In my previous post, I talked about why the SaaS magic number is one of my top KPIs. My other top KPI is time to revenue, which is important for all SaaS businesses, but especially so for those that make part, or all, of their revenue on transaction fees. Time to money measures how long it takes to get a customer from initial lead to run rate, the projected usage the deal was predicated on.
As the popularity of Software as a Service has grown, so has the discussion around which are the best metrics and KPIs to judge the growth and performance for SaaS business models, which are based not on monthly or yearly sales, as was the case in the on-premise software world, but on recurring subscription revenue.
Teams I’ve been part of have played around with a bunch of different ways of measuring success. We looked at like CAC, customer acquisition cost. We looked at LTV, lifetime value of customer. We looked at churn. We still look at those things, but I consider those metrics rather than KPIs, because they change frequently.
Many businesses, when they first start out, will sell their product or service to anyone in order to prove product market fit. If you’re successful doing that, you eventually figure out who your best customers are. At that point, you need to get more focused with your offering so you can scale your sales organization.
What I see a lot of companies do at that point instead is simply add more salespeople. Then, it turns into a free for all. You don’t know if every customer is hearing the same value message. You don’t understand why people are buying from you and what’s working.
A few months ago, I had dinner with Roger Travis, who ran sales for me at Pilot Software back in the mid-‘90s. When I hired Roger, I introduced him to the board by saying, “Roger has been selling for longer than I’ve been alive,” which was true. He’s still going at it, helping tech companies build their sales teams. To this day, a lot of my thinking and talk track to my team stems from things I learned from Roger.
Roger is the best kind of enterprise salesperson, because he is a master at building relationships. Even though digital technology has changed the way sales professionals work today, people still buy from people, so relationships matter.
This is a recap of a web seminar https://mattermark.com/webinars/using-marketing-signals-identify-sell-high-growth-companies/ I did a while ago around identifying your Ideal Customer Profile. This is something that every company really needs to identify and revise often, your customers will change and evolve – you have to do the same.
Most growing SaaS companies face similar challenges: Optimizing sales and building effective marketing programs. The answers for all of these challenges can be found in your current customer base. The trick is to identify your best customers, understand what they have in common and what it is they love about your product.