Welcome to the first edition of the SaaS Barometer Newsletter by Benchmarkit!!!
Today marks a pivotal moment in our journey together. As we continuously strive to provide you with the most relevant and insightful SaaS content, we are excited to announce a significant evolution. The Metrics That Measure Up (MTMU) Substack is transforming into the SaaS Barometer Newsletter.
This isn't just a change of name; it's a step forward that goes beyond sharing content that was originally created during an episode of the Metrics that Measure Up podcast. The SaaS Barometer newsletter is more than a newsletter, it is a microscope into how we will add additional insights, perspectives and industry thought leaders to supplement the cutting-edge SaaS metrics, trends, and benchmarks that you've come to rely on.
Here's what you can expect as a subscriber to the SaaS Barometer Newsletter:
Enhanced Insights: Deeper dives into the metrics that define, measure and inform SaaS success.
Broader Perspectives: Insights from a wider array of thought leaders, founders, and innovators in the space.
Community Focus: A platform not just for dissemination but for discussion, debate, and development of ideas among peers.
Your subscription to the Metrics that Measure Up newsletter will seamlessly transition to the SaaS Barometer Newsletter, ensuring that you don't miss a beat.
Now on to the first edition of the SaaS Barometer Newsletter…
Top five predictions for B2B SaaS in '24
Prediction #1: Painkillers will surpass vitamins as the drug of choice
👉 The number SaaS companies that cease operations will increase in '24 vs '231
Charts from Peter Walker - Carta
👉 Reduced budgets, especially S&M budgets in combination with conservative SaaS purchasing will tamper growth rates in 1H-24…2H-24 is currently looking like a slight increase in growth rates
Charts from Battery Ventures State of the OpenCloud ‘23 Report
🦄 only a few unicorns will materially increase enterprise value in '24 from previous financing.
Recommendations and Ideas
💡 Inject fresh ideas & experimentation in Customer Acquisition and Expansion tactics
💡 Use the Sean Ellis Score to understand if your product a vitamin or painkiller - act accordingly
Prediction #2: AI productivity hacks will move from individuals to departments
🤔 Results will be mixed due to a lack of change management and success measurements
👏 Some early productivity wins will be delivered by “content-centric” AI
Recommendations and Ideas
📏 Develop the impact and return on investment measurements on AI-generated content to increase customer acquisition, retention expansion outcomes and software development productivity
💡 Instrument the leading/lagging indicators for measuring the efficacy of using AI tools
📊 Activity, time to complete and resource utilization measurements need to be balanced with OUTCOME metrics that impact top level company “outcome” metrics and goals
Prediction #3: Investors will double down on “EFFICIENCY METRICS” - especially for their lower-performing portfolio companies
😤 Go-to-Market leaders will become increasingly frustrated with budgets & results
🤕 CEO and CFO will become more focused on efficiency metrics
📉 Growth rates may decline further or stay flat for those companies with reduced S&M budgets
Recommendations and Ideas
🦉 Know your like company benchmarks for:
Sales and Marketing expenses (% revenue)
CS expenses (% revenue)
Growth Rate
Rule of 40
CAC Payback Period
CAC Ratio
Pipeline Coverage Ratio
GRR
NRR
🥇 Establish overall and segment by segment objectives for each of the above including both a high level lagging indicator metric goal and the next level, and develop highly correlated leading indicators (metrics) owned across the department executives who can impact
🤚 if you are below the median in any of above operating metrics - develop an all in approach to fix and improve
💡 Companies with multiple products will benefit by investing more in a well defined , instrumented and measured up-sell and/or cross-sell process
Prediction #4: Usage-based pricing will continue to build momentum and met with varying degrees of success as measured by growth efficiency metrics
🛑 Before jumping headfirst into a Usage-Based or Hybrid pricing model, analyze the segments you target and if they exhibit the growth profile and associated utilization growth for the selected “pricing” elements
⚠ Usage-Based Pricing model companies had the largest decrease in growth rates in 2H-22 and 1H-23
Recommendations and Ideas
🚧 Ensure you have the product utilization and billing infrastructure required for Usage-Based Pricing
🥼 Experiment new Usage-Based Pricing models with either new customers, new segments or with new products first - strongly consider IF and WHEN to introduce new UBP to existing customers
⌛ Consider when “New Customer ARR” ends and “Existing Customer Expansion ARR” begins as these points in time will have measurable impact on core SaaS metrics including: 1) CAC Payback Period; 2) CAC Ratio; 3) Net Revenue Retention; 4) Gross Revenue Retention
Prediction #5: Those companies and executives who successfully weather the 2023 - 2024 environment while creating a strong foundation for the future will be well positioned for the future
🔁 Periods with extreme ups and downs have been a hallmark of the technology industry for decades, and the enterprise software and SaaS industry has experienced as least four times over the past two decades (‘01-’02, ‘08-’09, ‘16 and “22-’23
💪 Those companies and executives who took their medicine (painkillers) early and immediately started a regiment of significant operational improvements (vitamins) as measured by efficiency metrics will be well positioned to capitalize on their new found strength and health as we enter into the 2H-25 and 2025…
Prediction #5: Recommendations and Ideas
📏 Baseline Customer Acquisition, Retention, and Expansion metrics across the entire customer lifecycle by customer segment, determine the most attractive market segments and set quarterly improvement goals
🤝 Establish a metrics framework that EVERY department executive owns their contribution to the top level company performance metrics:
Lagging Indicators:
New ARR and Expansion ARR
Growth Rate
CAC Ratio (Blended, New and Expansion)
CAC Payback Period
CLTV:CAC Ratio
GRR
NRR
Rule of 40
Leading Indicators:
Win Rate (by segment)
Average Annual Contract Value (by segment)
Full Funnel Conversion Rates (by segment)
Product Penetration Ratio
Product Utilization
Sean Ellis Score and/or NPS
Customer Satisfaction (user, buyer, admin)
Verified Customer Outcomes
Well, that is it for the first edition of Benchmarkit’s SaaS Barometer Newsletter. Let us know what you think of our first newsletter, our predictions for 2024 and other topics that you would like us to cover in 2024!!!
If you would like to check out the other media assets and content we make available for free to our community members you can click on any of the below links:
SaaS Benchmarking Index: Benchmarks across 20+ different processes and organizations developed in partnership with leading SaaS companies including Gainsight, Xactly, Salesloft, Demandbase, LeanData, Maxio, Sage, Mosaic, MediaFly, Bito.ai and many more
Metrics that Measure Up Podcast: Fast moving 30-minute episodes with many of the industry’s top founders, CEOs, investors and thought leaders
SaaS Talk with the Metrics Brothers: Dave “CAC” Kellogg, author of @kellblog and Ray “Growth” Rike discuss the trending topics, reports and performance measurements of the time in this fast moving, and sometimes humorous attempt to discuss all things SaaS metrics
SaaS Metrics Palooza: The only event dedicated 100% to the sharing of SaaS Metrics and Benchmark best practices by the top voices, thought leaders and influencers across the SaaS industry
SaaS Solution Showcase: Benchmarkit and our partners identify and curate the five to six of the top solution providers in the industry to demonstrate their solutions to our community of executive and economic decision makers in a “hassle free” and “no sales pressure” environment
Monday Night Metrics: A show co-hosted with The SaaS CFO (Ben Murray) where we dive deep into the what, why and how of a metric the first Monday of every month