Every year we take a look back at the year that was in our Startup Year in Review - a video that documents and celebrates the startups that have reached major milestones throughout the year.
Every year we take a look back at the year that was in our Startup Year in Review - a video that documents and celebrates the startups that have reached major milestones throughout the year.
Recently, I asked a couple of founders and a local M&A advisor for their views on the appropriate key metrics to track when you are an enterprise SaaS business. There may be some metrics that are missing, perfection is not what I am focused on, traction and momentum I am!
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:
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LTV vs CAC
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MRR & ARR
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Growth Rate
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Churn Rate
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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:
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Revenue Growth
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Customer acquisition growth rate
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MRR net retention rate - high churn likely at early stage, however some clients growing is key
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MRR growth rate
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LTV or if too soon, average MRR per client.
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Sales Efficiency (showing tracking improvement ideally)
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CAC:Revenue ratio and/or gross margin.
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Conversion rates across each stage Inbound/Outbound> MQL > SQL> Closed won
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Sales cycle
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Product / Market Fit
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Market segmentation data / buyer persona validation
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Annual renewals
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Survey data - this method provides some key insights - https://coda.io/@rahulvohra/superhuman-product-market-fit-engine
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Operating Health
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Cash Burn rate
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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.