for users to invite others from app/web
• Penetrate a specific customer segment with widgets
• Build API for others to build on top of, encourage open development
• Affiliates, Contests
• Ads, Affiliates, Cross-promote app with other developers