Metrics that Measure Up

Mark Roberge is the founder and Managing Director of Stage 2 Capital and previously was the Chief Revenue Officer at HubSpot from 2007 to 2016. Mark is also the author of the best-selling book "The Sales Acceleration Formula".
The lessons learned over his nine years leading revenue at HubSpot have led to several new endeavors including creating a Sales curriculum being taught at Harvard Business School and founding Stage 2 Capital.
We started the podcast by discussing "The Sales Acceleration Formula" which was first published in 2015. The bool was stimulated by a breakfast between Mark and enterprise sales influencer and author, Jill Konrath. It evolved from a concept called "The Art and Science of Sales" to become the basis for the book. The Sales Acceleration Formula is essentially an autobiography of how Mark built and scaled the revenue organization at HubSpot.
The presence of Customer Relationship Management (CRM) systems enabled Sales to become more data-driven, and changed how Mark leveraged that data to inform how he built and managed the sales organization. One of the most interesting perspectives Mark shared was how he and his management team used the data being generated from the CRM.
Using the insights from the CRM data changed how HubSpot Sales Managers were able to better coach sales reps based on the "signals" being generated. Foundational to capturing those insights was the need to develop a very well-defined and structured sales process that generated performance metrics at each stage of the sales process.
We quickly pivoted to a leading sales technology of the day, Conversational Intelligence. I asked Mark why with the ability to capture and listen to every Sales conversation has not made full sales funnel performance a more data-driven, sale management and coaching process.
Mark highlighted one reason is that Sales organizations are often so focused on "chasing the number", that they do not carve out the time to step back, take a strategic planning approach to the future based on historical performance metrics and incorporate that into the planning process. This "reactive mode" cascades and impacts the organizational culture to one of high urgency - low value reactions versus one of high value - low urgency strategic activities leading to increased performance.
Another topic we discussed was the 360 lead review process at HubSpot, which lead to the concept of the SMarketing SLA (Service Level Agreement). Marketing and Sales co-owned the pipeline generation and lead development process, and as a result consistently led to analysis of pipeline generation performance. Far too often, there is significant friction between Sales and Marketing, which can be addressed by leading into the data. This starts with defining what a "lead" really is and starting to measure lead performance and conversion across the entire lead-to-customer process.
Finally, we discussed the catalyst for founding Stage 2 Capital. Stage 2 Capital is unique in that the Limited Partners (investors) are primarily successful B2B SaaS Go-to-Market executives who can provide both capital and applied operating experience across each stage of a B2B SaaS company's growth. One of the important findings was the failure rate to scale across different stages of growth is much too high. The Science of Scaling was based on research that Mark conducted across several early-stage companies, and then he applied the "challenges of scale" to the formation of Stage 2 Capital.
If you are considering raising funding for your SaaS company, or are just looking at how to more efficiently scale your revenue generation engine at the next phase of growth, the conversation with Mark Roberge is extremely instructive based upon the experience and success of Mark and hundreds of other GTM executives involved in Stage 2 Capital.

