Written By: Kyle Natichioni
With new SaaS businesses popping up by the minute determining the health of a B2B organization can present challenges. After you set up the basic infrastructure to report on the fundamental SaaS analytics like Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), Total Contract Value (TCV), and Renewal Rate what’s next? We are going to dive into these questions using a sales perspective to diagnose the company’s fitness and create stronger partnerships between marketing, product, client services and finance. The analytics examined below are designed to evaluate scalability and the customer lifecycle. Aiming to improve your go-to market strategy and drive long term growth.
Cost per Qualified Sales Meeting: I love this metric because it helps companies gauge if marketing and sales are effectively collaborating. All too often we see these two functions operating in silos, failing to capitalize on the work the other is doing. Using the Cost per Qualified Sales Meeting, helps push marketing to tie their success to revenue generating activities. In an age where demand generation is rapidly becoming a fixture of any high performing marketing teams, this metric is a lead-in for sales efforts. After the hand-off, Inside Sales and Sales Executives will further qualify a prospect interest before assembling the right team for the first meeting. Understanding the marketing, demand generation and sales efforts that account for a qualified sales meeting is a great indicator for top of the funnel activities.
Average Customer Life: It’s easy to focus on the prospects that are nearing signature or onboarding a marquee client. Diving deeper, what can be really telling is how long your customers stay with your company, or the Average Customer Life. This metrics is a thermometer across the customer lifecycle to help executives understand where their strengths or development opportunities lie. Losing multiple customers in the first 90 days can signal problems with implementation or onboarding. Clients jumping ship soon after go-live may identify product weaknesses. Losing customers at renewal could stem from pricing or new competitive offerings. No matter your contract length looking at trends in where your customers jump off the boat can be a reality check for any company.
Total Revenue Under Contract: The importance of building a sustainable subscription model is critical to protecting revenue erosion. Every product has a different subscription model based on their industry and competitive environment. Carving out your niche can be hard but measuring the Total Revenue Under Contract can help investors and potential buyers evaluate the long-term health of the company. The metric looks at your fixed contract value across all clients to determine if the company’s foundation is solid or filled with cracks that can lead to ruins. This metric can provide a different perspective beyond your typical ARR and MRR calculations.
Percentage of Referenceable Clients: I wish more companies tracked how many of their clients were referenceable. Some track referenceable clients by count and keep a list of their go-to reference clients. Evolving the measurement, let’s focus on the key executive that sponsors your product or service to count the total number of referenceable clients divided by the total number of clients. Ideally, the leader is near or in the C-suite and will influence buying decisions at other target organizations. It never hurts if the executive is a thought leader or influential within the industry.