Stay on Top of Your SaaS Metrics: Know What to Measure to Maintain Sustainable Growth

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0:10hello everyone I think I've met many of you and a lot of Miller faces so it's good to be here it's an unenviable position to be right after lunch on the second day people are tired or hungover so we're gonna have a lot of interaction here so if you have questions you can stop we will have that question at the end but what are we talking about today is SAS analytics and SAS metrics that you need to watch and those that you don't because I think anybody running a SAS business which I guess show hands who runs SAS or subscription business awesome good for you and who tracks their metrics like

0:46every day every week every month cool okay we're gonna talk about all this so that's cool SAS metrics are fun there we go but it's the second day right after lunch and so what's really cool is how we can grow our companies faster by paying attention to our metrics because metrics by themselves aren't really that important so who again show of hands who's happy with their current growth rate who has a positive growth rate I guess we'll start with that yeah and who's happy with it alright on I'd not unexpected okay after you talk great they're cool so um so I think we're gonna say here is like

1:28instead of just this nebulous I need to grow and I want to grow my business let's put some values around that so metrics and narrow down this whole huge field of like marketing and sustainability to something that's a little more tangible and that we can affect better so my son just started judo he's seven it's not my son but I think you know this this Bruce Lee quote is really cool because it dispels like the arrival fallacy right the rival fallacy is thing when I get to 10k and I quit my day job that I'm there or when I have a team of ten people and I don't

2:07have to be working in the business every day I can work on the business that everything will be sunshine and rain and it's not true right because you're never there right we're all at this conference because we want more out of our businesses and this fulfillment that it gives us personally and I think talking about metrics it's the same thing we are never going to be there we're never gonna be happy and so you just have to get cool and comfortable with being unhappy and and and kind of run your business this way so who has seen something like this and all the marketing world yep cool fun a little

2:46middle Oh funnel the bottom of funnel the idea is just get a bunch of people aware of your brand and your content and then you work them through this funnel by educating them about the problem that your product solves and then hopefully is this not working ok everybody hear me okay go let's go double fist in here and then convert them at the bottom of the funnel and so this this works really well this is pretty traditional I think some people are starting to dispel this a little bit with like instead of funnels they're using loops and cycles but the idea is really that you you

3:25start kind of at the top with something like awareness and then increase kind of awareness of like a problem and then the solution that your problem your product presents and more information about your product itself and how it's different from others and then hopefully convert these visitors or trial users and to paying customers at the end we're gonna touch on this down here a lot more later but this is something that's really popular in the marketing world these days about the five stages of like a customer journey so I think that this model is kind of short-sighted right as business owners if you're a marketer then this is cool right because this is

4:08all you care about but as a business owner this tells like from a metrics perspective maybe half of the story and what I really like to break it down to is acquisition and retention because there are the two parts of the business one is getting people kind of into your world and into your funnel and then converting them and then you got to keep them around right because there's a very pup I'm part of the tiny seed cohort the very famous saying now from one of the the tiny see folks in art didn't says I hate your turn and because turn will absolutely wreck your business right and so I know hates

4:42everyone's churn even if that's really low like we're fortunate to have it Cass dose you have to pay attention to both sides at the point where you have to pay attention to awareness and acquisition and trials and all this good stuff but you also pay attention to things like like on value and journey we'll talk about both sides of this because they're really important so from an acquisition metrics perspective this is like the world right this is like all we really care about see if things like from the very top of the funnel number of people come to your website right and and and the way we like to think about this is

5:15as we'll talk about you know kind of how we evaluate our metrics and how we can change them in the future but just the very beginning is like how many people are coming to your website when they're kind of goes down the funnel to say like having new trials do you have started that's cool and then what's that ratio so what is the trial - visitor ratio in your business or for your funnel and then from there you say how many new paying customers do I have every month or whatever and we we talked about that in terms of em are are usually and then what's that trial to

