When I started fundraising for SaaS Capital in 2006, PE firms were dismissive of SaaS. 

They thought the model only worked for companies serving the SMB market and that SaaS was generally an unprofitable approach. All that changed around 2010, and now, PE firms dominate the SaaS landscape. If you are looking to sell your SaaS business, it’s highly likely a PE firm or a PE-backed firm will be the buyer. 

PE thinking shifted again in 2020 to what we see today. They are still active in SaaS but have shifted from valuing businesses based on revenue to valuing them based on future cash flow. I have recently chatted with dozens of PE firms, and while not monolithic, the following statement holds for all of them.

Future EBITDA is the basis of PE SaaS valuations.

Because PE firms think this way, VCs have to follow suit. If you buy into a business on a revenue multiple and then sell on a cash flow multiple, you will (generally) lose your shirt. So, the shift in PE thinking has directly impacted how VCs evaluate and price SaaS transactions. It’s also fair to argue that the PE firms are downstream from the public markets, and the public market shift started this whole process.

For many folks in the investment community, the shift to EBITDA valuations is long overdue. Revenue was never a particularly good input for valuation. Some revenue is very profitable; some is not; some is sticky, and some is less so. However, in the early days of SaaS, revenue was the only input that worked.

Given the shift to EBITDA, what are the implications for SaaS business in fundraising or sale mode? It depends on your stage and what you are trying to accomplish.

Early-Stage — Minority Fundraise: 

Early-stage companies are defined as those with less than $3 to $5 million of ARR. If you are raising an earlier-stage round, you need to demonstrate the building blocks of future cash flows rather than actual profits. Battery Ventures described the most straightforward way to do this, which divides your business into two parts: a cash engine and a growth engine.

The cash engine is your capacity to generate cash from acquired revenue over time. Its key levers are gross margin and net retention. Battery focuses on recurring revenue, COGS, R&D, and G&A. Basically, how much do you make on an existing customer on a fully loaded basis? A good benchmark here is 35%, and 50% is best in class. You then determine what to do with this cash, which leads to the growth engine.

The growth engine measures your capacity to turn sales and marketing dollars into new revenue. Its metrics are the CAC Ratio and Burn Ratio. The more efficiently your business can capture new revenue, the better. The CAC Ratio is the simplest of the CAC metrics and measures how many dollars of sales and marketing expenditures it takes to get one incremental dollar of ARR. If you can spend one dollar on sales and marketing to get one incremental dollar of ARR, you will be in the top quartile.

It’s acceptable for an early-stage business to lose money as long as it efficiently converts losses into new revenue and the revenue is sticky and profitable.

That said, even with excellent unit economics, as described above, VCs will also want their capital to drive the business to a point where meaningful profits are on the horizon because that is how the next round will be valued. So, an early-stage raise needs to move the business to where it’s on the cusp of generating profits. Model your forecasts and investments accordingly.

What are current early-stage valuations? 

This is not an answerable question in a way that is helpful for companies raising money. The mathematical answer from Carta is the median pre-money valuation for a series A was $48 million in Q4 2023. However, no one reports the multiple of ARR, and they certainly don’t report growth rates. It’s also important to understand that priced series A rounds occur later in a company’s life than a few years ago. Often, several SAFE rounds have been raised before the series A.

Early-Stage — Company Sale: 

SaaS companies with less than $3 million in ARR don’t generally have enough scale to meaningfully impact the buyer’s future EBITDA and are typically positioned as a “Capability Add-on.” 

In these cases, the product itself becomes very important. Can it be easily added to a buyer’s product portfolio and cross-sold? This is harder than it looks. Buyers are skeptical. A buyer CEO recently said, “I have heard about cross-selling, just never seen it.” Your product must be highly complementary to the buyer’s products, and your ideal customer needs to be very similar.

At the very early stage, buyers will weigh buying your company versus building a similar product themselves. This is not a particularly strong position for the seller, given that acquired products still need integration and may not fit the current tech stack of the buyer.

That said, buyers will pay higher multiples in this area if you find the right fit because the total dollars are less.

Later-Stage — Minority Fundraise: 

If you are raising a later-stage round (defined here as ARR above $5 million), positive cash flow should be clearly within reach based on the current capital raise and without relying upon hockey stick assumptions, cost cutting, or significant margin changes. Being capital-efficient is not enough.

In this environment, the Rule of 40 is instructive. The Rule of 40 is the company’s annualized growth rate plus its operating margin. If raising later-stage capital, your projections should show significant growth and at least some profit. Remember that the focus is on future profits, not current ones. Current profits show how the business makes money, and growth indicates how big the profits can be in the future. Both are required, but growth is valued more highly.

Later-Stage – Company Sale: 

Larger SaaS companies will be valued based on their capacity to generate cash and will generally be categorized as platform or tuck-in companies. Platforms are businesses the PE firm will support with future capital and resources to grow and make future acquisitions, and tuck-ins are companies that will be merged into a platform.

Companies seen as platforms by PE firms are valued like a later-stage minority round described above. To become a platform company, you need to have solid growth and profitability, operate in a sector the PE firm thinks is ripe for consolidation, and have an experienced team capable of absorbing acquisitions.

If your SaaS company is more likely a tuck-in, PEs will model the combined entity’s cash flow potential. They will look closely at retention and headcount. If the business retains revenue and reduces costs, it can substantially increase cash flow. Be prepared with detailed revenue by customer-by-month schedules, contracts, and employee census data. Also, buyers will look closely and critically at cross-selling opportunities as described above. 

Creating a Competitive Process: 

VC and PE firms will try to pay as little as possible, regardless of how they model their valuations. The modeling described above establishes the top of their valuation range, not the bottom.

Creating leverage is the only way to achieve maximum value for your business. You can do little to improve the terms if you have one offer and need to sell or raise capital. 

Having negotiated hundreds of debt and equity deals primarily as an investor but also as an intermediary, I estimate that valuations are 20% to 30% higher for a company in a competitive process vs. a stand-alone transaction. This valuation benefit of competition should be intuitive in our daily lives, such as when selling a house. Still, I’m always surprised how many founders and executives don’t work hard to create a competitive environment.

The 20% to 30% competitive valuation premium translates into millions or hundreds of millions of dollars.

You don’t necessarily need to hire an advisor to create a competitive process if you have the skills and resources internally. Still, you do need to be intentional about running a process.

Takeaways: 

Except for seed deals, valuation methodologies have shifted from revenue multiples to cash flow at every stage of the SaaS market. You may not have noticed the shift because you can always take a company’s valuation, divide it by ARR, and get a valuation multiple, but that’s not how investors are doing their math these days.

