Date post: | 29-Nov-2014 |
Category: |
Business |
Upload: | bdsoftware |
View: | 709 times |
Download: | 1 times |
Software Club – SaaS Series
Finance – Chad VarraSendGrid, Inc.
Key goals
Growth Profitability
• Monthly Recurring Revenue (MRR)• Customers
Measuring Growth
Growth
Increase in MRR/Customers
# of Deals
Deal Growth
Add New Product/Service
for upsell
Decrease in MRR/Customers
Churn
Deal Reduction
JanuaryFebruary
Beginning MRR $1,000 $1,275New MRR 250 300Increased MRR 100 100Lost MRR (50) (60)Decrease MRR (25) (20)Ending MRR $1,275 $1,595
MRR = Monthly Recurring Revenue
January FebruaryBeg Customer Count 5,000
5,130New Customers 150
200Lost Customers _(20)_ _(25)Ending Customer Count 5,130
5,305
Increase Customers 75 75Decrease Customers (10) (10)
Customer Count
Profitability
Customer
CAC
LTV
Financial Statement
Cash Flow
Income Statement
Per Employee
Revenue per Employee
Expenses per Employee
Customer Acquisition Cost (CAC)• What does it cost to acquire a customer?• How many months of MRR does it take to
recover your costs of acquiring that customer?
CAC = (Sales + Marketing +Deploy Costs) # of Deals Closed
Sales Costs = $100,000Marketing Costs = $150,000# of Deals Closed = 600
$100,000 + $150,000 = $416 CAC 600
How long does it take to recover the CAC?Payback Period = CAC/MRR per Customer
Average MRR Per Customer = $100$416/$100 = 4.16 months
Rule of thumb: 12 months or less is good.
Lifetime Value of Customer (Average Lifetime of a Customer * MRR/Cust)- Cost of Revenue- CAC= Lifetime Value of Customer
Lifetime of Customer = 36 mths 24 mthsMRR per Customer = $100 $100Margin = 80% 80%CAC = $416 (4.16 mth payback) $1,600 (16 mth payback)(36*$100)-$720-$416 = $2,464 (24*$100)-$480-$1,600 = $320
Rule of thumb: LTV that is greater than 3x CAC is good
Churn
Churn
Sales
Customer Satisfaction
Product issues
Net Promoter Score
Impacts LTV
So What Are Your Levers• Increase MRR per customer• Increase Customers• Manage CAC• Increase LTV• Decrease Churn