Go-to-Market continues to be a trending topic for the majority of B2B SaaS companies being challenged to optimize efficient revenue growth. ICONIQ recently published a report entitled "State of GTM Benchmarks" and Dave "CAC" Kellogg and Ray "Growth" Rike discuss the report's findings and what the benchmarks mean to both operators and investors.

Key GTM benchmarks covered during today's episode include:

• Growth Rate Trends ('24 vs '23)
• Customer Acquisition Logo Velocity
• Pipeline Coverage Ratio
• Pipeline Conversion Rates
• Partner Sourced Contributions
• Expansion ARR vs New Logo ARR

If you are a B2B SaaS CEO, CFO or GTM executive this episode is full of interesting insights based upon the most recent GTM benchmarks.

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

The SaaS Mendoza line highlights the slope of the long term growth rate that investors expect and operators should target on a path to IPO. Dave "CAC" Kellogg and Ray "Growth" Rike break down the updated expectations.

Veteran software VC, Rory O’Driscoll of Scale Venture Partners proposed a theory to identify the growth rate below which a company may not be on the VC-to-IPO trajectory.

In 2018, Rory started with an analysis of SaaS companies at the time of IPO. In 2018, SaaS companies going public had a minimum run rate ARR of $100M and at least a 25% forward growth rate. He then examined growth rates over time and observed that the growth persistence - which represents the rate of growth decay year over year, that public SaaS companies grew at 80-85% of their previous year’s growth. This metric is commonly known as "Growth Endurance".

Dave and Ray discuss the new reality of the SaaS Mendoza line, with the most recent data in 2023-2024 suggesting that a SaaS company must have at least $400M - $500M" in revenue before they can IPO as evidenced by the recent Klaviyo, OneStream and Rubrik initial pubic offerings.

CAC and Growth highlight other common "growth expectation" models including the T2D3 (Triple, Triple, Double, Double Double) and 56789 models.

If you are evaluating what it takes for early stage company to attract new investors as your growth on a path to IPO - this conversation is full of great insights and perspective on investor expectations.

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 <insert ideas here>...

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.

Aileen Lee, Founder and Managing Partner at Cowboy Ventures recently wrote an article entitled "Welcome Back to the Unicorn Club, 10 Years Later" (1/18/24) which was a follow up to an article she wrote in November, 2013 entitled "Welcome to the Unicorn Club: Learning from Billion-Dollar Startups".

Our SaaS Talk™ with the Metrics Brothers co-hosts, Dave "CAC" Kellogg and Ray "Growth" Rike do a deep dive into how private and public company valuations are calculate, explore the difference between Market Capitalization and Enterprise Value, and uncover a few of the "inside baseball" secrets to how $1B Unicorn may be worth much less.

Topics discussed include:

• Market Capitalization
• Enterprise Value
• Participating vs Non-Participating Preferences
• 1x, 2x and 3x Liquidation Preference
• Common vs Preferred Stock in a Private Company
• Stock Option Re-pricing - beware the last post money Unicorn valuation
• Onceacorn, Decacorn, Supercorn, ZIRPicorns, Papercorn, Zombiecorn, Unicorpse

The number of unicorns has grown from 39 in 2013 to 532 in 2023 per Cowboy Ventures (1,000 according to Battery Ventures). Unfortunately ~ 40% are trading for a much lower price on secondary markets than the last post-money valuations.

If you love the idea of creating or being part of a VC backed company worth more than $1B, or are just interested in the material reduction in the creation of new unicorns, this episode is full of detail, insights and a little humor!

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

Go-to-Market trouble shooting is a very common activity in 2024 as B2B SaaS companies continue to face growth and especially efficient revenue growth challenges. In this episode Dave "CAC" Kellogg shares his top-down GTM trouble shooting method which boils down into two primary categories:

• Pipeline Coverage
• Pipeline Conversion

Dave and Ray dive into the details on the key metrics to evaluate and what they tell a SaaS GTM operator about the current state of their GTM performance. Key insights are provided across multiple topics including:

• Week 3, Day 1 Pipeline Coverage Ratio
• Win Rate vs Pipeline Coverage Ratio
• Pipeline Conversion Measurement
• Pipeline Source and Composition

CAC also provides his most basic insight into the top two questions a CEO should be asking which are:

1. Are we giving sales a chance to hit the number (pipeline coverage)
2. Is Sales converting enough opportunities into customers (pipeline conversion)

If you are a CEO, CFO or GTM leader in B2B SaaS and are responsible for GTM performance and/or evaluating GTM performance 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.