5:43pay the conversion ratio important and then something else that we think about is like how much does that cost right how much do we spend on Adwords or Facebook ads or marketing person or content writers all super important because you can't be paying more to acquire customers than they're worth in the long run and then the last one which is super hard but if you can figure it out as channel attribution so where are you getting people from and then how much does that cost from each channel on the on the retention side of things that's kind of like after someone becomes a paying customer how long did

6:16they stay around so we talked about revenue sharing we talked about customer lifetime value and average revenue per user so on a monthly basis how much does the average person pay you and then the big one is cash in the bank because oh I think the day that's all of it but all this is really about is like how profitable is your business how sustainable is it so we don't want to happen as this and that's why I like to think about acquisition and retention because you don't want to put a bunch of resources and time and money and stuff and the top of the funnel or in the top

6:46of the bucket just for it to leak out the bottom and so we're gonna run through a couple of examples and I'll ask your opinion on kind of you know hey let's look at this business is this good or is this bad but the way that we kind of solidify this is with a scorecard and this is not my unique idea this is from a book called traction by Gina Whitman who's read traction so there's two traction votes Rob talked about one yesterday it's not the marketing book it's that how to run a business book yep everyone else should read it like this week it's it's the book on how to run a

7:23business from a really kind of macro it's like if you've read the email it's like email - I already got the unit 2.0 it's the email 3.0 it's like for grown-ups how we should run our business so he has this idea of like a scorecard everything that really matters in your business is too much for all of us think about so you solidify it down and concentrate it into one piece of paper and it's your scorecard so it's all of these SAS metrics and then for the business the whole it's things like cash in the bank and receivables Mel it's kind of stuff depending on your business

7:53your scorecard will change but you have to have a place to look at this on a regular basis that's easily accessible and you can track over time so how and where do we track our metrics so a lot of subscription folks here will use something like profit well urban metrics that's cool that's a piece of it something like Google Analytics also super important amazingly free and then a product usage tool like amplitude and mix panel there's a handful of others out there heap and then we got to put all this information somewhere so we put it in things like notion which is what we use for like our communication tool

8:30or in Basecamp or in Google sheets or Google Drive so how often to track your metrics there are definitely people who look at profile every day I am Craig I look at profile every day I obsess about it and that's cool you should you should look at some things everyday you should look at some things every week and you should look at some things every month I and so we'll talk about what we do and you can kind of take this for what it's worth it's on a monthly basis we write a and we did this before we joined tiny seed we write a kind of

9:04narrative a letter to our friends and advisers and people that I know and respect in the space and now we write it to rob and INR and the folks a tiny seed to say hey this is how we're doing and we include all of this stuff in that letter and say here's our our here's our turn here's our booth here's our LP here's our cat here's the number of new trials that we'd started on a monthly basis because these are kind of lagging indicators right you're not gonna go do something I guess James dispel this little bit you're not gonna go do something that affects churn on like a

9:35weekly basis right this is a longer-term thing to affect these numbers so that's why you're only report these once a month because you look at churn or our poo on a weekly basis to be like yep it's the same as it was last your business on a weekly basis we look at a lot of the marketing and acquisition type things so we look at website visitors new trials what that ratio is trial to paid conversion ratio and we try to look at channel attribution because these are things that are really fluid and dynamic that are changing hopefully all the time right if you have an active marketing group all of this

10:07stuff should be changing all the time so we tracked this I'll show you how in a Google sheet and we look at it all the time and hopefully these numbers are changing on a weekly basis that tells us that something is happening and hopefully that's good and then on the daily basis we look at basically profit well they look at how many new trials we had started yet yesterday we look at what our M RR is today and we look at the number of new paying customers we acquired yesterday and so you might be saying Craig sounds like a pain right but it doesn't have to be right so we we

10:42automate a lot of this tools like proper well automatically do a lot of this for you Thank You Patrick but for the the the really marketing kind of metrics there's not a tool other than Google Analytics that does this in a really cool way like data studio from Google I think makes this in a really nice or Matt but we do is we automate the collection of all this into a little sheet with a free ad on the Google sheets everyone should be taking a picture of this that's amazing so you install this add-on for Google sheets that pulls automatically select Google Analytics reports into a Google sheet for you so