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Craig Rosenberg has worked with hundreds, if not thousands of B2B SaaS companies as the co-founder of TOPO, Distinguished analyst at Gartner, and now as Chief Platform Officer at Scale Venture Partners.
Across Craig's roles, he was able to take an expensive view across each stage of a SaaS company's growth including strategy, people, process, technology, tactics, and over time METRICS!
Craig highlighted that the best companies in the world were/are "metrics" driven, and as Craig started to work with larger, enterprise-class companies beyond SaaS being "metrics and data" driven was even more critical to decision-making.
"End to End" Customer Journey is an often discussed subject, but what is it really? Craig's perspective is most customer journey mapping is too generic and needs to be very focused on how the customer buys starting with using third-party internet activity to marketing interactions to Sales Development to Sales and then ending at "Closed-Won". Going beyond Closed-Won to include customer engagement, retention, and expansion,
Going beyond mapping and understanding the entire customer journey including acquisition, retention, and expansion, companies need to "SEGMENT" the metrics by customer cohort, such as SMB vs Mid-Market vs Enterprise. Another view should be based upon "HOW" the prospect/customer came into the customer lifecycle process, such as lead source and/or lead channel.
When I asked "who" in a company should map the customer lifecycle, Craig's response was quite pragmatic: "whoever is best at mapping the customer lifecycle in your company". Craig added that Revenue Operations is a perfect organization to take the lead on customer journey mapping, and building a "coalition" across Marketing, Sales, and Customer Success. An important caveat is that without the support and involvement of the CEO it becomes less significant and strategic.
Another topic we discussed, was if a company should involve customers in the "journey mapping" process. Craig said of course, but you only need to include a few customers in the process as talking with more than 10 customers will provide diminishing returns.
Next, I asked Craig about what metrics are priorities to measure the efficiency of the customer lifecycle across acquisition, retention, and expansion. Craig started with the Four Vital Signs Framework to track in a SaaS company:
- Growth
- Efficiency
- Churn
- Burn
Next, we discussed if any of the Vital Signs are more important at each stage of a company's evolution. Craig's first recommendation was to instrument and begin capturing metrics for all four vital signs early in the journey. Certain metrics like churn/Customer Retention will become more important as a company grows beyond the first and second renewal cycles, but identifying and instrumenting for metrics should begin earlier than most companies believe are required.
No matter what stage of growth your SaaS company is currently in, this discussion with Craig Rosenberg provides many interesting, insightful perspectives on the importance and priority of metrics across the customer lifecycle.

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If you have ever been frustrated with the forecasting process and accuracy at your company - this episode is for you!
Guy Rubin is the founder and CEO of ebsta, a leading provider of Revenue Intelligence - the next generation of forecast management.
Guy founded ebsta to automate the logging of sales rep activity directly into their Customer Relationship Management (CRM) like Salesforce and Hubspot. Over 50,000 companies have used ebsta in this environment which is when the breakthrough happened to begin scoring target buyer relationships - essentially a "relationship score".
The strength of relationships is a key factor in an opportunity's probability to convert into a new customer....and thus making the revenue forecast more accurate. More on that later in the episode.
Back to the core problem, ebsta has been solving for years - having timely and accurate account, contact, and opportunity data in their CRM. Since most of this data is captured in their email, and/or calendar. By using technology to capture every email, event, and meeting with an account or opportunity, it can be automatically imported into the CRM. Then, a company can use AI to determine the frequency of communications with an opportunity and begin to create an "opportunity score" based on the recency, frequency, and level of activities with specific opportunities.
What about including insights from "conversational intelligence" platforms? This is another signal that ebsta uses to evolve the "engagement score", but Guy highlighted that CI is only one signal that informs their platform.
Intent data is another signal that ebsta uses to inform and evolve their engagement and thus opportunity score. In a recent research report that ebsta published, one of the challenges is to determine what is the actual impact of intent data on the opportunity "win rate". In this report, ebsta was able to identify the level of influence that intent data has on win rates.
Forecast accuracy is a challenge for every company. Initially, Guy felt the "ebsta" internal forecasts were superior to those of a "bottoms-up" process that begins with the AE or front-line sales manager. Those customers still require the ability to include the sales "bottoms-up" forecast, the ebsta automated forecast is typically within a +/- 5% error of margin - which is superior to the 69% of companies that miss the forecast by +/- 10% or greater.
If you are involved in your company's "forecasting process" this conversation with Guy provides great insights and ideas to enhance your forecast accuracy!!!