ICONIQ Growth recently published their "Essential Go-to-Market (GTM) Board Slides", which includes the categories and metrics that they recommend be included in the GTM portion of the board deck. The template includes slides for the each category of GTM metrics they recommend including:

• GTM Scorecard
• Ideal Customer Profile
• ARR Funnel
• Logo Velocity
• Revenue and Logo Retention
• Win/Loss Analysis
• Pipeline
• Lead and Funnel Conversion
• Sales Capacity and Productivity
• Team Update and Planning

Dave "CAC" Kellogg and Ray "Growth" Rike identify and discuss their perspectives on the top slides in the template, while also highlighting a couple of additional slides that would be valuable.

If you are a GTM leader, or a CEO or CFO looking on refining and optimizing the GTM portion of your board deck, this episode is full of good ideas and insights.

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

Common Paper recently released a benchmark report on Cloud contract terms and conditions based upon data from over 1,000 companies. This is the first benchmarking report we have found that covers SaaS/Cloud Master Service Agreements.

Dave "CAC" Kellogg and Ray "Growth" Rike, better known as the Metrics Brothers break down the benchmarks contained in the report including:

• Agreement Length
• Payment Terms
• Limitations of Liability
• AI and Data Privacy
• Insurance Requirements
• Design Partner Agreements

If you are responsible for designing, negotiating or enforcing Master Service Agreements in the Cloud industry, this episode provides broad and detailed insights on the latest MSA terms and conditions being used in the industry.

The Common Paper Benchmark report is available by clicking here.

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

Nick Mehta, CEO of Gainsight joins Dave "CAC" Kellogg and Ray "Growth" Rike to discuss all things Customer Success and metrics! This is a "special episode" that combines deep Customer Success (CS) expertise with moments of light humor, pop culture references, and SaaS industry insider insights!

Topics discussed and benchmarks shared during this episode include:

• ARR per CSM
• Customers per CSM
• Customer Success Reporting Relationships
• Expansion ARR and Renewal Responsibility
• CSAT or NPS

Further into the episode, additional topics covered include:

• Priority Outcome Metrics for CS
• Primary Leading Indicators for CS
• Customer Verified Outcomes

There has been a lot of talk across the industry regarding the future of Customer Success, including if Customer Success as a function is needed which was highlighted in Frank Slootman's book "Amp it Up".

If you have a Customer Success team, are considering how to invest in Customer Success, or are just looking for an entertaining 20-minute conversation chalked full of great insights and a laugh or two 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 discuss the top metrics for a Customer Service organization that span the top three goals of CS including resolving, deflecting, and/or preventing cases.

During this episode, we lean heavily on CAC's background as a technical support agent for the first two years of his career, and then as the head of the Salesforce Service Cloud.

The primary job of Customer Service (Customer Support) including the three below macro-level goals

• Resolve Cases
• Deflect Cases
• Prevent Cases

What are the top metrics to measure the performance of Customer Service while ensuring a high level of customer satisfaction?:

• Cases per Agent (while maintaining a 4.5 CSAT score)
• CSAT 
• Time to Resolution (mean is not as valuable - have a max)
• First call resolution

There are many nuances to the above metrics including the type of call (how-to or bug fixes), the ability to effectively deflect calls that solve the customer issue, and how to measure the longer-term impact of preventing inbound cases over time.

If you are thinking about or currently evaluating your customer service (customer support) performance metrics, this is a great conversation that covers a wide range of metrics, goals, and priorities for any customer service organization in a B2B technology business.

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

What are the top metrics for a Professional Services (PS) leader in a B2B SaaS company? During this episode, our hosts Dave "CAC" Kellogg and Ray "Growth" Rike discuss the top PS metrics including:

• Professional Services Revenue / Billings
• Gross Margin (%)
• Billable Utilization Rate ($ and Hours)
• Non Billable Utilization including reasons
• Capacity ($ Billables and # Hours)

Before diving deep into the actual metrics, Dave highlighted that PS's primary job is to "maximize ARR without losing money". A key highlight on the role of PS is that it is not primarily responsible for maximizing PS Revenue or PS Gross Margin, but rather to help accelerate deployment to subscription revenue recognition, product adoption, utilization, and customer value all leading to increased customer retention rates and subscription customer lifetime value.

