Quote Info

SaaS businesses are more numerically driven than most other kinds of business. Making a small tweak to a number like the churn rate can have a very big impact on the overall health of the business. Because of this we frequently see a “quant” (i.e. a numbers oriented, spreadsheet modeling, type of person) as a valuable hire in a SaaS business. At HubSpot, Brad Coffey played that role, and he was able to run the models to determine which growth plays made the most sense.

Understanding these SaaS metrics is a key step towards seeing how you can drive your business going forward. Let’s look at some of the levers that these imply as growth drivers for your business:

Churn

  • Get Churn and customer happiness right first (if this isn’t right, the business isn’t viable, so no point in driving growth elsewhere. You will simply be filling a leaky bucket.)

Product

  • You’re in a product business – first and foremost: fix your product.
    • If you’re using a free trial, focus on getting the conversion rate for that right (ideally around 15 – 20%). If this isn’t right, your value proposition isn’t resonating, or you may have a market where there is not enough pain to get people to buy.
    • Win/Loss ratio should be good
    • Trial or Sales conversion rates on qualified leads should be good

Funnel metrics

  • Increase the number of raw leads coming in to the Top of your funnel
  • Identify the profitable lead sources and invest in those as much as possible. Conversely stop investing in poor lead sources until they can be tweaked to make them profitable.
  • Increase the Conversion Rates at various stages in the funnel

Sales Metrics

  • Sales productivity (focus on getting this right consistently across a broad set of sales folks before hitting the gas)
  • Add Sales Capacity. But first make sure you know how to provide them with the right number of leads. This turns out to be one of the key levers that many companies rely on for growth. We have learned from experience how important it is to meet your targets for sales capacity by hiring on time, and hiring the right quality of sales people so there are fewer failures.
  • Increase retention for your sales people. Since you have invested a lot in making them fully productive, get the maximum return on that investment by keeping them longer.
  • Look at adding Business Development Reps. These are outbound sales folks who specialize in prospecting to a targeted list of potential buyers. For more on this topic, click here.

Pricing/Upsell/Cross Sell

  • Multi-axis pricing
  • Additional product modules (easier to sell more to existing customers than it is to sell to brand new customers)
July 11, 2019 Seminar

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