B2B SaaS founders envision their entrepreneurial journey including a liquidity event such as an IPO, a financial acquisition, or a strategic acquisition from an industry leader.
Lowell Ricklefs has deep operating experience leading tech companies and has experienced acquisitions on both the buyer and the seller side multiple times. During these processes, Lowell often wondered why banks were required to sell a SaaS company.
Lowell identified an opportunity for enhanced sell-side assistance for SaaS companies in the $3M - $20M ARR range.
The first topic we cover is the personal decision of deciding to sell your company and the signs that suggest maybe this is the time to consider selling. One sign is the journey has been very long and arduous and the founder is tired, does not have any new breakout ideas, and is ready to exit. Another sign is when a market segment becomes very hot, the competition is fierce and larger companies have started to enter as competitors.
One threshold that Lowell suggests is critical to optimizing company value is reaching at least $5M - $10M ARR will materially increase both the interest and value that your SaaS company will receive.
A consideration that a founder needs to be fully explored is if they are truly ready to step away from being the day-to-day leader of the business. Often, especially in strategic acquisitions, the founder who has been the CEO for years will most likely be asked to take a reduced role within a larger organization. Some founders can find this very comfortable, but often it can become a struggle when the ultimate decisions will not be their own.
Strategic acquirers typically will be looking for a company with at least $10M ARR. At a macro level, Growth and Retention metrics are the most important metrics that a strategic acquirer will evaluate.
Net Revenue Retention, logo churn, revenue concentration, total addressable market, and EBITDA are important to strategic acquirers. Another metric that strategic acquirers consider is the amount of capital raised or consumed, as strategic acquirers do appreciate and value the company's ability to grow efficiently.
Our host, Ray asked Lowell the question for a $10M ARR company which is more important to an acquirer - Growth Rate or Net Dollar Retention? Lowell said both are important, but one that can grow organically as measured by Net Dollar Retention is his choice for the most important company value impacting metric...at $10M ARR and above.
An early-stage company will not be valued based upon the level of profitability by a strategic buyer, but Lowell still recommends having a plan to become EBITDA positive, and growing that profitability is a critical metric.
One consideration for strategic acquirers, especially Private Equity (PE) is if your company will become a "PLATFORM" for industry consolidation. There are several PE firms that have a thesis of consolidating the industry, growing through acquisition, and eliminating duplicate SG&A costs leading to increased profitability. In this scenario, having great organic and profitable growth is foundational to the company becoming the platform for consolidation and growth.
"PLATFORM" - what does this mean in strategic acquisition? For Private Equity - it is the company that becomes the centerpiece of a consolidation strategy. $10M ARR is really the threshold to be considered as the platform for a strategic consolidation strategy. Many PE companies also use the available market size as a criterion for using a consolidation strategy - but many also will focus primarily on Internal Rate of Return (IRR) as the primary criteria.
If you see an acquisition for your SaaS company as a potential outcome, the conversation with Lowell is a great listen!

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You Mon Tsang is the founder and CEO of ChurnZero. During this episode, You Mon and our host, Ray Rike discuss the following topics:

• How the role of Customer Success has evolved over the past 12 - 24 months
• How the measurements used to determine CS ROI have evolved
• The top three metrics that You Mon recommends for Customer Success teams

The catalyst for founding ChurnZero began when he was a Marketing leader and had a large selection of technologies to automate, manage, and measure marketing performance. When You Mon assumed responsibility for Customer Success, he quickly realized that there was not a large number of options to automate, manage, and measure Customer Success.

One of the major changes in Customer Success is the evolution of focusing primarily on Net Revenue Retention (NRR), which is a top two company-level metric. During the SaaS recession of 2022-2023, You Mon was an increased focus on Gross Revenue Retention (GRR) which measures a company's ability to retain a customer on an ARR basis, independent of including expansion ARR. Retaining customers today is the key to a strong foundation for growth in the future.

What leading indicators are most predictive of GRR? You Mon highlighted NPS, Customer Health Score, and product utilization as good leading indicators...however, the "health" of the customer is an important external variable that is harder to know but is still highly impactful to Gross Revenue Retention.

How does a CS organization's ability to determine "customer-verified outcomes" impact customer retention? You mentioned that verifying customer outcomes is very hard to measure. It is an admirable goal, and when your product natively impacts direct outcomes it is much easier.

Is Customer Success a cost center or a profit center? Often this is associated with where Customer Success expenses are recorded...Cost of Goods Sold or Operating Expense? You Mon highlighted that the majority of his customers place CS expenses in Operating Expenses and thus should be measured by expense vs revenue retained and expanded.

If you are a CEO, CFO, or CRO responsible for maximizing the return on investment for Customer Success, this is a great episode. If you are a Customer Success professional, You Mon shares some unique ideas and a vision for the future of Customer Success which will be a great addition to how you currently view Customer Success.

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