One of the key points that were discussed is that Professional Services should not be goaled, or incented for maximizing PS revenue and/or optimizing Gross Margin. Generating cash from PS is a strategy that companies that are not in a good cash position may use to lengthen their cash runway - but not a strategy that maximizes the enterprise value of a recurring revenue business.

Attach rate is a common measurement that many B2B SaaS companies use. The most common way to measure attach rate is: PS Billings / Total ARR in a specific period, such as quarterly or annually. Being able to correlate those customers that use PS and the associated GRR can highlight how the utilization of PS has to customer retention.

What % of total revenue in a B2B SaaS company is the max for professional services? Dave "CAC" Kellogg used 20% as the absolute cap on PS, measured as a % of PS revenue to subscription revenue. Dave also recommended a Gross Margin of anything above zero percent, but optimizing Gross Margin at the expense of ARR is not a good long-term strategy.

If you are responsible for Professional Services in a B2B SaaS company, or are evaluating the strategic role and associated metrics for a PS organization this is a great episode to listen to.

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 top metrics for a Chief Customer Officer to use presenting to the board and to report to the executive team when the CCO has responsibility for: 1) Customer Success; 2) Professional Services and; 3) Customer Support

• Net Revenue Retention
• Gross Revenue Retention
• Customer Health Score
• Billable PS Revenue
• Billable Utilization
• Gross Margin
• Cases per Agent
• Post Case Closed CSAT
• Deflections

Those these are the high level metrics for a CCO, each function will have more detailed lagging and leading indicator metrics that Dave and Ray will cover in subsequent episodes 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.

What are the top metrics for a Chief Marketing Officer to use when presenting to the board of directors and in a Quarterly Business Review. Dave "CAC" Kellogg and Ray "Growth" Rike discuss the below top 7 CMO metrics during this episode:

• Marketing Sourced Pipeline Generation
• Marketing Sourced Pipeline Conversion
• Day 1 Pipeline Coverage
• Demand Generation Cost per Opportunity
• Brand Awareness
• Website Visitors
• Sales CSAT

Dave recently wrote a detailed blog article on this topic which can be read by clicking here.

"CAC" is a huge fan of the phrase "Marketing creates pipeline that closes" and dives into the detail of the top Marketing metrics during this episode.

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

Top 5 Metrics for Chief Revenue Officers that own the entire customer journey, including Customer Acquisition, Customer Retention and Customer Expansion process.

Dave "CAC" Kellogg and Ray "Growth" Rike discuss 5 of the top metrics for a Chief Revenue Officer in 2024 including:

1. ARR "Actual vs Plan" - the keep your job metric
2. Pipeline Performance - Coverage & Efficiency
3. Net Revenue Retention
4. CAC Ratio
5. CLTV:CAC Ratio

Key context to this episode, is it discusses 5 of the top metrics for a true Chief Revenue Officer, not a SVP/VP Sales with the CRO title. CROs are responsible for revenue growth across every stage of the customer lifecycle, and is a financial steward of the company focused on increasing enterprise value by leading the strategy and the execution of all processes that result in efficient, profitable revenue growth.

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

Rule of 40 has been the standard metric B2B SaaS investors and operators have used to measure balanced growth...will the Rule of 40 be surpassed by the new Rule of X recently created by Bessemer Ventures? Join Dave "CAC" Kellogg and Ray "Growth" Rike as they discuss the details about the Rule of X including:

• Foundational calculation formula for the Rule of X
• How to find the "Growth Weighted" M in the formula
• What is a good "Rule of X" score

The Rule of 40 has been around for over a decade - but it was missing one key variable....which is more important growth or profitability? Beyond that, if one variable is more important what are the respective weights of Growth and Profit?

CAC and Growth have a little fun while diving deep into the details behind the Rule of X and the Rule of 40.

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

How the Enterprise Value of a SaaS company impacted by growth rate is the topic of today's conversation with Dave "CAC" Kellogg and Ray "Growth" Rike - the result is a new metric named "ERG" - the Enterprise Value to Revenue to Growth Rate Multiple.