The mindset is forward-looking cash flow.

Understanding the PE mindset before engaging with them or VCs will help you best position your company to maximize value.

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Your Plug-and-Play SaaS Metrics Dashboard

In this template, you’ll find a comprehensive set of pre-built SaaS metrics (that you can trust) to wow investors and make key business decisions with confidence.

Chart your path to profitability with metrics like:

  • Subscription Momentum (ARR, customer count, average ARR)
  • Churn & Retention (churn rate, renewal rate, net revenue retention)
  • Customer Lifetime Value (CLV)

I have been writing about how to value SaaS companies since 2008, working to demystify the process for founders and investors alike. The more I explore, the better I appreciate there is both a practical and theoretical side to the valuation process.

I have spent most of my time on the theoretical side, examining how things like growth, retention, margins, and interest rates impact SaaS valuations. Now, I’m spending more time on the practical side, focusing on buying and selling SaaS companies.  A big part of the practical side is comparing the company being sold to other companies like it. As with home buying, the process is designed to help you value the asset you’re trying to buy or sell. 

The problem is, that just doesn’t work.

Blending theory and practice

The theoretical side of the valuation process impacts the practical side and vice versa. Buyers build financial models incorporating the value drivers I mentioned above, and those models affect what they are willing to pay. But the relationship is sometimes less direct than you might think, and the practical side is full of outside influences. Is the VP of Corp-Dev new and looking to make a mark? Or are they going through a divorce? Or does the seller have gambling debts? Seriously, it’s real life.

My recommendation to SaaS founders has always been to understand the theoretical side as best you can and then optimize the practical side. 

Understanding the theoretical side means knowing your company’s value drivers (growth rate, retention, gross margin, CAC payback, cash burn, etc.) and how they compare to other companies. This knowledge allows you to best articulate your company’s value. On the practical side, optimizing means running a low-friction competitive process that reaches as many potential buyers as possible.

Private market comparable transactions

As I spend more time on the practical side of the equation, helping bring SaaS companies to market, I have been digging through the voluminous and expensive databases of private market transactions commonly known as running comps. As you may know, this involves evaluating a list of private M&A transactions for businesses similar to yours. 

The chart below shows the median valuation multiples of four hundred private software businesses with revenues less than one hundred million sold over the last two-plus years. There’s nothing wrong with the chart. It, just doesn’t tell you much.

Private Software Valuations, Q1 2021 - Q2 2023

Look at the underlying data, and you’ll see how unclear this picture is. Valuations are all over the place.

Public Software Valuations Scatter Chart

In each of the last ten quarters, at least one software company has sold for less than .1 times revenue and one for over 40 times revenue. Unfortunately, most private data doesn’t contain detailed operating metrics on the companies acquired, so it’s hard to know the differences between the ones that sold for 40 times vs .1 times. 

You can build a median from any data set, but it’s meaningless if the underlying distribution is too broad and the attributes of the data points are unknown. It’s like knowing the average home price in Cincinnati is $250,000. That’s not super helpful. You want to know the average price of a three-bedroom home with a new kitchen in a specific school district.

The data is further biased because each dot is an entirely different company. One quarter could be full of exceptional companies, while another could be full of duds, causing a change in valuation multiples that has nothing to do with market conditions and has no impact on your business.

All that said, what can we learn from the transactional data?

Psychologists and data scientists suggest humans are good at spotting patterns in large data groups, so rest your eyes on this chart again.

Public Software Valuations Scatter Chart

One thing is clear: there are fewer dots on the right than on the left. This indicates a slowdown in the number of transactions. From a seller’s perspective, that means lower demand, which might impact the price or even the likelihood of a completed transaction. It’s also clear that the number of transactions above 10X has virtually disappeared. That information is obfuscated in the chart, showing only the median values. The chances of a “frothy” exit have almost disappeared.

Beyond these limited observations, however, comps still aren’t good for much.

Evaluate your business using a public market approach

The public markets are a better place to start. Below, I’ve outlined a streamlined approach to valuing your SaaS company based on public data.

Begin by selecting a recent valuation multiple from a public benchmark that serves your needs best but is still defensible. Your choices include the Emerging Cloud Index, the SaaS Capital Index, or an index based on your specific SaaS segment. (See Saasonomics.com for a list of segments I put together.) Pick the one with the highest multiple.

Second, discount the valuation multiple by 25%. I looked up six studies on the long-term average discount of private companies to public companies, and the answers all fell between 20% and 30%. I would stick with 25%. It’s straightforward and entirely defensible.

Third, adjust the multiple for your growth rate. This is done by comparing your company’s growth rate to companies with a similar level of ARR (not public company growth rates). For every ten percentage points (not percent) your company is above or below the median growth rate for your ARR cohort, add or subtract 2.5 from your starting valuation multiple. The Maxio Institute has private growth rates by ARR.

The Growth State for B2B SaaS Businesses

We’ve analyzed the billing data of over 2,100 B2B SaaS companies between 2022 and 2023—download the report to learn what we found.

Fourth, adjust for profitability. This is less precise. Higher growth SaaS company valuations are not impacted much by profitability, so ignore profitability if your growth rate is above 30%. Even if you’re growing less quickly, ignore profitability if your operating profit margin is within ten percentage points of zero. If you have an operating profit margin in the 15% or above range, start adding to your multiple, and if your loss is 15% or more, start subtracting.

Finally, adjust for retention. Gross revenue retention is the driver and should be treated like profitability. Give yourself bonus points if you are five or more points above 90%, and subtract likewise in the opposite direction.

There are dozens of other factors that will impact your valuation. Still, they tend to be idiosyncratic or less important than those mentioned above. 

What this means

SaaS company founders and investors don’t need access to secret, proprietary data on comparable sales. It’s just not that useful. Accessible and timely public data can give you most of what you need to value your SaaS company. If you are selling your company or raising equity, use the valuation process above to hone your arguments for a higher value and establish a reasonable valuation range. Once that’s done, do your best to optimize the outcome by creating a low-friction competitive process.


About the Author

Todd Gardner is the Managing Director of SaaS Advisors and the founder and former CEO of SaaS Capital. Todd was also a partner in the venture capital firm Blue Chip Venture Company and was a management consultant with Deloitte. Todd has worked with hundreds of SaaS companies across various engagements, including pricing, capital formation, M&A, metrics, valuations, and content marketing. Todd is a graduate of DePauw University and Indiana University.