11:16you don't have to go into Google Analytics all the time to look at your stuff and so this is kind of a screenshot of what this looks like we have a couple of things here like users this is unique website visitors when we have two goals in our business one is when somebody starts a new trial and then when they become a paying customer and these are custom goals and Google Analytics that we've set up and so pulls this into a spreadsheet that I gave the first version of this to Denise on our team and it was horrible and she made it very pretty like this

11:45and this is these are our metrics from the last month or so and I don't have to do anything I just have this this Google sheet bookmarked in Chrome and I go look at it once a week right before her and I have our one on one call so I look at this and I say great this is working this isn't working this is where we should focus our efforts this thing we just started is awesome let's do more of it and so we start doing this who knows this folks from the US maybe know this I don't know if this exists in Europe yep what's the name of this game yes we play

12:18scorecard whack-a-mole see the idea here is you look at your scorecard at least from our perspective from a marketing kind of lens we look at this and we say this number is great this number is great it's number sucks let's go get this number right and you work on this number until it doesn't suck anymore and so we play whack-a-mole this is not my kid I wish that that would be great if this is my kid but this and that but yeah and so this is like a simple way to look at the whole of your marketing world and just say let's do the one thing that's the worst

12:55right now and we'll talk about leverage in a minute because that's really what this is it's like what's the absolute worst thing that we can effect that will make a big difference in our business so what right so like yeah that sounds great and so the so what is that your metrics should get guide your growth strategy and so I think this slide sounds like really obvious but I hope we can kind of like shed some more light on what this looks like from a practical perspective in a minute so let's be Lumbergh right and talk about some TPS reports and so this is where the audience participation

13:30comes in so we're a SAS business doing 10,000 a month and we have an average revenue per user of 50 bucks I'm very jealous okay and so let's consider a couple of scenarios this the first scenario I'll give everyone a minute to digest this the CC at sign up so they're requiring credit card to sign up with drug talk about yesterday's the best minority I guess so looking at this I think this is a pretty typical like early stage SAS application what is the mold that we all want to whack yep so the number here that we like to look for is like two percents awesome 1% is okay this is not

14:13good right so you're doing a fair amount of work maybe to get 2500 visitors a month almost nobody is turning into a trial trial customer or trial filer and then the rest of it is is I think pretty good the one that's really sweet here is LTV of almost a thousand bucks that's awesome so let's look at scenario two also with credit card at sign up what's the mole we want to whack here yep 10 percent churn we replace all of your customers every ten months yeah just thinking about it right what's that fresh energy you're right it's have to lunch on the first day on the second day

14:55yeah we got some energy it so leads us to like our rule of thumb right we'll the thumbs are very flexible things but this is like my rule of thumb and I will see if anybody agrees with it if you're child of a conversion ratio is greater than 35% with credit card fronts or without credit card if it's greater than 15% and your revenue turn is less than 6% then you have just a top of funnel you need more people on your website if it's worse than that you need to perk us on and you probably don't have product market fit everybody cool with this licks daily this is yes this is no right

15:33okay this is what we go by and we are solidly in the category up here right now we need just more people in our world so that's a pretty cool place to be your developer your product is awesome your messaging on-site aligns with that and the people that are signing up for expecting to get the value that they get so moving on to no credit card at signup which is where we are cast us now we don't have a hundred thousand website visitors a month or a 10,000 that would be oh no we do it we don't have a hundred thousand so so where's the kind

16:07of ugly mole here that we need to whack yep six percent this is rough right you're getting a whole bunch of people onto your site they're starting a trial and they're saying your thing is horrible I'm never gonna pay you money there's also like Rob talked about yesterday the onus is on you and you don't have credit card upfront to prove the value of your product to those trailers and this is this is something we're getting used to at Estes right now we required credit card upfront for the first two and a half years so a lot of though this is on in marketing say hey

