background preloader

SaaS Metrics - A Guide to Measuring and Improving What Matters

SaaS Metrics - A Guide to Measuring and Improving What Matters
This blog post looks at the high level goals of a SaaS business and drills down layer by layer to expose the key metrics that will help drive success. Metrics for metric’s sake are not very useful. Instead the goal is to provide a detailed look at what management must focus on to drive a successful SaaS business. For each metric, we will also look at what is actionable. There is an updated (re-written) version of this post available here: SaaS Metrics 2.0. Before going any further, I would like to thank the management team at HubSpot, and Gail Goodman of Constant Contact, who sits on the HubSpot board. Let’s start by looking at the high level goals, and then drill down from there: Key SaaS Goals Profitability: needs no further explanation. Two Key Guidelines for SaaS startups The above guidelines are not hard and fast rules. In the next sections, we will drill down on the high level SaaS Goals to get to the components that drive each of these. Three ways to look at Profitability Other Metrics

http://www.forentrepreneurs.com/saas-metrics/

Related:  Trabalhobusinessmodel

How London's Subway Map Is Helping Hold Investment Banking Accountable When Harry Beck designed the now-classic London Underground map in 1931, he surely had no idea that it would someday be used to help banks make woolly regulatory information easier to decipher. But this year, Beck’s map did just that. The design firm Electronic Ink, which specializes in business systems, used the familiar Tube map as a model for a flowchart that illustrates a new federally mandated approval process for financial products. Financial information is complex and boring.

What is core in your Business Model? Focusing on what a business does best, is often argued the easiest and most efficient way for companies to grow and be profitable. In the 1980s Tom Peters and Robert Waterman referred to this as "sticking to your knitting" in their classic book In Search of Excellence, a decade later Gary Hamel and C.K. Prahalad described the concept as focusing on "core competencies" in the Harvard Business Review article The Core Competence of the Corporation. Why Churn is SO critical to success in SaaS Summary: Illustrates graphically why churn is a huge problem a SaaS company gets larger. It also looks at a very surprising factor that can massively accelerate SaaS growth: negative churn. (This article is applicable to any recurring revenue business, not just SaaS.) Introduction As a SaaS company becomes larger, the size of the subscription base becomes large enough that any kind of churn against that base becomes a large number.

5 crucial stages in designing your viral loop Designing a viral loop has multiple stagesViral loops have been featured in mainstream media and there’s even a book coming out on it – but the step-by-step design of creating a new loop remains obscure, and for good reason. I’ve come to believe that creating viral loops is akin to building a software project – at best, it still comes down to a great team, a strong understanding of the tools available, and relentless iteration. There’s no recipe at the heart of it which guarantees a viral process every time, the same way that you can’t guarantee that any software project will result in market success.

How Sales Complexity impacts startup viability There is no question that success for the entrepreneur starts with a breakthrough (or at the very least great) product or service. Yet too often, entrepreneurs fall into the “field of dreams” mentality (in the words of Terence Mann, AKA James Earl Jones: “build it and they’ll come”). But the truth is that defining the product is just the beginning. Entrepreneurs must spend significant time thinking about the complexity of their sales process and the cost of customer acquisition, as these factors will strongly impact a company’s ability to make money and attract investors. An obvious requirement for a successful startup is that they are able to make more money from a customer than they spend for a customer, i.e.

How To Answer The ‘Tell Me About Yourself’ Interview Question Don’t be afraid of this question; instead use it as an opportunity to position yourself for success. When I was a human resources executive doing hiring interviews, I almost always began my interviews with candidates by requesting, “Tell me about yourself.” I did that for a number of reasons, the most important of which was to see how the candidates handled themselves in an unstructured situation. I wanted to see how articulate they were, how confident they were and generally what type of impression they would make on the people with whom they came into contact on the job. I also wanted to get a sense of what they thought was important. Most candidates find this question to be a particularly difficult one to answer.

BeyeNETWORK: The Future Role of Business Intelligence within the Depending on who you ask, there are 195 countries in the world today. While the majority of economic resources are controlled by a small, yet very powerful subset of global corporations and sovereign nations, the impact of their actions is felt by the entire world community. That the recent economic crisis was triggered by a variety of factors including faulty assumptions, greed, malfeasance, ineptitude, lack of oversight and a host of other causes is not surprising in retrospect. One of the most important revelations is how interconnected our world has become in the past 50 years. In his speech to the Council on Foreign Relations on March 10, 2009, FRB Chairman Ben Bernanke highlighted the significance of managing the systemic risk of the global financial system.

Multi-axis Pricing: a key tool for increasing SaaS revenue Scalable pricing is a powerful tool to grow revenue in a SaaS or software business. It allows you to capture more of the revenue that your customers are willing to pay, without putting off smaller customers that are not able to pay high prices. It also provides a great way to continue to grow revenue from your existing customers. This post looks at how to create scalable pricing using multiple pricing axes, and discusses the different types of axes that can be used. Introduction Many SaaS startups begin life with one product that has a simple pricing model.

Facebook App Virality: Not Dead Yet But Dying Slowly At the Social Gaming Summit in San Francisco today, the overall consensus among many speakers and attendees was that viral growth on Facebook isn’t dead yet, but it is definitely dying slowly. Kavin Stewart of LOLapps articulated the state of development on Facebook effectively when he suggested that with the ongoing changes on the Platform, it’s necessary to “keep your chin up”, as developers have historically figured out a way to continue growing. The term “viral growth” essentially means the art and science of free user acquisition. Optimizing your Customer Acquisition Funnel This blog post focuses on how B2B companies can optimize their customer acquisition funnels using a customer-centric methodology to analyze and remove blockage points. Acquiring customers in the B2B world involves using a variety of marketing and sales steps with the goal of converting prospective customers into paying customers. The process is often thought of as a funnel (see diagram above) where you pour in suspects at the top, and various steps in the process, some percentage of prospects successfully convert to the next stage, making the funnel narrower as the process evolves. No matter how large or successful your business is, you will have at least one place that is a blockage point in your customer acquisition funnel.

The problem with data journalism The recent boom in “data-driven” journalism projects is exciting. It can elevate our knowledge, enliven statistics, and make us all more numerate. But I worry that data give commentary a false sense of authority since data analysis is inherently prone to bias. The author’s priors, what he believes or wants to be true before looking at the data, often taint results that might appear pure and scientific. Are you destroying shareholder value? - Rusk O'Brien Gido + Partners, LLC Most small businesses destroy shareholder value, rather than create it. This was the conclusion of a study by a well-respected business professor I recently heard lecture on the subject of small to mid-size business capital markets. The premise is simple. If your business cannot provide a return on investment equal to or greater than its cost of capital, it is destroying shareholder value.

SaaS Economics - Part 1: The SaaS Cash Flow Trough This post provides SaaS entrepreneurs with an Excel spreadsheet model and graphs that show the cash flow trough that happens to SaaS, or other subscription/recurring revenue businesses that use a sales organization. These kinds of SaaS businesses face a cash flow problem in the early days, because they have to invest up front in sales and marketing expenses to acquire customers, and only get payments from those customers over a delayed period of time. I refer to this phenomenon as the the SaaS Cash Flow Trough. The model also compares the cash flows of businesses that charge monthly to those that are able to charge their customers for a year’s payment in advance. The greatest value from this post will come from downloading the model and inputting your own variables. The Excel Spreadsheet and associated PowerPoint file can be downloaded by clicking here.

Related:  Entrepreneur