OPEXEngine | SaaS Articles

Monitoring SaaS Customer Cohort Analysis

Investors love SaaS customer cohort analysis. It shows that you are analyzing your business, using data to identify areas of strength and weakness. It shows that you know your customers and can analyze which segments are likely to grow and which are at risk for churn. If you can identify the groups most likely to churn, you can do something about it and improve your performance. If you know the groups most likely to grow, you can better allocate resources to find more of them and drive more sales and revenue growth.

February 15, 2019

How Much ARR Can a CSM Manage?

How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment.

February 12, 2019

Bessemer’s Investment Framework

This week I listened to Jeff Epstein, Bessemer partner and former CFO of Oracle, present to CFOs and finance execs at Intacct’s Finance Summit. The Summit content was well done and kudos to Sage Intacct for organizing it.Jeff described the stages, pre-money valuation and milestones at each stage, from pre-seed to Series G and beyond. I think it bears reviewing here because the milestones represent how a leading venture fund measures the operational focus of a SaaS company at various stages. More importantly from a benchmarking perspective, the milestones define what key metrics a growth company should be tracking at various stages of growth. And heck, we can all learn from the models of one of the most successful venture firms in the world.

February 8, 2019

Should Your SaaS Company Have a Channel Sales Strategy?

Over the last year or two, many of SaaS Capital’s portfolio companies have initiated channel sales strategies, and many more are contemplating it. Given the trend, this was the focus topic at a recent portfolio company CEO roundtable.

February 5, 2019

Pros and Cons - SaaS SMB versus Enterprise Models

SaaS companies selling in the SMB market are structured operationally very differently from SaaS companies selling in the enterprise market. Everything from Sales structures to Marketing to R&D is organized differently depending on whether you are selling a low-priced product to a high volume of customers, or selling a high-priced product to a smaller number of customers. But while many of the operational drivers and related costs are different, many of the financials actually end up about the same. But, what are the pros and cons of SMB sales characteristics versus Enterprise sales characteristics?

February 1, 2019

Scalable Financial Operations: The Key to Successfully Growing a SaaS Business

For any growing business, capturing and analyzing financial data is critical for scaling and making informed decisions. With the right performance metrics and insights at your disposal, you won’t be blindsided by changes in the business. You can proactively address issues quickly and drive growth confidently. And when you’re ready to seek capital, you can deliver the metrics and insight into the financial health of your business that investors and venture capitalists will, without a doubt, expect. But for B2B SaaS businesses, the approach isn’t one-size-fits-all. Traditional financial metrics can’t provide the insight you need because they simply don’t work for a recurring revenue business model. That’s because SaaS businesses aren’t static, and the volatility that comes with customer upgrades, downgrades, and cancellations is impossible to track using a spreadsheet. Spreadsheets can be valuable for ad hoc financial analysis and financial modeling, but they are poor at managing data.

January 29, 2019

CAC Doesn't Have to Rise as You Grow

One of the most important metrics for B2C companies is customer acquisition cost or “CAC”. One debate is whether the cost rises or falls over time. The argument for rising CAC is the next marginal customer is generally harder to acquire than your last customer. The argument for falling/stable CAC is that as companies get larger, they benefit from scale and brand recognition. We took a look at publicly available data for B2C companies which disclosed CAC, and while there were only three we could find, the data is interesting.

January 22, 2019

Why CAC Matters for B2B SaaS Companies

CAC can be difficult to calculate. If you have 1000 customers paying $1,000/year plus 100 customers paying $10,000/year, is it good, bad or indifferent if your average CAC is $5,000/customer? In the B2B SaaS world, most companies have different customer segments who pay somewhat or very different prices based on a variety of different licensing options.

January 17, 2019

How To Present a Quarterly Sales Forecast to Your SaaS Company Board

While most companies put real thought into how they present numbers in their post-quarter board decks and other management reports, one area in which you’ll find a lack of discipline is in how they present quarterly sales forecasts to the board.

January 15, 2019