During this episode, Dave and Ray highlight several leading public, B2B Cloud companies and how their Enterprise Value to Revenue multiples are impacted when the growth rate is factored in.

With a public Cloud/SaaS company median growth rate of 21%, the median Enterprise Value to Revenue multiple of 6.1x and a median ERG of .31 - what does that mean when the ERG is calculated for public Cloud companies such as Workday, Twilio, Domo, ZoomInfo and Hubspot?

If you are interested in how growth rate impacts enterprise value in a B2B Cloud company - 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.

OneStream went public on July 24, 2024 and Dave "CAC" Kellogg and Ray "Growth" Rike dedicated this episode to discussing their S-1 and Initial Public Offering (IPO). OneStream, the company offering their Digital Finance Cloud to the Office of Finance has a long history including being self-funded, being acquired by Private Equity (KKR) in 2019 and beginning the transition from a perpetual license software company to a SaaS company in 2020 on the path to their IPO.

During the episode, Dave and Ray discuss multiple aspects of the OneStream public offering including:

• The history of OneStream
• KKR investment in 2019
• IPO pricing
• Umbrella Partnership Corporation (Up-C)
• Stock Class Voting Rights
• Financial Performance Metrics Trends

If you are a student of the SaaS industry and/or are interested in the details behind a company that serves the Office of Finance this episode is a great listen.

This is the 50th episode of SaaS Talk™ with the Metrics Brothers and don't miss CAC and Growth sharing credits to the people who made SaaS Talk a reality!!!

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 go out on a limb and share their predictions on the Top 5 SaaS Metrics in 2024 - some are old friends and two are brand new for 2024!!!

2023 was a year focused on efficient growth, extending cash runways and making progress towards profitability. Simultaneously, certain metrics became more important in correlation to enterprise value to revenue multiples - including the re-emergence of the Rule of 40 being critical to company valuations.

Which metrics are Dave and Ray predicting as the Top Five for 2024:

• Rule of X - a growth-weighted Rule of 40
• ARR/FTE - the ultimate overall productivity metric for B2B SaaS companies
• GRR & NRR - Why the "&" is so important to measuring retention & expansion
• CAC Payback Period and CAC Ratio - The GTM efficiency metric combination
• ERG - a growth-weighted enterprise value to revenue growth ratio

The Metrics Brothers focused on the "SaaS Metrics" predictions for this episode - but if you would like to see the more holistic 2024 predictions - take a look at Dave's @kellblog post at: https://kellblog.com/2024/01/02/kellblog-predictions-for-2024/

Happy New Year to all and here is to an improving B2B SaaS environment with a balanced approach to growth and profitability!!!

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 long standing, industry standard SaaS Metrics Benchmark report from KeyBanc Capital Markets, which was released in December, 2023.

If you are a long-time SaaS veteran or new to the SaaS industry - this report has been the de facto SaaS Metrics benchmarking report for 14 years. This year's report includes a total population of 106 companies, and often comes up short in comparison to previous year's report. The small population makes segmenting the benchmarks by company size or ACV much very difficult - and benchmarks that are relevant to company size and ACV is critical in making them useful.

We encourage our listeners to download the report and follow along at CAC and Growth break it, and several of the metrics that are included... which are primarily for 2022, and some are based upon 2023 estimates.

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 break down the recent Battery Ventures - State of the OpenCloud 2023 Report which includes a historic view of performance benchmarks and some predictions on how AI will impact performance metrics in the future.

During Part 2 of this episode the co-hosts cover several metrics and SaaS industry trends including:

• Growth Rates
• Technology Buyer Sentiment heading into 2024
• The impact of balanced growth + profitability
• Business model and pricing evolution
• Stock Option Re-pricing
• The human capital impact of AI...beware Sales and Marketing

The entire report is available by clicking here.

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 break down the recent Battery Ventures - State of the OpenCloud 2023 Report which includes a historic view of performance benchmarks and some predictions on how AI will impact performance metrics in the future.

During this episode the co-hosts cover several metrics and SaaS industry trends including:

• Growth Rates
• Technology Buyer Sentiment heading into 2024
• The impact of balanced growth + profitability
• Business model and pricing evolution
• Stock Option Re-pricing
• The human capital impact of AI...beware Sales and Marketing

The entire report is available by clicking here.