Todd was recently a guest on our Expert Voices podcast. He chatted with our CEO, Randy Wootton about the current state of the capital markets for SaaS companies and the recent deceleration in the growth rate of SaaS companies. Todd emphasizes the value of three key metrics for fundraising: growth, profitability, and retention.

Listen now →

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The State of SaaS Growth 2023

We’ve analyzed the billing data of over 2,100 B2B SaaS companies between 2022 and 2023 and have presented key insights, including:

  • Growth rates of businesses based on billing type
  • Where some of the fastest growing companies are located
  • The bar for raising your successive round of investment.

Download the report

Over the last 26 months, sixteen public SaaS companies have been taken private. Sixteen! 

What can we learn from the PE firms? Let’s look at the data.

My first observation is that while the PE firms were undoubtedly looking for value, that did not necessarily mean “cheap.” They paid, on average, 7.7 times ARR when acquiring a company, which was only about 1.7 times below the average ARR of public SaaS companies at the time of the acquisition. These data are consistent with the “flight to quality” that we have seen private market investors adopt. Private buyers are looking for undervalued SaaS companies, not low-value ones.

The growth profile of the companies taken private was about the same as the universe of public SaaS companies at 22%. Profits, however, are a different story. As a group, the companies targeted by PE firms were very unprofitable. Half of the companies had operating losses above 30%, with several running into the 60% loss range. Thoma Bravo, the most active buyer, acquired seven companies with an average operating loss of 36%. (This was substantially worse than the other public SaaS companies, which averaged losses of 20% over the same period and are now only losing 10%.)

The Growth State for B2B SaaS Businesses

We’ve analyzed the billing data of over 2,100 B2B SaaS companies between 2022 and 2023—download the report to learn what we found.

Referring back to my post a few weeks ago, Growth or Profit: It’s Time to Pick a Lane, all but one of the companies acquired by the PE firms were in the Dead Zone or Grey Zone. That means they were underperforming on the Rule of 40 and, generally speaking, the profit side of that equation. 

The point I made in the Pick a Lane post was that management teams running companies with a low Rule of 40 need to be intentional about pursuing growth or profit and stop trying to do both, at least initially. I lay out some objective measures to determine if growth is a viable strategy, and if not, driving profits must be the imperative. If you don’t do one or the other, someone will do it for you, and that’s what happened to these companies.

The SaaS businesses that were not gobbled up have received the message. The chart shows public SaaS companies’ substantial operating margin improvement over the last fourteen months. (To some degree helped by the underperformers being acquired.)

It’s likely the go-private wave is largely behind us. The remaining public SaaS companies are picked over at this point; debt is more expensive, and many of these companies cleaned up their profitability picture independently.

The takeaway is that all SaaS companies, even large public ones, must either grow quickly or make money. The relentlessly efficient capital markets will solve that equation if the current owners and management team cannot.

About the Author

Todd Gardner is the Managing Director of SaaS Advisors and the founder and former CEO of SaaS Capital. Todd was also a partner in the venture capital firm Blue Chip Venture Company and was a management consultant with Deloitte. Todd has worked with hundreds of SaaS companies across various engagements, including pricing, capital formation, M&A, metrics, valuations, and content marketing. Todd is a graduate of DePauw University and Indiana University.

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The State of SaaS Growth 2023

We’ve analyzed the billing data of over 2,100 B2B SaaS companies between 2022 and 2023 and have presented key insights, including:

  • Growth rates of businesses based on billing type
  • Where some of the fastest growing companies are located
  • The bar for raising your successive round of investment.

Download the report

Early in my VC career, I was sitting in a board meeting when Frank Adams, the founder of VC firm Grotech, told the CEO he needed to grow or become profitable; those were the only two choices. I was fresh out of business school and had somehow missed this lesson. I felt like asking for a refund.

Fast forward to today. Whipsawed by free money, then no money, all SaaS businesses have tightened their belts in the last 18 months. Some companies cut expenses, maintained growth, and became profitable, while others cut expenses, saw growth deteriorate, and remained unprofitable. Many of those companies are in a holding pattern to see what’s next in the funding environment and broader economy.

In the public markets, the low growth/low profit companies are in the Dead Zone and Grey Zone on the chart. They must find a path up, to the right, or both. Hanging out in the slow growth but unprofitable zone is risky and destroys value, especially when rates are high.

Blog_Growth vs Profit Graph

How to choose between growth and profit

Choosing between profit and growth is not overly complex, but it’s not easy either. All SaaS companies can be profitable. The question you need to answer before picking a lane is:

Is there an objectively reasonable, data-driven, and fully-funded plan to re-accelerate growth? 

If not, the business needs to start making money. Now. 

Scaling During a Recession: Winning Strategies for SaaS Leaders

In this playbook, you’ll learn how pricing consultants, fractional CFOs, and SaaS veterans recommend you adapt to keep winning—even in a volatile market.

SaaS businesses have a great business model: recurring revenue, high gross margins, and discretionary expenses. Making them profitable may be painful, but it’s doable. 

Getting to breakeven is the first step. Breakeven allows more time to identify incremental growth plans. But there are risks to staying in the slow-growth and breakeven position for too long. In addition to opportunity costs, technology risks, economic risks, and competitive threats can quickly turn slow growth into decline. 

Upon committing to profits, target at least 20% of revenue, which is the median for the Max Profit group of public companies. This level of profitability generates an acceptable valuation on an EBITDA basis and allows for a sale, re-cap, or M&A strategy, as it can support leverage and is attractive to PE firms.

Circling back to the growth question: “Objectively reasonable” is a filter designed to emphasize clear thinking. This is not a test of will or grit; it’s an “objective” exercise, and “reasonable” is the bar to be cleared. 

“Data-driven” means the growth plan needs to be based on things like successful go-to-market experiments, early adoption of a new product, or a successful cross-sell program. These plans should not be based on a “good pipeline” or an “amazing” new VP of Sales.

And finally, “fully funded.” If the growth plan requires capital, and there is none, it’s not helpful, and a capital raise becomes the critical next step.

It’s possible to survive with slow growth and weak profits, but not long. It’s time to pick a lane.

About the Author

Todd Gardner is the Managing Director of SaaS Advisors and the founder and former CEO of SaaS Capital. Todd was also a partner in the venture capital firm Blue Chip Venture Company and was a management consultant with Deloitte. Todd has worked with hundreds of SaaS companies across various engagements, including pricing, capital formation, M&A, metrics, valuations, and content marketing. Todd is a graduate of DePauw University and Indiana University.

