I’m pleased to announce that I was recently featured in a six-part SaaS podcast mini-series on SaaShimi hosted by Aznaur Midov, VP at PNC Technology Finance Group, a debt provider who works primarily with private equity (PE) firms for SaaS buyouts, growth capital, and recapitalizations.
Let’s talk first about the mini-series. It’s quite a line-up:
- A Brief History of SaaS with Phil Wainewright, co-founder of Diginomica and recognized authority on cloud computing.
- Key SaaS Metrics with me.
- Building a Sales Org with Jacco van der Kooij, founder and CEO of Winning by Design
- Building a Marketing Org with my old friend Tracy Eiler, CMO at InsideView and author of Aligned to Achieve, a book on aligning sales and marketing.
- Building a Customer Success Org with Ed Daly, SVP of Customer Success and Growth at Okta.
- Raising Capital with my friend Bruce Cleveland, partner at Wildcat Ventures and former operational executive at Oracle and Siebel.
Now, let’s talk about my episode. The first thing you’ll notice is Aznaur did the interviews live, with a high-quality rig, and you can hear it in the audio which is much higher quality than the typical podcast.
In terms of the content, Aznaur did his homework, came prepared with a great set of questions in a logical order, and you can hear that in the podcast. His goal was to do an interview that effectively functioned as a “SaaS Metrics 101” class and I think he succeeded.
Here is a rough outline of the metrics we touched on in the 38-minute episode:
- ARR vs. ACV (annual recurring revenue vs. annual contract value)
- ARR vs. MRR (ARR vs. monthly recurring revenue)
- TCV (total contract value)
- RPO (remaining performance obligation)
- Average contract duration (ACD)
- Customer acquisition cost
- Customer acquisition cost (CAC) ratio
- CAC Payback Period
- Renewal and churn rates
- ARR- vs. ATR-based churn rates (ATR = available to renew)
- Compound vs. standalone metrics
- Net dollar expansion rate (NDER)
- Survivor bias in churn rates
- The problem with long customer lifetimes (due to low churn rates)
- LTV/CAC (LTV = lifetime value)
- Net promoter score (NPS)
- The loose correlation between NPS and renewals
- Intent to renew
- Services gross margin
- Cash burn rate
- The investor vs. the operator view on metrics