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 analyze the recently published OpenView Partners 2023 Benchmark Report which was conducted in partnership with Paddle. Interesting insights into the declining growth rates and increased customer churn trends.

Key metrics and the associated benchmarks segmented by company ARR analyzed include:

• Growth Rate
• Rule of 40
• Net Revenue Retention
• Gross Revenue Retention
• CAC Payback Period
• Headcount
• Revenue/FTE

The OpenView 2023 Benchmark Report is at: openviewpartners.com/2023-saas-benchmarks-report/

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

Rule of 40 is a long standing metric used by investors to determine the health and enterprise value of a SaaS company, that is misunderstood far too often - so CAC and Growth dedicated an episode to how the Rule of 40 is calculated and how it impact company valuations including:

• Calculation formula
• Best variable for the operating profitability component
• Balance of growth and profitability yielding the highest valuation multiples
• When does the Rule of 40 become valuable versus a vanity metric

If you are a SaaS operator or a public SaaS company investor, this episode covers and important topic and 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.

Presenting performance metrics at a board meeting is a critical skill for every SaaS CEO, CFO and executive team member - Dave "CAC" Kellogg and Ray "Growth" Rike share a few best practices during this episode including:

• First slide provides a holistic executive summary
• Second slide establishes the foundation for every other slide
• The importance of showing trends and establishing context
• Mistakes to avoid

This episode encapsulates much of the content from two different presentations shared at SaaStr annual 23' and SaaS Metrics Palooza 23'

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

SaaS metric benchmark trends over the last decade highlights the challenges associated with the rapid expansion and evolution of the B2B SaaS industry. Some of the significant changes that every SaaS industry stakeholder should understand include:

• Expansion as a % of Revenue Growth
• Gross Churn Rate
• Net Revenue Rate
• Customer Acquisition Cost Ratio (cost of acquiring a $ of Growth ARR - New and Expansion)
• Rule of 40
• ARR per FTE

Matt Harney - at Cloud Ratings did a great job at putting this report together and we highly recommend everyone take a look at: cloudratings.com/saas-benchmarks-historical/ to follow along with Dave "CAC" Kellogg and Ray "Growth" Rike as they break down the top findings and insights from this SaaS Metrics Benchmarks longitudinal report.

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 all things Bookings, Total Contract Value, Annual Contract Value, Billings and revenue including:

• Bookings vs Total Contract Value vs Annual Contract Value
• Billings - more than an invoice?
• Revenue - CARR, ARR and GAAP

B2B SaaS companies regularly use the above terms, but unfortunately not always consistently defined, calculated and/or utilized.

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 dive deep into the ICONIQ | GROWTH 2023 - The New Era of Efficient Growth Report to discussed several key report components including:

• Enterprise Five Metrics
• Resiliency Rubric
• Trade-off between Growth and Efficiency
• Expansion vs New Logo contribution to New ARR
• Operating Expenses as a % of Revenue
• Benchmark utilization cautions, concerns and insights

Go grab the ICONIQ | Growth Report - take it for a read while listening to this episode to see if some of the key points Dave and Ray make resonate with your own personal perspectives.

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

Burn Multiple is a metric created by David Sacks to measure the capital efficiency of ARR growth in B2B SaaS companies. In this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss alternatives to the Burn Multiple and then dive into the details of the two primary burn multiple components which are Net Burn and Net New ARR.

There are multiple metrics that attempt to measure capital efficiency of B2B SaaS companies including:

• Hype Ratio = Capital Raised / ARR
• Cash Conversion Score: Current ARR / (Total Capital Raised to date - cash)
• Efficiency Score = Net New ARR / Net Burn

The Burn Multiple uses two primary components in it's calculation which is:

• Burn Multiple = Net Burn / Net New ARR
• Net Burn = Revenue in the Period - Operating Expenses in the Period
• Net New ARR = New Logo ARR + Expansion ARR - Down-sell ARR - Churned ARR

What is a good Burn Multiple? It depends on the stage of the company, but let's use David Sacks benchmark framework from his original Burn Multiple article in 2020:

