The Metrics Brothers

Benchmarkit recently published their 2024 SaaS Performance Metrics Benchmark Report based upon 936 B2B SaaS companies participation. Dave "CAC" Kellogg and Ray "Growth" Rike discuss the recent trends and insights.

SaaS Metrics and the corresponding benchmarks discussed include:

• 2023 Growth Rates
• 2024 Planned Growth Rates
• CAC Ratio (Blended, New and Expansion)
• CAC Payback Period
• Net Revenue Retention
• Sales and Marketing expenses as a % of Revenue
• ARR per Employee

The full report and interactive benchmarking tool can be reached at: benchmarkit.ai/2024benchmarks

If you work in the B2B SaaS or Cloud industry this episode is a must listen!

NOTE: Benchmarkit was founded by SaaSTalk co-host, Ray "Growth" Rike"

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Is Pipeline Coverage Ratio simply the inverse of the win rate? Many people will translate a 20% win rate into the need for a 5:1 Pipeline Coverage Ratio - Dave "CAC" Kellogg and Ray "Growth" Rike dive into why that just isn't the case! There are multiple variables that need to be considered including:

• Win Rate versus Closed-Won Rate Conversion - there is a difference
• What happens to Pipeline Coverage Ratio when deals are pushed into or pushed out of the quarter
• How is Pipeline Coverage Ratio different in a 30 day sales cycle versus a 180 day sale cycle
• Bottom line - why Pipeline Coverage Ratio is NOT as simple as 1/Win Rate

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

SaaS Account Executive Benchmarks including On-Target Earnings, Commission Rates, Quota, Quota Achievement, Renewal and Expansion Responsibilities are a few of the benchmarks that Dave "CAC" Kellogg and Ray "Growth" Rike discuss in this episode.

Account Executive Benchmarks discussion include:

• On-Target Earnings (2024 vs 2022)
• Base Salary and Variable Compensation Mix
• Commission Rates (2024 vs 2022)
• Quota Assignment by ACV
• Quota Achievement
• Renewal and Expansion Responsibilities

If you are leading a B2B SaaS sales team or have one in your company that directly impacts financial performance this is a must listen episode of SaaS Talk with the Metrics Brothers!

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Logan Bartlett, Managing Director at Redpoint Ventures recently shared the Market Overview Report they presented to their Limited Partners in March '24 at their AGM event at the Chase Center in San Francisco. Ray "Growth" Rike and Dave "CAC" Kellogg review the key insights during this episode.

Insights that Dave and Ray discussion include:

• Enterprise Valuations - a return to 2019
• Growth Rate trends - a return to a time long ago in a land far away
• The value of Growth vs Profitability - the trends and the facts
• Down Rounds, Shut Downs and No Rounds

Click here to get the report and to follow along Dave and Ray's conversation - as they sometimes go off the deep end!

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Rubrik, a cloud industry cybersecurity company went public on April 25th - Dave "CAC" Kellogg and Ray "Growth" Rike break down the key metrics that Rubrik used as the foundation to their S-1 and Initial Public Offering. Those metrics include:

• Annual Recurring Revenue Growth
• Revenue (GAAP) Growth
• Net Revenue Retention
• Sales and Marketing Expenses as % of Revenue
• Free Cash Flow versus Net Income

The Metrics Brothers also discuss the Rubrik transition to a recurring revenue model and the two-tier stock structure used to ensure voting control remains with the founders and early investors.

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Dave "CAC" Kellogg and Ray "Growth" Rike discuss how a "growth rate" endures for a SaaS company trend over time!

Topics covered during the conversation include:

• T2D3 Growth Model and Mantra from 2015
• "56789" Growth Model from Metric Brother Dave "CAC" Kellogg
• The Impact of Growth Endurance decreasing to 65% in 2023 versus 80% in 2021

Growth Endurance is the measure of how a company's growth rate endures over time: GE = current year’s growth rate / last year’s growth rate.

At an 80% Growth Endurance (2021 value) says that a companies growth rate in the next year will be 80% of the current years growth

- example: 70% growth this year would predict 56% growth next year

Growth Endurance has decreased over the last two years and is NOW ~ 65% (2023)

- example: 70% growth this year would predict 45.5% growth next year

Growth Endurance decreasing from 80% to 65% may not sound that bad but let's look at the impact over 5 years at a $10M ARR company today but...