16:39our thing is so cool great and they put the credit card in and they just convert after two weeks now the onus is on us to to convert those people during the trial period how about the last scenario also no credit card upfront

17:02so the rest of this is great right visitor trial child paid churn yeah I hate your turn right six percent okay right it depends but I think six percent is okay and at this point this is rule of thumb number two and all the developers in the room which is like almost everybody's gonna hate the rest of the talk now because if you have less than and thirty thousand is kind of an ambiguous number but if you don't have a ton of traffic to your site and the rest of your business is pretty good then you just need more traffic and this is this is a this is a really tough thing for

17:38all of us to really drop in Excel because it's an emotional thing to sell or embrace the marketing of your business what we're talking about is leverage right Archimedes lever this is we want to look for the single thing we can turn this lever this and it moves a huge amount of business for us on the end it's not kind of going back couple slides it's not getting our visitor to trial ratio the 1.75 percent right that's gonna be a couple hundred bucks a month but what if you've tripled your website right that's some cheddar right and so that's what we're gonna talk about kind of for the rest of this and

18:17this is this is like a tough thing and even for me I'm not a developer I'm a marketer should be this is I'm not a developer I have to be a sales and marketing guy but we're all scared to do marketing and to really dive in and embrace the fact that we need to sell our stuff within the tiny seed cohort I think this guy's like it is absolutely the one thing that everybody struggles with right 10 companies of successful multiply time founders all of us every week they're talking about how would you get more customers very very few of us are talking about how can we build a

18:52things more cool than maybe a little bit of design or something like that but at all you know a lot of that stuff ultimately goes to how can I do better at sales and marketing because we're all scared of it this is this is it right like because the the the fear is I can go build a thing all of you guys can go build a thing that's really great right but there's a decent chance that all of us could or many of us could could dedicate ourselves to marketing and it failed all right and then you say hi I went all in on this thing and I couldn't

19:31pull it off and that's rough like emotionally that's really rough and so this is like rule of thumb number zero I guess right is that all the developers in here and even me I'm not a developer but I find myself falling into this trap a lot is that I lean on our development team right instead of me going out and doing more marketing and figuring that part of the business I'd say and if we had this thing we'd be set guys you know have when can we release this feature when how about this integration and that is not the problem right the problem like if the rest of our SAS metrics is

20:02good and that's what this assumes if the rest of our SAS metrics are good then we just need more customers right and the product will not solve that there I think are exceptions where like the product sells itself and all that and those people are not at this conference right there on those boats out there but for the majority of us we have to figure out how to sell our product easier and better and that's we'll talk about kind of for the rest of our time and so going back to like acquisition metrics a really top of funnel if you will stuff your acquisition metrics and where that

20:34kind of ugly moleish should dictate how when and where you talk to your customers so who has heard of Eugene Schwartz yep so Eugene Schwartz I think of him as like he's the big guy from admin right like he's an old-school direct response marketer an advertiser right and so Eugene Schwartz wrote this book it's now out of Prenton like to get it it's like 600 bucks on Amazon or something he talks about the five stages of a customer journey so we kind of talk about the customer journey and how we all look can and do apply it to acquiring more customers and doing so in a really appropriate way for those

21:18customers and so things that make a lot of sense of that and so I have to give credit where credit is due this concept was introduced to me by one of the tiny seed mentors Taylor Hendrickson so I love that Taylor's like avatar photo is of him holding the beer cool Taylor lives in River Oregon where they have fantastic beer and Taylor runs a marketing agency that helps SAS businesses and e-commerce stories with exactly this thing so it was like the perfect person to talk about it maybe he should be here talking instead of me but and so here is kind of the gist of doesn't show up great with the white

21:54font the the five phases of a customer journey and it starts kind of from the bottom and goes up and and the bottom is a place you don't want to be right the bottom is a place where you're creating the the market or you're creating the product in this market and people are completely unaware that they have a problem or that there's a solution to it or there's a product that that solves you know that need that they have and and if you find yourself down here you have a long road ahead of you you have a product a problem of educating the market on the problem and