• Amazing = < 1x
• Great = 1.0 - 1.5x
• Good = 1.5 - 2.0x
• Suspect = 2.0 - 3.0x
• Bad = >3x

If you have an investor focused on the Burn Multiple or you have heard about the Burn Multiple but want to understand the details and nuances 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 importance of measuring revenue retention. This week they cover Net Revenue Retention (NRR) - a top three B2B SaaS Metric. '

During this episode they cover many aspects of how to calculate and use Net Revenue Retention including:

• Cohort method versus formula method
• The impact of Usage-Based Pricing on the NRR calculation
• NRR benchmarks using a Good, Better, Best framework
• Ideas on how to optimize and increase NRR

In addition, Dave and Ray answer three audience submitted questions - fulfilling their goal to address the questions that the B2B SaaS industry has about everything SaaS!

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

On this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss four SaaS metrics from the Klaviyo S-1 including:

• Annual Recurring Revenue (ARR)
• CAC Payback Period
• Gross Revenue Retention (GRR)
• Net Revenue Retention (NRR)

This conversation covers many of the nuances of SaaS metrics and uncovers the lack of a standard way that even the best companies define and calculate SaaS metrics

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

On this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss Gross Revenue Retention (GRR), aka Gross Dollar Retention (GDR), and the different nuances to consider when calculating this metric.

In addition, Dave and Ray discuss why this metric is important, how to calculate GRR and how to use the results to inform decision making.

The Metrics brothers discuss the following nuances of calculating Gross Revenue Retention

• The definition of GRR
• Cohort vs Formula Method
• What to exclude and include in GRR
• How is GRR impacted by Product Led Growth and/or Usage-Based Pricing environments
• How does Churn and GRR compare...are they the same thing?
• GRR vs NRR - which is most important?

If you love the nuances and details of SaaS Metrics - this is a thought provoking episode that highlights the nuances to consider when calculating Gross Revenue Retention

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

On this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss Customer Lifetime Value, and the different input variables required to calculate this compound, multi-variable metric.

The Metrics brothers discuss the following nuances of calculating Customer Lifetime Value

• The basics - CLTV or LTV
• Revenue or Gross Profit
• Which number to use for churn in the formula (GRR, Logo Churn, all ARR or only available to renew ARR)
• Which number to use for the Average Revenue Per Account (ARPA) - new customers only or all customers

If you love the nuances and details of SaaS Metrics - this is a thought provoking episode that highlights the important of gaining alignment of the CLTV and CAC metrics in your B2B SaaS company

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

On this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss in detail how Usage-Based Pricing (UBP)  impacts the calculation of Customer Acquisition Cost and it's efficiency derivatives including CAC Ratio and CAC Payback Period.

They discuss the three primary different types of Usage-Based Pricing Models including:

• Pure usage-based or consumption-based pricing with no minimum commitments
• Minimum commitment agreement that includes up to #x units and then overage $/unit over the minimum
• Annual Subscription agreement to the platform and a $/unit of usage in addition to the annual subscription

Each of the above models can impact what is consider Annual Recurring Revenue (ARR), Variable Recurrring Revenue (VRR) and/or pure variable revenue - and that will accordingly impact the CAC efficiency metric calculation methodology.

If you love the nuances and details of SaaS Metric and how emerging GTM models impact traditional metrics calculations - this episode is for you!

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

The Metrics Brothers discuss how Product-Led Growth (PLG) including the use of Freemiums and/or Free Trials impacts the Customer Acquisition Cost (CAC) calculation. Each PLG model may have different times to value, conversion rates to paid users, different definitions of when a free user becomes a customer which all can impact the CAC calculation formula and the resultant usefulness of the metrics

During this weeks episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss CAC Payback Period, and provide a little entertainment along the journey to using CAC Payback Period in your SaaS company.

Summary

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

The Metrics Brothers discuss the use of Customer Acquisition Cost Payback Period (CAC Payback Period). On the surface CAC Payback Period (CPP) is easy to understand, yet in practice there are many nuances and considerations such as using Gross Margin in the CPP calculation, and if CAC Payback Period is an efficiency, risk or return metric.

During this weeks episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss CAC Payback Period, and provide a little entertainment along the journey to using CAC Payback Period in your SaaS company.

