KPI Centric Objectives
This episode of the RevOps Squared video blog highlights recent B2B SaaS 1H20 KPI benchmarks. and how 2H20 company, leadership, department, and individual objectives need to be updated to reflect the new normal.
Overall ARR Growth is down over 50% versus 2020 Plan and 2019 results. New Name customer ARR is down 3x from the 2020 budget. Gross Dollar Retention and Net Dollar Retention is performing better than forecasted immediately after COVID-19 impact SaaS financial performance in March 2020.
In this video, Ray discusses why SaaS companies will benefit by increasing marketing, sales, sales development, and customer success resources sharing objectives on Net Dollar Retention and Existing Customer Growth.
Q&A Session with The SaaS CFO
Ben Murray, the founder of The SaaS CFO blog and the SaaS Academy joins Ray Rike, the founder and CEO of RevOps Squared to discuss the recently released RevOps Squared KPI Framework.
During this session, Ben and Ray discuss the First Five KPIs in the KPI Framework including: 1) Rule of 40; 2) CAC Ratio; 3) Gross and Net Dollar Retention; 4) Customer Lifetime Value to CAC Ratio and; 5) Gross Margin.
Insights shared include a what stage of evolution should a B2B SaaS company start using KPIs to inform decision making, the nuances of CAC Ratio including why New Name and Existing Customer Expansion CAC Ratio is important, and the critical need to develop a solid, foundational financials to increase the accuracy, impact and Enterprise Value creating effect of the First Five Key Performance Indicators.
Revenue Operations in B2B SaaS
Gartner Group research finds that B2B SaaS companies that implement a "revenue operations methodology" experience a 34% increase in profitability, 12% accelerated revenue growth and a 71% increase in shareholder value.
84% of research participants agreed that having Go-To-Market team alignment across marketing, sales, and customer success is critical to revenue growth performance.
However, 37% of B2B SaaS participants surveyed do not think their GTM teams are optimally aligned and over 50% do not have a centralized revenue operations function.
As B2B SaaS companies look to scale to $50M, $100M, and $250M+ in ARR, Revenue Operations is an imperative, foundational, and strategic organizational requirement. This video covers all of the above and provides unique insight into the why what, and how of Revenue Operations.
B2B SaaS KPI Framework
As the B2B SaaS industry matures, Key Performance Indicators and their comparison to industry benchmarks will increase the predictability of Enterprise Value.
B2B SaaS companies calculate industry standard Enterprise Value creation metrics beyond ARR and Growth Rate including: 1) Rule of 40; 2) CAC Ratio; 3) Gross and Net Dollar Retention; 4) Customer Lifetime Value to Customer Acquisition Cost and; 5) Gross Margin.
Based upon 150+ conversations with SaaS CFOs. CEO's and investors, we identified inconsistent calculation of multiple industry-standard metrics. In over 20% of cases, we found the CAC Payback period calculation neglected to factor in Gross Margin. A more concerning gap was that over 50% of operational KPI's had no DIRECT impact on the Enterprise Value creating company level metrics.
This video discusses these and many more challenges with today's SaaS KPIs and why a new KPI Framework is required.