What are the key metrics for Enterprise SaaS companies to track over time?
In creating this, I received some great input from Mike Carden of Joyous, Danny Tomsett of Uneeq and Mark Clare of Clare Capital – thank you for sharing and enabling others to see this.
What key metrics?
Mike Carden manages to these 5 key metrics:
LTV vs CAC
MRR & ARR
Growth Rate
Churn Rate
Cash Runway
Read Mike’s thoughts https://www.linkedin.com/pulse/5-key-saas-benchmarks-start-ups-michael-carden/
Mike also is a big fan of Return on Capital Invested. The theory is that for each $ you raise, it should result in a 5x increase in enterprise value for the next round. As Mike says, “let that one sink in”.
What do investors look for?
Danny Tomsett shared some perspectives around what an investor looks for:
Revenue Growth
Customer acquisition growth rate
MRR net retention rate - high churn likely at early stage, however some clients growing is key
MRR growth rate
LTV or if too soon, average MRR per client.
Sales Efficiency (showing tracking improvement ideally)
CAC:Revenue ratio and/or gross margin.
Conversion rates across each stage Inbound/Outbound> MQL > SQL> Closed won
Sales cycle
Product / Market Fit
Market segmentation data / buyer persona validation
Annual renewals
Survey data - this method provides some key insights - https://coda.io/@rahulvohra/superhuman-product-market-fit-engine
Operating Health
Cash Burn rate
Days to zero
Mike and Danny also both have adopted OKRs for their teams with a focus mostly around Team, Engineering, Marketing, Sales, Product Health and Customer Advocacy.
What tools do people use for tracking?
So many different options, all use OKRs, to trail down the key metrics to everyone across the business, or One Metric (Rowan Simpson), others customise their CRM. I have also seen people work out the metrics and then just release them on a tool like Notion and let people iterate on the fly.