Building the Foundation for SaaS Metrics Panel Discussion Top Takeaways
Do you have the groundwork in place to track the right metrics needed to succeed? Is your team ready for success in the new year? As we round the corner on a chaotic year, it’s the perfect time to make sure we’re ready for growth again in the next. To help your team lay the foundation, we gathered a panel of SaaS leaders including Kory Knell, Senior Vice President of Operations at RainFocus, Michael Olender, Business Applications Architect at the Predictive Index, and David Carnes, CEO of OpFocus to discuss how they’ve built the foundation for SaaS metrics.
How does the outside world view your business? What can you do to prepare the business for responding to the inevitable investor/stakeholder conversation?
David: In the entrepreneur community, it’s common practice among startups to always run your business as if you’re planning to sell it, so you’ll always be ready if you need to. This mentality can be applied to fundraising as well, to always be in fundraising mode. Make sure there is soundness to your data and supportive metrics.
Kory: Step one is educating yourself on how the outside world is going to measure your company. After doing so, you’re able to see where you’re strong and where you should focus your efforts.
A big part of exit preparedness and having the end in mind is considering your company objectives, then designing the metrics around them. Operations should become a strategic partner to the business. Operations needs to be involved in what the company’s goals and objectives are. Look at the company’s goals on an annual basis and how your company-level metrics stack up to achieve these goals. More frequently reviewing metrics from a department level and individual level are also essential for your team to make better decisions. Employees like to know how they’re measured and whether or not they’re doing well.
Michael: When building out new solutions for measuring metrics, don’t just look at what a solution should do today, but also what it will need to do a few years down the road.
Is there a particular set of metrics that companies tend to be the weakest in?
It depends on the company and how it’s structured. A company’s maturity also impacts the types of factors the outside world looks at. In the early days, top line growth is the most important metric. As a company becomes more mature, factors like profitability, operations, and EBITDA will be looked at more closely. The pipeline is another metric that’s often looked at very heavily. These metrics help investors build out a model for the future and determine which companies they’d like to invest in.
What changes have you made or recommend be made to how teams are aligned and incentivized?
Mike: A big question you need to ask is, “How do we structure our intelligence team? Is it a decentralized approach where you have analysts throughout the company in different functional areas or are they all centralized into one analyst team?” At the Predictive Index we saw a lot of benefits when we moved from a decentralized approach to a centralized one.
The first advantage is that everyone speaks the same language in regards to metrics. There are a lot of metrics out there and it’s valuable to have everyone on the same page. A drawback of becoming more centralized was the time it took for his team to become adjusted. For a period of time, his team couldn’t go to their usual place for data. During this transition, things moved a bit slower.
Regardless of how your teams are organized, it’s important that the architects building the system and the business analysts reviewing the metrics are in lockstep. Build the system in a way that captures the right data for the analysis team.
Kory: I’ve worked at companies that have centralized and decentralized intelligence functions, and ones that operated under a hybrid model. Whichever approach you take, make sure that everyone is on the same page. Regular oversight and conversations between departments are a great way to ensure clear communication on metrics. Teams should also be aligned on which metrics they’re using and how they’re tracking. Including the operations analysts who produce the data on some of those alignment meetings provides valuable context as well.
The importance of bringing in core platform data to Salesforce and connecting your system.
David: There are so many ways your marketing, sales, customer success, and finance teams can take advantage of your core platform usage data in Salesforce. I wish this type of conversation could happen 10x more often — high-growth SaaS companies often don’t think about integrating their systems until much too late.
Michael: Have a larger strategy in mind when it comes to your data. There are certain SaaS metrics his team prefers to keep out of their Salesforce instance so their users don’t become overwhelmed. Instead, they use DOMO to house data that their sales and client success team don’t need access to.
David: There are also intelligent ways for Salesforce to rollup summary-level data so that your users only see actionable, relevant insights on the front-end while keeping the systems in sync.
