5 Essential SaaS Revenue Reporting KPIs the Board Wants to See
When it’s time to present to the board, how can you best showcase your company’s growth and trajectory?
There are numerous SaaS revenue reporting KPIs and metrics competing for a spot on your revenue report — such as net deal velocity, MRR/ARR, and negative retention, just to name a few.
But aside from the obvious ones, which KPIs do boards care most about — and why?
This post will discuss five essential KPIs to include in your revenue report so you can offer your board maximum visibility into revenue generation and realization.
1. CAC Payback Period
Customer Acquisition Cost (CAC) payback is a metric used to determine the number of months it takes for a company to recover the cost of acquiring a customer — the break-even point.
This SaaS revenue reporting KPI calculation is entirely dependent on three key metrics:
- CAC: Average customer acquisition cost
- MRR: Average monthly recurring revenue
- ACS: Average cost of service
To calculate the CAC Payback Period in months, subtract the average cost of service from the monthly recurring revenue. Then divide the result by your CAC.
CAC Payback Period = (MRR – ACS) / CAC
Obviously, the shorter the payback period, the faster your company will become profitable.
More specifically, your board of directors is likely to be very interested in your CAC Payback Period because it helps them to:
- Understand the company’s acquisition efficiency — which, in turn, provides crucial cash flow visibility
- Identify effective and ineffective customer acquisition methods and adjust accordingly to win more business for less investment, and avoid unnecessary expenses
- Define spend ceiling per customer to hit projected growth targets
- Predict profitability trajectory
So, what’s the CAC Payback industry benchmark? According to Patrick Campbell, the founder and CEO of ProfitWell, SaaS startups average a 5-12 month CAC Payback Period.
Finally, it’s worth noting that CAC Payback Period shouldn’t be viewed in isolation — instead, it should be viewed in context with other relevant revenue operations metrics, such as customer lifetime value (LTV/CLV) and LTV:CAC ratio.
2. Win Rate
Win Rate is a metric used to measure the sales team’s success over a certain period.
This straightforward revenue operations metric is the percentage of sales opportunities that were closed won in a given period, such as a quarter or a year. For example, if your sales team generated 200 opportunities and only closed 50 of them, your win rate would be 25%.
Win Rate = (Total amount of sales / Amount of sales opportunities) x 100
This RevOps KPI’s impact lies in its ability to:
- Showcase your sales team’s successes and challenges
- Highlight the market demand for your product or service based on your messaging and positioning
- Help set a realistic and accurate sales forecast
Whenever possible, showcase the performance of your Win Rate over time — and the resulting impact on revenue and forecasts.
3. Average Sales Cycle Length
A Sales Cycle is the method businesses use to sell a product or service. It typically begins with prospecting and ends with a closed win.
To calculate the length of your Sales Cycle, add up the number of days it took to close every deal you’ve won then divide that number by the total number of sales. For example, if it took 100 days to close 25 deals, your Average Sales Cycle length would be 4.
Average sales cycle length = Total number of days to close deals / Number of closed deals
Monitoring your Sales Cycle Length is a very straightforward process in Salesforce, and doing so will enable your sales team to know exactly where leads are — and predict where they should be — in the buyer’s journey, which is crucial for a value-based and effective sale.
Like Win Rate, Sales Cycle Length also showcases the effectiveness of your messaging, the health of your sales team, and the strengths of the sales process.
An accurate Sales Cycle Length will help you forecast more accurately and enable you to make time-sensitive decisions.
Once you’ve calculated your Sales Cycle Length, how do you know if you’re doing well? Jason Lemkin of SaaStr, has shared some B2B SaaS sales cycle length benchmarks based on annual contract values:
- “Deals < $2,000 in ACV should close on average within 14 days.
- Deals < $5,000 in ACV should close on average within 30 days.
- Deals < $25,000 in ACV should close on average within 90 days.
- Deals < $100,000 in ACV should close on average within 90-180 days, depending on # of stakeholders and gates.
- Deals > $100,000 in ACV will take, on average, 3–9 months to close. They can take the better part of a year, as these purchases are budgets on Annual cycles. Some deals will be faster, some sorter.
4. YoY Bookings Growth Rate
Bookings is the term given to the dollar amount of all newly signed contracts. And year-over-year (YOY) is a term used to describe a company’s annualized metric change in two comparable and (typically) consecutive years.
This comparative metric enables you to track the dollar amount customers have committed to spending with you.
To calculate your YOY Bookings Growth Rate, you first need to calculate your annualized Bookings Rate. You can do this by adding up your net new and expansion bookings (upsells, cross-sells, or new contracts with existing customers), then subtracting your churn amount.
Next, take this year’s Bookings Rate and subtract the previous year’s Bookings Rate. Finally, divide this number by the previous year’s Bookings Rate and multiply the result by 100 to get the YoY Bookings Growth Rate.
YoY Bookings Growth Rate = [(This year’s Bookings Rate – Previous year’s Bookings Rate) / Previous year’s Bookings Rate] x 100
Boards value YOY Bookings Growth Rate as a reliable indicator of future revenue growth because it compares actual historical transactions to the money customers have already committed to spend with you. Your Bookings Rate is also a strong indicator of the increase or decrease in market demand for your product or service. It also provides context for how to improve your products, messaging, or positioning in the market.
5. Percentage of Partner-Sourced Bookings
Partner-Sourced Bookings is the term given to revenue generated directly through a partner. For example, if a partner introduces your sales team to one of their customers who’s a net-new lead and the deal closes, your partner would be the originator of the booking.
Percentage of Partner-Sourced Bookings = (Partner-Sourced Bookings / All bookings) x 100
Boards are likely to be interested in this KPI because partnerships are a key driver of revenue growth. According to Forrester’s study, “Invest In Partnerships To Drive Growth And Competitive Advantage,” 76% of companies report that partnerships are key to delivering on their revenue goals. What’s more, companies with the most mature partnership programs were growing revenue nearly twice as fast as companies with less mature programs.
Consequently, you may also want to measure Partner-Influenced Revenue. This is when a partner positively influences a deal with one of your existing prospects or leads.
Succeed at your next board meeting
In summary, here are 5 impactful SaaS revenue reporting KPIs to consider including in your next revenue report:
- CAC Payback Period
- Win Rate
- Average Sales Cycle Length
- YoY Bookings Growth Rate
- Percentage of Partner-Sourced Bookings
Of course, selecting the right metrics is the first of many steps to a successful board meeting. As Toby Carrington, the VP of Revenue Operations at Seismic, shares:
“Producing a sales and marketing efficiency metric is not so important. What’s important is showing the trend over time of that sales and marketing efficiency — and explaining why the strategic things that have been put in place to improve sales and marketing efficiency are working or are not working.”
If you’d like more board presentation tips from RevOps leaders, here are the highlights from our event, ‘How to Prepare for Your Next Board Meeting.’
Streamline your revenue reporting
Some Revenue Reporting KPIs, like Win Rate, can take minutes to pull, but others can be far more challenging to capture. For many SaaS revenue leaders, pulling data from multiple systems and generating accurate reports is often a complex and resource-intensive task.
So, before you select the KPIs you’d like to present to the board, it can help to consider which metrics are readily available and which will require configuration.
And if you’re struggling to report on essential metrics like MMR/ARR, Churn Rate, or Renewal Rates, it may be time to consider Salesforce CPQ. If you’d like to learn more, we created a guide on How to Choose the Right Salesforce Partner.