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How to Scale During a Recession: Winning Strategies from SaaS Leaders

In this playbook, our panel of pricing consultants, fractional CFOs, and SaaS veterans provide actionable strategies and tactics to keep all your teams aligned around a single goal: beating the market downturn.

Get the ebook

The decline in SaaS growth rates did not start last year; it started a decade ago. Much of this is a natural maturation of the industry as it gets harder to grow as you get larger. That said, this decline is still notably sharp.

Blog internal_Chart_Long-term SaaS Growth Rate for Public Companies

The graph includes all B2B SaaS companies that were public in this period as defined by the SaaS Capital Index. On 1/1/14, there were 17 companies; by 7/31/23, there were 69, so this is not simply a static pool of maturing companies. Many new companies have been added, yet growth is clearly declining.

Growth is simply getting more challenging as the industry gets bigger. More competition is fighting over new bookings and putting pressure on pricing and renewals. And if AI impacts software development the way most experts predict, even more software will hit the market in the next few years, and growth will get harder still.

Knowing growth is harder to achieve, management and investors must adjust their plans and spending accordingly. And as many have pointed out, you better have a great product as well.

SaaS Valuation Multiples

If we line up SaaS valuation multiples with the SaaS growth rates, we see some interesting trends and anomalies.

For this analysis, we used a static pool of SaaS companies, so new IPO entrants or acquisitions do not influence the growth.

The data suggest that investors have been pretty good at predicting the future growth rates of SaaS businesses. The run-up in multiples during 2020 preceded the post-COVID revenue bump in 2021, and the decline in multiples starting in the fall of 2021 foreshadowed the revenue slowdown that began in 2022 and continues today.

Why, then, have valuation multiples remained steady over the last 15 months, while growth rate has absolutely plummeted?

Chart_Median Public SaaS Growth Rates and Multiples

First, the market anticipated this level of contraction 15 months ago, and its lower expectations have been met. This is undoubtedly part of the equation, given how fast multiples declined early in 2022.

Chart_Growth Rate and Profit Margin

Second, the slowdown in growth has been mostly offset by an increase in profitability.

Mature public SaaS companies have gone from 13% to 11% on the Rule of 40 over the last year—a relatively modest net decline. From a valuation perspective, improving margins increases the likelihood of future profits and pulls them forward. Both factors offset the negative impact of slowing growth on the valuation multiple.

Third, the expected target interest rate for the Fed has remained consistent in the last 15 months, even as actual interest rates increased. Meaning that the interest rate impact on valuations was all adsorbed in the first half of 2022. 

Where do we go from here?

If we look over the long term, SaaS multiples averaged about ten times revenue, and growth averaged about 30%. Currently, multiples are down 30% from the long-term average, while growth is down more than 50%. That would indicate more downside in multiples is undoubtedly possible.

In terms of revenue and profit, the current trend lines are relatively straightforward and steady, indicating a continued deceleration in growth and a margin improvement. 

For this cohort, revenue growth is in long-term decline as the companies scale and mature; however, their recent decline is well in excess of what can be explained by natural maturation. That said, growth will get easier mathematically as the rate decreases, and any economic outlook improvement may help accelerate bookings.

Profit margin is more controllable than growth and is likely the more certain bet going forward. Because the businesses will continue to grow, at least modestly, and the SaaS model has such high operating leverage, I expect operating margins to continue to improve. This will support higher valuation multiples at all levels of growth.

The critical takeaway from this data is that while current SaaS multiples are well below those reached in 2020 and 2021, they are actually higher on a growth-adjusted basis and, therefore, have as much or more downside as they have room to bounce back. In addition, continued margin improvement will be needed to support valuations regardless of the growth trajectory.

Investments, both by VCs and management, need to be aware of the likely range of future SaaS performance and valuations to make better capital allocation decisions for 2024. 

I will dive more deeply into this data and correlate private SaaS data from the Maxio Institute at Expert Voices in Austin, September 20th. SaaS CEOs and CFOs are welcome for dinner, conversation, and community. Maxio is buying!

About the Author

Todd Gardner is the Managing Director of SaaS Advisors and the founder and former CEO of SaaS Capital. Todd was also a partner in the venture capital firm Blue Chip Venture Company and was a management consultant with Deloitte. Todd has worked with hundreds of SaaS companies across various engagements, including pricing, capital formation, M&A, metrics, valuations, and content marketing. Todd is a graduate of DePauw University and Indiana University.

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The State of SaaS Growth 2023

We’ve analyzed the billing data of over 2,100 B2B SaaS companies between 2022 and 2023 and have presented key insights, including:

  • Growth rates of businesses based on billing type
  • Where some of the fastest growing companies are located
  • The bar for raising your successive round of investment.

Download the report

Whether you’re raising your first institutional round of funding or you’re looking to retain funding from an investor, there are specific revenue growth metrics and KPIs that investors expect their portfolios to produce. Not only do these metrics help support the story you’re telling investors about the business, but they are the cornerstone of key operational insights that can help drive your business forward. In today’s landscape, investors are taking a closer look at their portfolio companies to ensure their sustainability and strategize ways to help them grow—even in times of economic downturn. That’s why we partnered with Fulcrum Equity Partners to create a comprehensive guide to SaaS KPIs and important metrics like churn, MRR, ARR, lead generation, and upsell revenue.

“Tracking these metrics provides a really insightful view of a company’s business model, sales efficiency, and customer validation. Ultimately, it delivers investors with the key information needed to build conviction during a fundraising process.” 

 -Chad Hooker, VP, Fulcrum Equity Partners 

What is a typical revenue growth rate for SaaS companies?

When you sit down to review your company metrics with your investors and the board, you’ll typically be faced with questions regarding new bookings, churn, and cash burn. These leading and lagging indicators allow them to track progress of your company’s performance quarter-over-quarter.

However, what investors really care about is your company’s revenue growth rate. How does the current period’s revenue compare to the previous period’s revenue? How are repeat customers and customer retention factored in? How much of what your company brings in is the result of sales revenue vs. upsells and cross-sells from your CS team?

In order to gauge your own company’s performance vs. similar SaaS companies in your vertical or revenue range, you’ll need accurate benchmarking metrics. The 2022 OpenView SaaS Benchmarks Survey breaks down the median SaaS revenue growth rate as follows:

<$1M: 100% (46-286%)

$1-2.5M: 79% (37-153%)

$2.5-10M: 50% (30-115%)

$10-20M: 72% (30-101%)

$20-50M: 40% (30-52%)

>$50M: 30% (18-55%)

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How to calculate your revenue growth rate

To accurately benchmark your revenue growth rate, you’ll need to make sure you’re calculating the metric appropriately. Here are the steps you can take to calculate your revenue growth rate and see if your company is heading in the right direction:

1. Determine the time period: Decide on the time period for which you want to calculate your revenue growth rate. It could be monthly, quarterly, or annually, depending on what your board and investors want to see.

