- How do you know if you and your team
are working really hard on, every single day,
grinding in and out in and out
is actually gonna help you accomplish your 2021 goals?
How do you know whether the work you're doing every week
is gonna add up to the type of growth,
the type of results, the type of momentum
that you need for your SaaS business?
Here's the thing,
your natural answer is gonna be metrics.
But you and I both know,
with all the different metrics out there,
with all the different dashboards that are out there,
it can be really easy to start to ignore them,
or get overwhelmed by them, I've been there.
And at the end of the day,
you start to just look at the lagging indicators
at the end of the year,
and you kinda now look and say,
well, we did it or you didn't do it.
How do you shift that?
What are the key performance indicators,
the leading indicators that you can look at every day
without getting overwhelmed,
so you can be sure and certain
that you're navigating growth and doing the right work
every single day.
That's what I'm gonna cover in this episode.
In this episode, I'm gonna give you
the four key performance indicators,
key performance indicators that you should be looking at
on a weekly basis, so that you will know ahead of time
if you're on track to hit your goals or not.
Intro.
(upbeat music)
What's up everybody?
Welcome to Unstoppable, I'm TK and on this channel,
I help SaaS founders like you
grow your SaaS businesses faster
with an unstoppable strategy.
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you're part of my SaaS go-to-market coaching program,
welcome, it's super awesome to see you over here,
and also happy new year.
All right, so back when I was at ToutApp,
you know, we took on multiple projects
to establish management dashboards.
And very quickly, they would become overwhelming,
very quickly, we would hit into data analysis,
paralysis and fatigue,
and just get overwhelmed.
Because there's just so many metrics
that you can look at in a SaaS business,
you just don't know which one to look at.
Even at Marketo, we struggled as a management team
and we were like what is our management dashboard?
Like what should we be looking at on a daily basis,
because naturally speaking,
when you're operating a SaaS business,
you you get so mired in the day to day details,
you're always fighting fires,
you're trying to get the next release out,
you're trying to make sure the deals are closing
and the quarter is on track.
But if you don't set up the right metrics
to monitor what's going on overall
in the macro sense of the business,
to predict whether you're gonna hit your goals or not,
you're gonna be in a lot of trouble at the end of the year,
because you didn't know what was happening
and you got lost in the trees
and forgot about the forest.
I always get confused about that note,
but you get the picture.
So, having been a ToutApp, having been at Marketo,
executive teams of both,
having now worked with,
we're working with over 50 founders
as part of our SaaS go-to-market coaching program.
I've now seen my share of management dashboards
and SaaS metrics and what really moves needles
and what confuses.
So in this episode,
I'm gonna walk you through the four metrics
that matter the most.
The four key performance indicators
that matter the most for your SaaS business,
the absolute should be monitoring,
and will help you really understand in a key performance way
on like, well, are we going in the right direction or not,
we need to zoom into some aspect of the business
and diagnose it more, without getting overwhelmed.
If you're excited to get going smash that like button.
Let's go to metric number one.
The key performance indicator number one,
is what I call Revenue Per Lead.
And it's something Jason Lemkin talked about
probably like a decade ago,
when I was first learning about SaaS,
and really getting into it,
and really getting into ToutApp,
and I always loved it and we always monitored it.
Revenue per lead is sort of a composite metric,
but I the reason I like it as a key performance indicator
is because it is a snapshot
into how effective your go-to-market machine is.
So if you talk to marketing,
or if you are marketing if you're that early,
then you might look at, hey, we generate 100 leads.
But 100 leads doesn't really tell you anything.
How many dollars you extract out of those leads,
really tells you a lot about how quality those leads are.
It also tells you a lot
about the effectiveness of your sales process.
And if you're self service tells you
how effective your product lead growth,
or self service process is.
So revenue per lead is one of my most important metrics
because I can look at it week over week, month after month,
as we do different marketing activities and spends
and run our broadway show,
and we can understand how quality leads are,
how effectively are converting those leads to real revenue
for every one lead that comes in,
how much revenue are regenerating.
And ideally that should be going up and up and up.
And I can start to double click on this
and say well, if it's going down, why is it going down.
So that's key performance indicator number one,
revenue per lead, I like it a lot
because it really helps you get a glance
at how effective your go-to-market machine is going.
The second key performance indicator
that I absolutely love,
is just looking at Win Rates and Conversion Rates.
If you're self service business,
then I look at conversion rates, if someone started a trial,
how many of them actually converted?
If it's a sales driven business,
then out of the opportunities that were created,
out of leads, what is the win rate?
How often are we winning?
Now, for conversion rates, eight to 10% is pretty damn good
and I've seen that at scale.
With win rates, it's abhorrent
but 20% is pretty good and 50% is great.
If it's an inbound lead, 50% is awesome for win rates
and you should be able to see that,
it's an outbound 20% rate
which is kind of low on the grant sensor things,
but that's actually considered good in SaaS.
So number two is I like to monitor
our win rates and conversion rates
because it helps me understand,
really specifically if I'm paying salespeople,
how effective are they?
If we're ramping up salespeople,
there is our overall win rate taking a dip,
is it coming back up as we ramp those people,
because then I can dig into that and say,
Well, why are we losing?
Is it a competitive thing?
Is it a training thing?
And if the win rate is soaring, we can start to say,
awesome, like, how do we double down on this?
So that's the second key performance indicator
that I like to look at on a week by week basis,
quarter by quarter basis,
because then you trended you can start to monitor changes
that are happening in deeper processes in the business.
The third key performance indicator that I love,
is Month over Month growth.
Month over month growth is super important to know.
See, the thing is, you know,
if you're a venture backed business growth
is super important.
