1. SaaS METRIC OF THE WEEK:
ZCP: Repeat this metric 5 times as fast as you can: "month zero cash-on-cash payback”- this tongue twister is best referred to as ZCP. It’s a cash-based metric because cash-in-the-bank is THE critical number for a SaaS company to monitor in my experience. ZCP answers the question: if we invest $1 in sales costs (such as salaries and commissions), how long does it take to recoup that dollar spent and welcome it back to our bank account?
2. SPEND:
Figuring out how to optimize marketing spend with growth rate is a key question and this study doesn’t show amazing benchmarks for us all - the percentage of inbound revenue pretty much equals the percentage of growth out, but there is an ever-increasing range of outcomes as spend increases per business. Less mediocre benchmarks are with the Sales vs Marketing spend ratios which stay at about 2:1 regardless of market-facing strategies (although Mixed is a bit of an outlier).
3. PROFESSIONAL SERVICES:
It’s a weird open secret that a lot of B2B SaaS businesses generate a significant amount of revenue from implementation and deployment projects, often captured as revenue from Professional Services, due to deployment and configuration complexity. So what are the revenue benchmarks for a SaaS Business to captured revenue through professional services? On average it caps out at 11% of all annual revenue with Enterprise focused businesses but even at the lower end of town it’s still 5% of revenues with SMB focused businesses.
4. MISTAKES:
A somewhat morbid post-mortem article from Failory who analyzed over 80 startups who have failed and identified some of their common mistakes (some fatal). Marketing problems seem the most abundant (and deadly) - but product-market-fit, market size, and value add are all creeping around too.
5. SDRs:
The answer to the question "what does an SDR do?" is pretty unique to whoever is responding. So here is some good empirical survey-based insight on the things an SDR Team does within a revenue organization to add to your job descriptions. It's way more than just prospecting including research, social media, content creation, and.....watch out all you AEs....closing.
6. CHURN:
I love myself a good infographic, so take a good look at this one on Churn prevention complete with steps to take at every stage in the customer lifecycle and the good old involuntary churn prevention - extra tactics on that here (another infographic!)
7. PREDICTABLE REVENUE:
It's the #1 reason investors love SaaS. I may give Salesforce a hard time occasionally - but over 20 years ago, they launched the methodology of Predictable Revenue, which then became a sales guide published way back in 2011 by Aaron Ross - Crib Notes PDF pf that book is downloadable here.
8. REVENUE MANAGEMENT:
Tagging on to #7 above - revenue management is the system of setting prices and adjusting them based on supply and demand (thanks for the infographic Chargify). In SaaS, which is all about predictability, this is really important, with RevOps being a new category of practice within maturing SaaS companies.
- A/BTESTS: Everything is a hypothesis in a startup and testing should be embedded into everything you try towards growth and product. When conducting experiments such as A/B tests, get started with this Step-by-Step Guide. Go Practice has some great advice on how to make these experiments run faster.
10. CASE STUDY:
Product hunt has the metric of being everywhere - so how did it get to be the place to discover the new next big thing?
POD OF THE WEEK:
Customer churn is the bane of SaaS businesses - data can help understand the causes of churn and take action to reduce it.