2. Gather the revenue data: Collect the revenue data for the chosen time period. This can be obtained from your financial statements, such as income statements or profit and loss statements. You can also pull this data directly from a SaaS metrics platform like Maxio.

3. Calculate the revenue growth: To calculate your revenue growth rate, use the following formula.

Revenue Growth Formula
  • Subtract your previous revenue from the current revenue in the specified period (monthly, quarterly, yearly)
  • Divide the result by your previous revenue
  • Multiply the quotient by 100 to express the growth rate as a percentage

For example, if your previous revenue was $100,000 and your current revenue is $150,000, the calculation would be:

Revenue Growth Rate Example

4. Interpret the result: Once you’ve calculated your revenue growth rate, interpret the result to gain insights into your business’s performance. A positive growth rate indicates your revenue is increasing, while a negative growth rate suggests a decline in revenue. The magnitude of the growth rate reflects the pace of revenue growth.

5. Analyze and adjust: You can use your revenue growth rate as a key performance indicator to evaluate your business’s performance over time. Compare it with SaaS industry averages or your own historical data to identify trends and patterns. If the growth rate is lower than desired, consider implementing strategies to boost revenue, such as expanding your customer base, launching new products or services, or improving marketing efforts.

6. Consider your business model: If your company makes use of subscription-based services, it is important to factor in the churn rate of your customer base. Churn rate refers to the percentage of customers who cancel their subscription within a given time period. Reducing churn can lead to more revenue and a higher revenue growth rate.

7. Track conversion rates: To increase revenue growth, it’s important to track conversion rates—the percentage of potential customers who become paying customers. By improving conversion rates, you can increase your customer base and ultimately generate more revenue.

8. Focus on total revenue: While your revenue growth rate is an important metric, it’s important to also focus on total revenue. A high growth rate may be impressive, but if the total revenue is low, it may not be sustainable in the long run.

By regularly calculating and analyzing your revenue growth rate, you can make informed decisions and take proactive steps to drive the success of your business.

Now that you highlighted the importance of your revenue growth rate, let’s take a look at the other revenue growth metrics that matter to your investors.

Insights from investors: revenue growth metrics

Revenue growth performance metrics provide visibility into the health of your business and its growth potential. You’re likely familiar with these, but we’ll recap what they are just in case.

Foundational metrics you should know:

  • ARR and MRR
  • ACV
  • CAC, CLV, and CAC Payback

ARR or MRR

Annual Recurring Revenue (ARR) or Monthly Recurring Revenue (MRR) is the value of the contracted recurring revenue components of your term subscriptions normalized to an annual or one-month period. While an MRR/ARR number is important, it’s the momentum categories that provide true insight. In Maxio’s Subscription Momentum reports, we break ARR/MRR down into the following categories:

  • New ARR/MRR: new sales to new customers
  • Expansion ARR/MRR: existing customers who expanded their subscriptions or licensed additional products or modules
  • Contracted ARR/MRR: existing customers who downgraded their subscription and/or reduced their consumption
  • Canceled ARR/MRR: existing customers who canceled their subscription. These components are frequently measured in both absolute value and relative value and are often presented in the context of incremental changes from period to period

The investor’s point of view on ARR or MRR

Monthly Recurring Revenue: An Investor's Point of View

One of the most essential metrics investors evaluate is quarter-over-quarter ARR or MRR bookings growth.

Quarter-over-quarter bookings growth provides valuable insights into the momentum and velocity of the business. Investors consider it to be one of the leading indicators of overall business performance.

Average Contract Value

Average Contract Value (ACV) is a measure of the average revenue generated per customer and is usually calculated annually.

A growing or contracting ACV is a good indicator of the value you’re providing customers. 

This metric is also a critical input for your sales and marketing plan and provides visibility into how many leads (MQLs) and opportunities (SQLs) are needed to achieve your plan.

The investor’s point of view on Average Contract Value

Average Contract Value: An Investor's Point of View

Tracking ACV over time is valuable to understand evolving customer behaviors. It helps drive decision-making for sales and marketing, customer success and retention, as well as your product roadmap. 

ACV is also a useful metric to measure the success of land-and-expand growth strategies, upsell initiatives, and a company’s ability to deliver value to customers continually.

Customer Acquisition Cost

Customer Acquisition Cost, or “CAC,” helps you make important decisions about allocating sales and marketing spend. It’s valuable in understanding how much your company is making from each new customer.  

In essence, these metrics measure how long it takes to surpass the money you spent to acquire that customer.

  • Customer Acquisition Cost (CAC): the total sales and marketing resources associated with acquiring a new customer
  • Customer Lifetime Value (CLV): the average revenue or profit a customer will generate before they churn
  • CAC Payback: the time it takes (in months) to recoup the cost of acquiring a new customer.

Note: Calculating CAC can be a very nuanced effort. Depending upon how your business is structured, automatically including all sales and marketing costs in the month they appear can be misleading. We recommend a thoughtful approach here. Start by asking the question, “Is this truly a cost associated with acquiring a new customer, and is this the correct time period for this expense?”

You can also measure your CLV against CAC, commonly known as your CLV/CAC ratio, to determine what you can expect to net for every dollar you spend to acquire a customer.

The investor’s point of view on customer acquisition costs

Customer Acquisition Costs: An Investor's Point of View

CAC, CLV, and CAC Payback are used to measure the performance of sales and marketing teams and are also extremely valuable in understanding the efficiency of a company’s growth model.

Investors will spend a significant amount of time in due diligence, analyzing the scalability of your sales and marketing organization. These metrics are great validations that additional investment in sales and marketing activities will drive value creation.

Get Your Free SaaS Metrics Template

Template provides you with a comprehensive set of pre-built SaaS metrics (that you can trust) to wow investors and make key business decisions with confidence.

Increasing revenue and pleasing investors: final thoughts

What’s the best way for SaaS leaders to increase their revenue and please investors? The answer is simple: provide more value to customers. By doubling down on customer satisfaction, you’re essentially knocking out two birds with one stone.

