Welcome to the second edition of the SaaS Barometer Newsletter by Benchmarkit!!!
I was recently asked by the partner who leads the “Sales Transformation” practice at one of the largest, most respected global consulting firms, what are the top Sales performance metrics I recommend broken down by:
Sales Effectiveness Metrics
Sales Efficiency Metrics
Go-to-Market Efficiency Metrics
🤔 As I thought about his question, it reminded me that across the SaaS industry, we still primarily think about departmental goals when determining objectives, goals and which metrics to measure. Moreover, even though most everyone stresses the importance of focusing on the “customer journey”, which is inherently a cross-functional process, we still think about “internal metrics” in a traditional siloed, department-centric manner.
💡 Benchmarkit conducts over twenty “SaaS Performance Metrics and Benchmark” assessments every year, and a key deliverable is to develop a “SaaS Performance Metrics Framework” that is customer journey centric. This framework includes the high-priority metrics required to measure cross-functional process effectiveness and efficiency during each phase of the customer journey including:
Customer Acquisition
Customer Retention
Customer Expansion
🦉 To best understand how “metrics” impact what is often the #1 goal of a company’s stakeholders “ENTERPRISE VALUE” we started with the Five Pillars of Enterprise Value.
👆 Though the above pillars of enterprise value are hard to argue, the next level question is which performance metrics are most correlated to achieving optimal performance in each pillar of enterprise value, which requires us to develop a targeted SaaS Performance Metrics Framework.
📊 The next step in building the “SaaS Performance Metrics Framework” was to break down each pillar of enterprise value into the top 5 metrics that have the highest correlation to the pillar of value. Essentially, the second level of the framework is outcome-centric performance metrics that every SaaS company should consider using:
The above SaaS Performance Metrics Framework is a good metrics-centric foundation for the CEO, CFO, and the entire Executive Leadership team to rally around. The magic happens when each departmental executive can align their department, team, and individual objectives (in the form of metrics) to the company performance metrics. In the example below we show the next level Sales metrics aligned to the company level metric - CAC Ratio:
💯I began today’s newsletter with a question I received regarding “Sales Performance Metrics” which was the catalyst for sharing what we think is the better approach spanning Customer Acquisition, Customer Retention, and Customer Expansion.
In light of the specific question that stimulated today's newsletter, below is a “Sales” Only Effectiveness and Efficiency metric overview, coupled with the GTM Efficiency metrics we recommend as a starting point:
𝐒𝐚𝐥𝐞𝐬 𝐄𝐟𝐟𝐞𝐜𝐭𝐢𝐯𝐞𝐧𝐞𝐬𝐬:
Win Rate
Stage by Stage Opportunity Conversion Rate
Average ACV
Sales Cycle Length
Pipeline Coverage Ratio
Quota Productivity (Total Reps hitting quota / Total Reps)
𝐒𝐚𝐥𝐞𝐬 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲:
Gross Sales CAC Ratio (Total Sales Expenses/Gross New ARR) Sometimes referred to as "Gross Sales Efficiency"
Net Sales CAC Ratio (Total Sales Expenses/ Net New ARR) Sometimes referred to as "Net Sales Efficiency"
Overall Quota Performance (Total Quota Achieved / Total Quota Assigned)
Ramp Productivity (time to ramp AE's to specific "productive" variables)
𝐆𝐓𝐌 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲:
Blended CAC Ratio
Marketing CAC Ratio (Cost per $ of pipeline and new ARR)
Sales Development CAC Ratio (Cost per $ of pipeline and new ARR)
Sales CAC Ratio (Cost per $ of pipeline and new ARR)
Partner/Channel CAC Ratio (Cost per $ of pipeline and new ARR)
New CAC Ratio
Expansion CAC Ratio
CAC Payback Period
Customer Lifetime Value:CAC Ratio
Pipeline Coverage Ratio
Customer Retention Cost Ratio
Gross Revenue Retention
Net Revenue Retention
𝐒𝐚𝐥𝐞𝐬 𝐀𝐜𝐭𝐢𝐯𝐢𝐭𝐲 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲:
Activities to Conversation
Conversation to Meeting Scheduled
Meeting Scheduled to Meeting Held
Meeting Held to Sales Qualified Lead or Sales Qualified Opportunity
Marketing Qualified Lead to Sales Qualified Lead
Sales Qualified Lead to Sales Qualified Opportunity
👆 The Sales Effectiveness, Sales Efficiency, and Sales Activity Efficiency are most applicable to a VP or SVP Sales versus a Chief Revenue Officer who has responsibilities that span the customer acquisition, customer retention, and customer expansion processes. If you have a CRO, we recommend considering using the three (3) SaaS Performance Metrics Framework components that cross the entire customer journey.
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