If your bootstrapped, growth is still important, right?
Like you don't want to just stagnate,
you just may be growing at a lower clip.
Either way, growth is super important
but we tend to not measure the growth until a quarter later
or at the end of the year.
But if you measure month over month growth consistently
and create a culture,
we're thinking about where on a monthly cadence,
we're gonna be thinking about
what our month over month growth is,
then it creates a higher standard of a bar,
higher bar for people to be performing.
They'll sandbag less, they'll say well,
"Oh, by the end of the quarter, we'll make it up
or by the end of the year, we're back back loaded,
at the end of the year."
A lot of excuses that sales and marketing teams use
to justify under performance, will be eradicated right away
because you're saying no, we're on a monthly cadence,
that's to the best of our abilities
to track month over month
and we can have the conversation to say,
look, this month may be slower
but next month is gonna pick up
because we have these deals in pipe
or this many trials in pipe.
But month over month growth at that level of granularity
is a solid key performance indicator,
because it forces the conversation
about having a higher standard about growth
and monitoring for it.
I have one more for you,
but before I go into that,
let me just pause here for a second.
You start to see the power in this.
These are some key performance indicators
that are what I call composites.
Composite meaning, when you look at this number,
if it's going up or down
and you constantly monitor it,
it measures and stress has big areas of the business,
not just one function.
And it tells you how effective we're being
for critical things, critical parts of the business.
And when you actually monitor these week after week,
and you train your team to look at this week after week,
it creates a certain discipline, certain structure,
and it forces the conversation to say,
"Well, I get it we have these deals,
but let's zoom out
and talk about why this bigger metric is not functioning"
and then actually crafts and facilitates better discussions,
more detailed discussions to have
about the overall machine
versus just being stuck inside the business.
You start to see the power of this,
how just implementing these three, I have one more for you,
can actually change the level of strategy
and the level of strategic thinking you have,
how you can kind of zoom out on the business
and work on the business
instead of being stuck in the business.
You start to see the power in this.
Can I just get a yes, in the comments below.
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Also, if you are thinking about what are the right metrics,
if you're thinking about what is our one strategy for 2021,
I have a five point SaaS growth strategy guide.
In it, I give you the five key pillars
on creating a growth strategy for your SaaS business.
It's super awesome,
it's been downloaded thousands of times already,
gotten tremendous feedback on it.
I'll tell you more about it than in this video,
but let's go to principle number four.
Principle number four,
the fourth metric that I actually love,
is constantly looking at Burn and Runway.
It's scary to look at,
because it's probably going down
if you're not profitable yet
and that's fine if you're in growth mode.
But it's just important to look at burn and runway.
You should have that number readily available and clear
because they'll help you make decisions
if all of a sudden you're crushing it on new metrics,
it may be time to invest more,
and by investing more it may reduce your burn
but it's a calculated risk of taking for more growth.
If a bunch of stuff isn't working
in your go-to-market machine or in the market
and your burn is shrinking,
it may be time to cut some expenses.
And that's the right thing to do
while you figure out what's working
and you can double down more, conserve cash
which is super important to look at this
on a weekly or monthly basis
and that way you will make better decisions
as you go forward.
So those are my four key performance indicators.
And why did I pick these,
because they all work together.
Based on these four indicators, key performance indicators,
if you keep monitoring these week by week,
as you look at them,
you'll be able to figure out what area of the business
to double click on and diagnose
and have a conversation around.
And that's super powerful.
So when you think about it,
if you are looking at revenue per lead and it's terrible,
it tells you, all right, cool,
let's first look at how are we getting these leads
and are they quality or not?
If they're quality, then let's look at the win rate
and figure out why we're getting choked up here.
If they're not quality, then let's double click on marketing
and figure out how are we getting these leads.
If it's a win rate problem,
then let's talk about our sales process
and figure out how to fix our sales process.
And overall, as we're optimizing on these two,
let's look at our month over month growth.
If growth is great and burn is fine,
maybe we need to invest more here.
If these two aren't working and burn is high,
then maybe we need to go,
we need to reduce the burn and go over here
and kind of take our time to fix it.
So this all kind of connects together,
and with these four metrics,
these key performance indicators,
it helps kind of look at the overall business,
work on the business
and makes better decisions on what you need to do
on a day to day basis.
So to recap, revenue per lead, that's the first one.
Number two win rate or conversion rate.
Number three, month over month growth.
Number four, burn and runway.
By the way, one pro tip on this,
don't try to create some automated dashboard,
pay for some fancy SaaS tool, you don't need that.
Even if you set aside 30 minutes every week
to look these metrics up
and put it in a consistent spreadsheet template,
that alone, that practice of looking at that data
and filling out that data on a weekly basis
will be very, very powerful for you.
So those are the four key performance indicators
that I had for you.
If you got value from this video,
be sure to smash that like button for the YouTube algorithm.
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hit me with a yes so I can hear from you.
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please share this video, we wanna share,
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And also if you wanna dig more into this
in creating a growth strategy for your SaaS business
on how to navigate this right,
yeah, I'm all about thinking about strategy
and execution separately
and making sure you spend enough time on strategy,
quote down my five points SaaS growth strategy guide.
All you just need to go to getunstoppable.com/strategy
or you can follow the link below,
get on getunstoppable.com/strategy's completely free,
five point SaaS strategy guide
and we go into much more detail
on how to craft a one page strategy for your SaaS business.
Well thank You for joining.
Be sure that like button subscribe.
And lastly remember, everyone needs a strategy
for their life and their business
but when you are with us, yours is gonna be unstoppable.
I'm TK, I'll see you in the next episode.
(gentle music)