At Maxio, we’ve built a platform to help you do just that. Our SaaS metrics and analytics dashboard helps you see how product lines and business segments are performing across your customer base. You can then use that knowledge to pull the right growth levers in your business, increase revenue, and ultimately get buy-in from investors on your next stage of growth.

If you found the additional context provided around these revenue growth metrics helpful, check out our e-guide to see the full list of KPIs and insights from the investors at Fulcrum Equity Partners

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Summer 2023 Product Webinar

Are you Enterprise Ready? You Should Be.

On this webinar, we shared how Maxio’s new (and some not-so-new) features support your FinOps needs today while preparing your for tomorrow.

This webinar has already aired, but you can check out the highlights below!

Summer 2023 Feature Release

On our recent product release webinar, we discussed what it means to be “enterprise ready,” and how Maxio’s newest features will support your FinOps needs today while preparing you for tomorrow.

We showcased several new features, including:

Our Chief Product Officer, Barrow Hamilton, also teased some of our upcoming product releases and answered attendees’ questions about current and future Maxio features.

Graphic image_Maxio Rollforward Report

Multi-entity reporting

Multi-site reporting has come to two of our most popular reports, Advanced Subscription Momentum and A/R Aging. This functionality is building on the work we released last year, which allowed reporting currency conversion as well as foreign exchange segmentation on some of your favorite metrics.

FX gain/loss

In addition to the cumulative translation adjustment segmentation available in our Advanced Revenue Summary report, our customers need to be able to segment out noise related to FX movements from their data.

We’re pleased to announce segmentation of FX gain/loss in our payment summary report for unrealized and realized FX gain/loss. And this allows users to see their true economic movement versus what may be chalked up to macro changes in the FX market, while also adhering to ASC-830 for GAAP purposes.

Enhanced Advanced Subscription Momentum Report

Net dollar retention is a critical SaaS metric for those in high growth mode, as segmenting which customers you’re retaining in your growth numbers gives a more appropriate picture of your metrics. So, we’ve added a new section for net dollar retention to the Advanced Subscription Momentum report.

This update allows your board of directors and investors to see granular movements.

Reporting upgrades

You can now generate reports up to 80% faster. Multi-select fields allow you to enjoy bulk selections for report detail sections. And freeze panes offer an Excel-like user experience, allowing you to freeze the first column or row in each report for better readability.

We’ve increased the detail columns on both the DSO and A/R aging reports, which allows a much more granular view for any of your dunning efforts, net dollar attention, as well as the segmentation of FX gain/loss and CTA.

Advanced Revenue Summary Report Builder

Milestone-based projects and Salesforce projects triggers

Milestones are configurable markers that correlate with specified contract events in Maxio. When marked complete, milestones fire actions that trigger required invoicing, revenue recognition, and subscription dates.

Projects track milestone-based billing and revenue recognition events triggered by actual milestones achieved during a project or an implementation. This keeps implementations from falling through the cracks, and keeps you from having to manually review the contract once the project is complete.

Additionally, automated Salesforce project triggers allow you to manage projects in either Salesforce or Maxio. Previously, team managers had to connect with the finance team to update projects. Now they can do it themselves directly within Salesforce. Tracking projects, notifying the finance team, and following up, are now done one step—right from where you work best.

NetSuite integration enhancements

Maxio’s NetSuite integration is a bi-directional, highly customizable solution for growing businesses. It ensures our customers have critical financial information when and where they need it.

We’ve made a number of improvements to this integration, including the ability to send items and deposits to NetSuite, automatically add currencies to NetSuite customer records, and several custom mapping additions.

What’s next?

We’re continuously developing Maxio to better meet the needs of growing SaaS businesses. Here’s a sneak peak of our product roadmap.

While you’re always free to process payments through one of our payment partners, our recent release of Maxio Payments allows you to further automate your order-to-cash process by integrating reconciliation directly with all the great reports Maxio has to offer. Process payments in the same platform that you use to invoice, recognize revenue, report on financial data, and sync to your general ledger.

Maxio Payments is available to customers now, and we are continuing to enhance this capability in 2023.

Maxio’s developer tools save you time by enabling your engineers to quickly and easily integrate your web applications with our platform. Improving these tools continues to be a big focus for us moving into 2023 as we roll out additional SDKs to make your customers’ billing experience even better.

Part of the value of Maxio is the ability to push Maxio data into other critical business systems (and vice versa). In 2023, we’ll continue to make Maxio data more actionable and accessible, including the exploration of integrations with Business Intelligence and data visualization tools.

Finally, we’re continuing to enhance the breadth of integrations we currently offer.

In addition to the previously-mentioned updates to our Salesforce and NetSuite integrations, we are enhancing our integrations with QuickBooks, Xero, HubSpot, and more to help facilitate the business processes you need to work seamlessly between Maxio and your other critical applications.

Get a customized demo to see how Maxio will help you:

  • Streamline your order-to-cash process
  • Reduce churn and stop revenue leakage
  • Get cash in the door faster
  • Drive strategic decisions with real-time SaaS metrics and analytics

A grid of fall G2 badges: Leader, Leader Small Business, Leader Mid-Market, High Performer Europe, High Performer Mid-Market EMEA

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As continued headwinds make the future of many SaaS companies uncertain, there’s one KPI that’s ultimately determining who gets ahead: revenue efficiency. Efficient revenue growth has been a major point of discussion for SaaS owners and operators, but it’s still difficult for many of them to shake off the old growth playbook of aggressive customer acquisition.

To facilitate discussion around revenue efficiency, we met with some of the brightest minds in SaaS during our Expert Voices event in London. Jon Steinberg, Co-founder of Mountside Ventures, and Octopus Ventures Partner Edward Keelan led the discussion on:

  • Retention and expansion best practices
  • The importance of cross-functional alignment between Sales and Leadership
  • How to identify expansion opportunities to achieve profitable growth in SaaS

Here’s how SaaS leaders are thinking about revenue efficiency in their organizations.

Embracing a new perspective: acquisition vs retention

According to Jon, citing a research report from Price Intelligently, incremental improvements across retention and expansion can make big improvements to your bottom line.

  • 1% improvement customer acquisition = 3.3%
  • 1% improvement in retention = 6.7%
  • 1% improvement in expansion = 12.7%

Furthermore, churning a key client close to or during an investment round can extend deal timelines by multiple months, or even kill deals entirely.

Despite the overwhelming evidence on this topic, Jon also states that almost all B2B companies he comes across are massively under-resourced on customer success and he urges SaaS leaders to prioritize this function the same way they would new sales. 

In short, if your customers feel looked after, they’ll look after you.