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

The Metrics Brothers discuss advanced topics and uses of Customer Acquisition Cost (CAC) and the CAC Ratio. On the surface CAC and CAC related metrics appear easy to understand, yet in practice there are many nuances, considerations and approaches to optimize the insights provided by CAC.

During this weeks episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss those advanced topics, and provide a little entertainment along the journey to using CAC in your SaaS company.

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

The Metrics Brothers discuss Customer Acquisition Cost (CAC) and the CAC Ratio. The two metrics are closely related, yet are fundamentally two very different SaaS metrics. 

During this weeks episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss the value of each metric, when to use them and how to calculate each metric.

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

How do B2B SaaS leaders measure the financial returns on pipeline generation?

On the surface this question may seem quite simple, but one with that presents several options, especially when considering how a CFO evaluates return on investment.

The Metrics Brothers, Dave "CAC" Kellogg and Ray "Growth" Rike dive deep into the nuances and considerations of pipeline returns on this week's 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.

Bessemer Venture Partners recently released their "State of the Cloud 24" which included the catch phrase "The Legacy Cloud is Dead - Long Live AI Cloud!" Dave "CAC" Kellogg and Ray "Growth" Rike discuss the report and the opportunities and threats to traditional SaaS companies.

Topics discussed include:

• Social Media Buzz and Sources of "SaaS is Dead"
• Gen AI VC Funding Categories and Sources
• Top Five Gen AI Trends

Trend 1: AI foundation models set the stage for Big Tech’s new battle-of-the-century

Trend 2: AI turning all of us into 10X developers

Trend 3: Multimodal models and AI agents will transform human relationships with software

Trend 4: Vertical AI shows potential to dwarf legacy SaaS with new applications and business models

Trend 5: AI Brings Consumer Cloud Back from the Dead

If you are in a SaaS company evaluating how best to maneuver the risks and/or capture the potential of Gen AI, the Bessemer State of the Cloud report is a great read and this episode with CAC and Growth 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.

In this episode of SaaS Talk™ with the Metrics Brothers, Dave "CAC" Kellogg and Ray "Growth Rike discuss Pipeline Measurements

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

In this episode of SaaS Talk™ with the Metrics Brothers, Dave "CAC" Kellogg and Ray "Growth" Rike, they discuss all things Pipeline Generation

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

SaaS Talk™ dives deep into the world of Software as a Service, discussing the successes and hurdles that C-suite leaders in the SaaS industry encounter.

Co-hosted by Ray Rike, CEO of Rev Ops Squared, and Dave Kellogg, Executive In Residence at Balderton Capital and Principal at Dave Kellogg Consulting, this podcast brings forth insights and perspectives from esteemed SaaS leaders. They share knowledge and experience on a wide array of topics, including SaaS strategy, business model innovation, customer success management, revenue operations, SaaS metrics, infrastructure and security, and data-driven decision-making.

Whether you're a C-suite executive in a SaaS company, an ambitious tech entrepreneur, or simply eager to delve into the SaaS landscape, SaaS Talk has you covered. Our guests reveal their real-world experiences and practical advice, along with their perspectives on emerging trends and technologies in AI, Machine Learning, and Cloud Services.

If you're eager to stay at the forefront in the rapidly evolving world of SaaS, tune in to SaaS Talk. Discover what it takes to excel as a C-suite leader in today's dynamic and ever-changing tech landscape.

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

McKinsey recently published a report entitled "Navigating the Generative AI Disruption in Software" that Dave "CAC" Kellogg and Ray "Growth" Rike discuss in his episode.

Some of the primary topics discussed include:

• GEN AI penetration velocity today vs SaaS in the early days
• GEN AI impact on switching from traditional SW/SaaS vendors
• Where will the rewards of Gen AI go
• Impact on SaaS Growth and Churn Rates

One of the most interesting parts of the report and this episode is that expansion growth rates of software will increase for those with embedded generative AI. In addition, the adoption of Generative AI solutions will be spread across three primary modalities of Gen AI software including:

• Native Generative AI Point Solutions
• Broader platforms with embedded Generative AI
• Internally developed Generative AI software

If you are a traditional SaaS company and are looking to navigator the unchartered waters of the Generative AI software era, the McKinsey report and this episode are great sources of ideals and insights.

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