Core platform data every team should bring into Salesforce
Michael: Ask your team “what data is most important to trigger the actions we want to automate?” This will help determine the type of data you’ll want to bring in. This will also determine if the data should be brought in with records or not. Even utilization data that’s brought over in summary can be used to trigger certain elements.
Kory: One driver for integrating the core product into Salesforce is to track the metrics your customers use when calculating ROI. Make it easy to provide your customers with the metrics they need. It’s a positive feedback loop at RainFocus where both the client and company benefit from having this data available.
How you were able to gather data and the data points you may have used to evaluate utilization from an implementation team?
Kory: First of all, someone needs to own this process. Our team uses Financial Force, an accounting tool with robust forecasting functionality. We create a rolling forecast and evaluate how our actual performance compares. A rolling perspective allows us to make decisions on the timing for hiring new employees.
Chandler: There are also a number of PSA solutions such as Cloud Coach or Klient that can help teams with this type of forecasting. Drop a comment below if you have specific questions on PSA!
How did RainFocus prepare itself with metrics to survive through the downturn in live events?
Kory: Fortunately, my team had set up the metrics we wanted to track in advance, and we were already tracking how key metrics were trending over time. Specifically, we’re using the SiriusDecisions Demand Unit Waterfall to look at conversions through the marketing funnel. We watch conversion velocity, conversion rates, and win rates.
At the beginning of the COVID-19, our pipeline shrunk, and lagging indicators were severely impacted. For a few months, the leading indicators also dropped. We had to pivot quickly to support virtual events. As our customers jumped to host virtual events, RainFocus received more demo requests, and we started to see some of our leading indicators stabilize. This data that we received from demo requests were then fed back into marketing and sales messaging. Over the last couple of quarters, our team was able to make informed decisions based on these leading indicators and gained confidence that events wouldn’t be outright canceled.
Conclusion
Throughout the discussion, each individual offered a unique perspective on tracking & building the foundation for SaaS metrics. Some key takeaways: 1) the importance of considering metrics from a very early stage. 2) how the metrics your team should focus on will adapt and change as the company becomes more mature.
If your team has had difficulty with tracking the right metrics and is looking to become more targeted with them for the year ahead, our Growth Advisory would be happy to speak with you! We’re here to help you reach your growth goals.
How does the outside world view your business? What can you do to prepare the business for responding to the inevitable investor/stakeholder conversation?
David: In the entrepreneur community, it’s common practice among startups to always run your business as if you’re planning to sell it, so you’ll always be ready if you need to. This mentality can be applied to fundraising as well, to always be in fundraising mode. Make sure there is soundness to your data and supportive metrics.
Kory: Step one is educating yourself on how the outside world is going to measure your company. After doing so, you’re able to see where you’re strong and where you should focus your efforts.
A big part of exit preparedness and having the end in mind is considering your company objectives, then designing the metrics around them. Operations should become a strategic partner to the business. Operations needs to be involved in what the company’s goals and objectives are. Look at the company’s goals on an annual basis and how your company-level metrics stack up to achieve these goals. More frequently reviewing metrics from a department level and individual level are also essential for your team to make better decisions. Employees like to know how they’re measured and whether or not they’re doing well.
Michael: When building out new solutions for measuring metrics, don’t just look at what a solution should do today, but also what it will need to do a few years down the road.
Is there a particular set of metrics that companies tend to be the weakest in?
It depends on the company and how it’s structured. A company’s maturity also impacts the types of factors the outside world looks at. In the early days, top line growth is the most important metric. As a company becomes more mature, factors like profitability, operations, and EBITDA will be looked at more closely. The pipeline is another metric that’s often looked at very heavily. These metrics help investors build out a model for the future and determine which companies they’d like to invest in.
What changes have you made or recommend be made to how teams are aligned and incentivized?
Mike: A big question you need to ask is, “How do we structure our intelligence team? Is it a decentralized approach where you have analysts throughout the company in different functional areas or are they all centralized into one analyst team?” At the Predictive Index we saw a lot of benefits when we moved from a decentralized approach to a centralized one.