Here are a few actions you take can if you aren’t ready to invest in new CS headcount:

  1. Invest in technology: Decreased user activity and less logins are possible warning signs that a customer is about churn. By investing in CS technology, you can measure these different variables with an overall ‘customer health score’ that will help you determine the state of your different customer accounts.
  2. Automate, automate, automate: Sam Altman, CEO of ChatGPT, noted in a recent podcast that customer success is one of the roles he sees as being the highest automatable through conversational AI. For example, an AI trained on a company’s help documentation could serve up the appropriate response to incoming help tickets or customer queries. While this may not be a full-stop solution, it can lighten the workload of a lean customer success team.

Tackling the revenue expansion challenge 

While customer retention comes with its own set of challenges, so does revenue expansion. One of those challenges being: how are you supposed to convince customers to spend more money with you in a period where companies are determined to cut back on spending?

Here are a different methods you can use to achieve revenue expansion (without having to shake down your current customers for more cash).

Achieving revenue expansion through pricing

A thoughtfully designed pricing strategy is one of the most effective-yet-overlooked growth levers in most SaaS businesses. If your ultimate goal is revenue expansion, you need to re-examine the way you’re pricing your products and services.

Specifically, experimenting with different pricing options, like usage-based pricing, discounts, and add-ons are all effective means of generating revenue without bringing in new sales.

The Changing Role of the CFO

Edward described how the role of the CFO had changed beyond recognition from where it was 12 months ago. “This time last year, the CFO’s focus was still on the next funding round. That has completely changed, and perhaps looks like something more traditional. It’s imperative that the CFO gets closer to both Sales and Customer Service to ensure they understand the importance of growth, but also what is working efficiently in order for them to work together.

However, Maxio CEO, Randy Wooton, challenges this notion and believes that sales needs to have some stake in the game as well. Randy believes that Sales are in a better position to sell add-ons, additional modules, and complimentary products to accounts that they’re already familiar with. Not only does this strategy shift the focus of your GTM teams towards customer expansion, it helps align the organization as a whole around the idea of achieving revenue efficiency.

Building a partnership between Sales and the CEO

Edward continues, given the current state of the market, many SaaS leaders are feeling pressure from their board and investors to start delivering results. According to Edward, a strong partnership and shared vision between the CFO and the CEO are crucial for success.

Here’s how sales leaders and CEOs can get aligned on revenue efficiency:

Regular communication: Establish regular communication channels with your CEO to keep them updated on sales performance, challenges, and opportunities. Sharing insights, market trends, and customer feedback will help your CEO understand the sales team’s activities and align their expectations accordingly.

Collaborative goal setting: Work closely with your CEO to set revenue targets and sales goals that are both challenging and achievable. This collaborative approach ensures that your CEO’s expectations are realistic and that your team has the necessary resources and support to meet those goals. Regularly review and adjust the goals as needed based on changing market conditions and business priorities.

Seek alignment on sales strategies: Engage in strategic discussions with your CEO to gain their perspective on sales strategies, target markets, and customer segments. Collaborate on refining the sales process, identifying growth opportunities, and addressing any barriers or challenges. Seek their input and guidance to ensure alignment between sales initiatives and overall business objectives.

Leading with data: Provide your CEO with data-driven insights about your team’s performance, including revenue metrics, conversion rates, customer acquisition costs, and sales pipeline analytics. By investing in the technology to produce SaaS metrics reports, you can help your CEO understand the effectiveness of your sales efforts and make informed decisions about resource allocation and the company’s strategic direction.

Key performance metrics and investor expectations

Despite your best efforts, your board and investors will be the ones to decide if your company is operating efficiently and performing above industry benchmarks. Here are the metrics Edward states investors are paying close attention based on his conversations in the VC community.

EBITDA

EBITDA is currently having a resurgence in a market where balancing profitability with ARR expansion is key. Investors who used to be all-in on double and tripling revenue growth are now most concerned with getting to breakeven in three to six months.

Net Sales Efficiency

A few years ago, it was okay if a salesperson brought in revenue that was just above the cost of doing business. Today, we’re looking at 3-4x the cost of doing business as an acceptable measurement of success. This metric makes sense for companies that are earlier than their Series B or C, he states that it’s still being scrutinized heavily by investors as a key performance indicator.

Investor expectations aside, what exactly should you be measuring internally to achieve revenue efficiency?

Revenue Efficiency

The goal of revenue efficiency is to ensure your net new ARR is higher than sales and marketing spend. By taking net new ARR for a period of time and dividing by cost of sales and marketing over the same period, you get your revenue efficiency (represented by a percentage). The goal is to keep this percentage under 100%.

If you want to dig deeper, you can split this metric into “bookings” and “expansion” efficiency, which will show you the difference in effectiveness between the two motions. This will give you a better understanding of which motion is more valuable to your business (new sales or customer expansion), which, in turn, informs your decision of where to invest time, energy, and dollars.

What’s most important for your business is to figure out where you’re seeing the greatest ROI. For example, while Net Sales Efficiency is helpful for measuring the cost effectiveness of your sales team, you also need to measure revenue generated via customer expansion against the costs of your customer marketing and customer success activities. By leveraging financial reports to measure efficiency across your organization, you can then determine where it makes sense to allocate capital to grow responsibly.

Want more insights from SaaS finance experts like Edward and Jon?

Check out Maxio’s Expert Voices, an invite-only event series where the best and brightest minds in the SaaS Finance community meet for meaningful conversation about industry trends and best practices. Additionally, Maxio’s latest 2023 Growth Index Report will show you how over 2,000 B2B SaaS companies are leveraging their billing and pricing models to achieve revenue efficiency.

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Estimate your cashflow with the Billing Change Calculator →

As we enter a period of great uncertainty in SaaS, companies are re-examining their payment terms. Quantify the cashflow impact of changing billing terms with this SaaS billing change calculator.

Marketing partners with Sales, and Engineering partners with Product. These relationships are understood as common knowledge… but what about Customer Success?

At a time when revenue efficiency is top of mind, Customer Success needs to be aligned with the office of the CFO. However, to establish an effective partnership, your Finance and CS leaders need to speak the same language. 

That’s why we met with ChurnZero to discuss:

  • How to align CS metrics with the CFO’s priorities
  • The key to breaking down communication barriers and partnering effectively
  • Which financial metrics CS leaders should focus on to drive business impact
  • How to benchmark CS success in the private market 
  • How your customer health scores impact revenue retention
  • The importance of segmentation in your CS strategy

Here’s what we learned.