• 80% Growth Endurance = $189M ARR in Five Years (starting at $10M ARR)
• 65% Growth Endurance = $122M ARR in Five Years (starting at $10M ARR)

Using a 6.5x "Enterprise Value to Revenue" multiple that projects a material decrease in Enterprise Value 👇

• 80% Growth Endurance = $1.23B Enterprise Value in Five Years
• 65% Growth Endurance = $793M Enterprise Value in Five Years

The change in Growth Endurance translates into a $437M decrease in EV (at the same 6.5x multiple)

🤷‍♂️ If Growth Endurance has decreased by 15% over the past two years and Customer Acquisition Cost & Growth Efficiency have not improved materially over the past 7 quarters it might be time to change ...

The "T2D3" Growth Model suggests the below ARR growth for a B2B SaaS company

• Get to $2M
• Next year: Triple to $6M
• Next year: Triple to $18M
• Next year: Double to $36MNext year: Double to $72M
• Next year: Double to $144M

The "56789" Growth Model suggests the below ARR growth for a B2B SaaS company

• Year 5: $10M
• Year 6:$20M
• Year 7: $50M
• Year 8: $75M
• Year 9:$100M

If you are a fan of B2B SaaS and have a desire or need to stay on top of the most recent trends this episode is a great listen!

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Dave "CAC" Kellogg and Ray "Growth" Rike continue their discussion on the SaaS Metrics Maturity Model which includes the below five levels:

• Level 1: Foundation
• Level 2: Trust
• Level 3: Strategic Linkage
• Level 4: Metrics Culture
• Level 5: Trajectory

Level 1:  Lay the foundation

• Definitions and calculations
• Pipeline stages, forecast categories, close dates, values, SaaS metrics
• Semantics - what do words like best case, forecast, commit and downside mean
• Instrument underlying systems (GL, CRM, Billing, HCM, etc)
• Consider Metrics Committee

Level 2:  Build trust

• Templates, templates, templates
• Metrics selection & presentation
• History & context - always include footnotes on how metrics are calculated
• Regular Cadence:  which templates used at which meetings?
• Continuous improvement - fix data at the source, improve templates

Level 3:  Link Metrics to Business Strategy

• Identify your top challenges
• Define 4-6 strategic goals - align metrics to those goals
• Link department, team and individual objectives to the company metrics (OKRs)

Level 4:  Build a metrics culture

• Demand numeracy
• Manage to the regular metrics publishing cadence
• Metrics conversations about the business impact NOT the metric calculation method

Level 5:  Agree on strategic trajectory

• Long-range, driver-based models
• Timeframe:  When are metrics goals targeted to be achieved, what are the milestones towards goal
• Sequencing:  Not everything at once - what is the priority order and associated timeframe for each metric's goal

If you are a creator, user or participant in how your company uses metrics to measure performance, inform decision making and/or report performance to your boss, your board and your investors this conversation will be valuable!!!

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Dave "CAC" Kellogg and Ray "Growth" Rike discuss the 5 root causes that created the need to develop a SaaS Metrics Maturity Model for companies as they scale.

The top five root causes that lead to the 15 primary problems in how companies use metrics include:

• There’s no shared metrics foundation
• There’s no trust
• Metrics are not integral to strategy
• The culture is not metrics-driven
• Metrics are not being used define trajectory and long-term goals

This episode discusses the key challenges in using metrics and the approaches to address those challenges. This discussion builds up to the introduction of the Metrics Maturity Model and the 5 levels of maturity:

• Level 1: Foundation
• Level 2: Trust
• Level 3: Strategic Linkage
• Level 4: Metrics Culture
• Level 5: Trajectory

If you use, develop or just are a student of SaaS Metrics - this episode is full of insights and ideas on how to accelerate your company's metrics maturity model to level 5!!!

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Dave "CAC" Kellogg and Ray "Growth" Rike discuss the Customer Lifetime Value to Customer Acquisition Cost (LTV:CAC) Ratio - a metric many consider the ultimate compound metric that investors love.

During this episode topics covered include:

• How to calculate Customer Lifetime Value
• How to calculate Customer Acquisition Cost
• Benchmarks for LTV:CAC Ratio and the translation to Rate of Return
• Primary input variables and predictive indicators to optimize LTV:CAC Ratio

If you have ever heard of the LTV:CAC Ratio or just are interested in some of the details and finer points from CAC and GROWTH - this is a entertaining and information episode!

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

This is a replay of one of the most popular SaaS Talk episodes (#5) published in season #1. Dave "CAC" Kellogg and Ray "Growth" Rike dive deep into all things Customer Acquisition Cost (CAC) including the CAC Ratio.

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.