The first advantage is that everyone speaks the same language in regards to metrics. There are a lot of metrics out there and it’s valuable to have everyone on the same page. A drawback of becoming more centralized was the time it took for his team to become adjusted. For a period of time, his team couldn’t go to their usual place for data. During this transition, things moved a bit slower.
Regardless of how your teams are organized, it’s important that the architects building the system and the business analysts reviewing the metrics are in lockstep. Build the system in a way that captures the right data for the analysis team.
Kory: I’ve worked at companies that have centralized and decentralized intelligence functions, and ones that operated under a hybrid model. Whichever approach you take, make sure that everyone is on the same page. Regular oversight and conversations between departments are a great way to ensure clear communication on metrics. Teams should also be aligned on which metrics they’re using and how they’re tracking. Including the operations analysts who produce the data on some of those alignment meetings provides valuable context as well.
The importance of bringing in core platform data to Salesforce and connecting your system.
David: There are so many ways your marketing, sales, customer success, and finance teams can take advantage of your core platform usage data in Salesforce. I wish this type of conversation could happen 10x more often — high-growth SaaS companies often don’t think about integrating their systems until much too late.
Michael: Have a larger strategy in mind when it comes to your data. There are certain SaaS metrics his team prefers to keep out of their Salesforce instance so their users don’t become overwhelmed. Instead, they use DOMO to house data that their sales and client success team don’t need access to.
David: There are also intelligent ways for Salesforce to rollup summary-level data so that your users only see actionable, relevant insights on the front-end while keeping the systems in sync.
Core platform data every team should bring into Salesforce
Michael: Ask your team “what data is most important to trigger the actions we want to automate?” This will help determine the type of data you’ll want to bring in. This will also determine if the data should be brought in with records or not. Even utilization data that’s brought over in summary can be used to trigger certain elements.
Kory: One driver for integrating the core product into Salesforce is to track the metrics your customers use when calculating ROI. Make it easy to provide your customers with the metrics they need. It’s a positive feedback loop at RainFocus where both the client and company benefit from having this data available.
How you were able to gather data and the data points you may have used to evaluate utilization from an implementation team?
Kory: First of all, someone needs to own this process. Our team uses Financial Force, an accounting tool with robust forecasting functionality. We create a rolling forecast and evaluate how our actual performance compares. A rolling perspective allows us to make decisions on the timing for hiring new employees.
Chandler: There are also a number of PSA solutions such as Cloud Coach or Klient that can help teams with this type of forecasting. Drop a comment below if you have specific questions on PSA!
How did RainFocus prepare itself with metrics to survive through the downturn in live events?
Kory: Fortunately, my team had set up the metrics we wanted to track in advance, and we were already tracking how key metrics were trending over time. Specifically, we’re using the SiriusDecisions Demand Unit Waterfall to look at conversions through the marketing funnel. We watch conversion velocity, conversion rates, and win rates.
At the beginning of the COVID-19, our pipeline shrunk, and lagging indicators were severely impacted. For a few months, the leading indicators also dropped. We had to pivot quickly to support virtual events. As our customers jumped to host virtual events, RainFocus received more demo requests, and we started to see some of our leading indicators stabilize. This data that we received from demo requests were then fed back into marketing and sales messaging. Over the last couple of quarters, our team was able to make informed decisions based on these leading indicators and gained confidence that events wouldn’t be outright canceled.
Conclusion
Throughout the discussion, each individual offered a unique perspective on tracking & building the foundation for SaaS metrics. Some key takeaways: 1) the importance of considering metrics from a very early stage. 2) how the metrics your team should focus on will adapt and change as the company becomes more mature.
If your team has had difficulty with tracking the right metrics and is looking to become more targeted with them for the year ahead, our Growth Advisory would be happy to speak with you! We’re here to help you reach your growth goals.