(Don’t want to read the recap? You can watch the original webinar here.)

Aligning customer success and the CFO

To establish a healthy relationship between CS and the CFO, it’s crucial to understand each other’s needs and communicate effectively. 

Customer success leaders often worry about being limited to nitty-gritty financial conversations with the CFO. However, the alignment goes beyond numbers; it involves understanding what drives the business and how CS efforts contribute to its success. CS leaders must proactively communicate with the CFO to avoid surprises related to budgets and ensure continuous updates on customer base health. 

Tying customer success activities to revenue

One of the major barriers to a productive relationship between Customer Success and the CFO is not sharing the same business priorities.

Finance leaders are trying to run on a tight ship and course correct only when necessary, so it’s essential for CS leaders to maintain constant communication, especially when concerning additional headcount and customer performance. However, one of the biggest favors CS leaders can do for their CFO is to shift focus from the number of accounts managed to the dollars associated per CSM. Not only does this language resonate better with the CFO, it demonstrates business impact and can easily be reported up to the board.

Key financial metrics for CS leaders

To demonstrate the value of their efforts, CS leaders should familiarize themselves with key financial metrics and their implications. Here are the metrics CS leaders should be tracking and reporting up to the CFO:

1. Annual Recurring Revenue (ARR) is a fundamental metric that serves as a non-GAAP indicator of how a SaaS business is growing across its customer base. It represents the annualized value of recurring revenue derived from monthly billing. By analyzing ARR, CS leaders and CFOs can gain insights into sales performance, contract types, and overall business growth.

2. Renewal Rate is a critical metric for CS leaders to measure customer satisfaction and retention. It represents the percentage of contracts that are available for renewal and are successfully renewed. CS leaders should focus on maintaining high renewal rates as an indicator of customer loyalty and overall business health. Best practices suggest aiming for renewal rates around 95-97% to ensure a strong foundation for growth.

3. Gross Retention complements renewal rate by considering the entire customer base and their spending over a specified period. It takes into account churn (customers who stop using the product or cancel their subscriptions) and contraction (customers who reduce their spending or scale down their usage). CS leaders and CFOs should aim for healthy benchmarks of 80-85% or higher for gross retention. By analyzing both renewal rate and gross retention, CS leaders and CFOs gain a comprehensive understanding of customer loyalty and revenue stability.

4. Net Revenue Retention (NRR) reflects the expansion and contraction of revenue across a customer base over a specific period. It encompasses upsells, cross-sells, and expansion revenue, offset by contraction and churn. CS leaders should collaborate with CFOs to drive NRR above 100%, indicating that the business is successfully expanding its revenue within the existing customer base.

CS leaders play a vital role in driving NRR by identifying upsell and expansion opportunities, working closely with customers, and providing feedback to the product team. By collaborating with the CFO, CS leaders can create bottom-up forecasts to inform decision-making and shape the future direction of the business.

5. Churn Rate and Retention shows you the rate at which customers stop subscribing to your service. While churn is an unfortunate reality in any business, CS leaders can work closely with CFOs to monitor and address it effectively. Churn represents the loss of customers or revenue, and it’s crucial to understand the reasons behind churn. By analyzing churn reasons, CS leaders and CFOs can identify areas for improvement in product strategy, pricing, and packaging. Moreover, tracking retention rate throughout the customer lifecycle, from onboarding to renewal, helps in assessing the overall health of the customer base.

CS leaders should also pay attention to the concept of “failure to launch,” which refers to customers who fail to achieve value from the product due to onboarding or implementation challenges. By addressing these issues, CS leaders can minimize churn and maximize customer success, ultimately driving business growth.

Leveraging industry benchmarks

Benchmarking is a valuable tool for CS leaders to understand their performance relative to industry standards. For example, OpenView’s 2022 SaaS Benchmark Survey provides excellent industry benchmarks for gross dollar retention, net dollar retention, and other relevant CS metrics. By collaborating with the CFO to identify relevant benchmarks based on your company’s stage, size, and industry, you can more easily determine what success should look like between your departments.

Health scores as leading indicators

Health scores play a crucial role in predicting customer retention and identifying areas of improvement. It’s essential to move beyond subjective reasoning, such as how your individual CSMs feel about customer relationships, and focus on objective data that indicates whether your customers are at-risk of churn or not. 

By analyzing leading and lagging indicators tied to customer renewals, CS leaders can proactively address potential churn risks and strengthen customer satisfaction. Understanding what constitutes a healthy customer and aligning health scores with renewal outcomes is key to optimizing your customer success efforts.

The importance of segmentation

Every customer is valuable, but not all customers contribute the same amount of value to your company. 

Customer Success leaders must adopt a strategic approach to segmentation, understanding which customers require high-touch engagement and which can be managed with a more low-touch, hands-off approach. By segmenting customers based on their value and needs, CS leaders can allocate resources effectively, ensuring that high-value accounts receive the necessary attention and low-touch accounts are handled efficiently. This approach allows CS teams to optimize their efforts and drive maximum value for the organization.

Speaking the same language: Metrics and KPIs

To foster alignment with the CFO, your CS teams must report on the same metrics and align key performance indicators (KPIs) with your company’s financial goals. This ensures that CS efforts are not only valued but also rewarded appropriately. 

CS leaders should collaborate with the CFO to establish a set of KPIs that directly contribute to revenue growth, customer expansion, and churn reduction. By quantifying the impact of their work in financial terms, CS leaders can engage the CFO in meaningful conversations and position themselves as strategic drivers of success within their organizations.

Want more tips on driving revenue efficiency in your business?

 Check out our playbook, “Scaling During a Recession–Winning Strategies for SaaS Leaders”, to see how pricing consultants, fractional CFO’s, and SaaS veterans recommend you adapt to achieve revenue efficiency—even in a volatile market.

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Combat churn and increase profitability—here’s how

Losing a customer through churn before you’ve recouped the cost of acquisition can have a greater negative impact on your bottom line than not signing that customer at all. Learn how you can reduce churn and retain customers longer.

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Raise or Sell? Calculate Your Equity

This downloadable excel template is designed to help founders and other shareholders of SaaS companies decide if raising a round of equity would result in an economic gain for them.

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What’s inside?

The model presented in this calculator compares selling your company today vs. raising capital, absorbing dilution, growing ARR, and selling in 24 months.
We called upon industry expert Todd Gartner and SaaS veteran Jon Cochrane to share their thoughts and speculations on the current market and give a quick tour of the calculator so you will know how to use it to its full potential.

Create financial reports that instill investors with confidence