22:26that there's a solution and that there's a product that fulfills what that solution needs to be and that your product is the best one and then they have to buy right you have to go all the way up here some folks are problem aware and we'll talk about give a couple example as opposed like specifically kind of where some people are and how they attack this some people are problem where it so they're like I need a podcast hosting platform cool because I need to host my pile somewhere that's fair so then you have to walk these folks from there's a problem to there's a solution to your solution your product

22:59is the best one for them and then kind of from there in there so there's some people that say I need a CRM to to make my sales team more effective cool clothes I up those calm and then product aware is I'm gonna choose Mixpanel or amplitude and then that gets stuff right so that I think the the idea with some of this is that the higher up you get in this the more difficult a lot of the marketing is because you are focused on kind of smaller things so my feature is this and that rebates and discount codes and things like that as you get up higher

23:36into this and we'll talk a little bit more about some strategy around how you might think about entering this spectrum because people exist all along the spectrum and where you choose to enter and talk to your customers in this spectrum talks about how like what kind of marketing you do and how long you might expect that that some of this marketing takes so a few examples so we're a podcast hosting platform we have a couple of different different customer personas some of them are existing podcasters like myself that might move from another tool like SoundCloud on the telecast us that's one type of customer persona we would talk to them in a

24:12different way than we would talk to new podcasters right your podcasters come in and laugh because I mean it's it's an unmanned vehicle position podcasting is really popular but kind of complex it's not like Elliot's been a wordpress and you do a blog post and it goes in the world like there's a lot podcasting a lot of people come in and say I have no effing idea how to do any of this right we have a lot of people to come in to that and that's cool because we can add a lot of value by providing a ton of content around this right and that's what we do and so here's a sample of

24:42like maybe what a funnel or a customer journey would go look like it's like we have this huge how to start a podcast blog post right and so a lot of people come to it organically some people come to it from ads that we run and they say wow this is really cool this is a really cool blog post you know ask us probably those guys know what they're talking about they may sign up for an email course we have like you know 20-day how to start a podcast email course that's cool and by the end of it we pitch this thing called office hours which is a live webinar we run every

25:10week where we answer questions about podcasters so all this stuff is the same right it's talking to the same person at the same point in their journey with the same topic and in trying to answer and solve the same problem and the offer is you know hey if you're part of this email course here's the coupon code to sign up right so all I didn't ask your permission to do this so less accounting is one of the tiny seed companies I know Paul really well we talk every week and so Paul is you know less accounting as accounting software for small businesses and their problem is I want to do my

25:44accounting but it's a pain and I don't want to spend a lot of time on it and I want it to be right and so a sample kind of customer journey for for less accounting equal Paul could be something like drive traffic to to a case study from one of his existing customers talks about how great less counting is and how it saves them a ton of time every week all this kind of stuff maybe then it's like hey if you want to see more about less counting click here to view this demo or Paul would go on a call with them and walk them through it and then

26:15maybe we'd have a service about like hey I'm going to solve this thing for you by making it super easy I'm just gonna get all your books set up on your on this black phone for you or use automated tools to make this easier for that so we all heard from steli earlier everybody knows what closed is closed the CRN yep and so I think the customer persona here would be something like sales managers or directors or founders who want to make their sales teams more productive but also for them to have insights into what people are doing is I manage a salesperson now and what the

26:47deal flow and the pipeline looks like is a big question I have as a founder and so this is an interesting one that that I think we'll spend some time talking about Castelli is a really savvy guy right everybody heard him talk this morning so they write a metric ton of content around how to do sales better and so steli kind of has dispelled some of this myth because you would consider that a lot of people looking for a crm like close our product aware right they know they need a tool to make their salespeople sell better and for the management team to have visibility into

27:24this right but I think what steli has seen is that that's a crappy place to be right because then you're competing directly against pipedrive and Salesforce and the 8,000 other people in his face right and nobody wants to do that is anybody in like a super exclusive competitive space any belt in a super competitive space yeah do you try to attract and convert people really far down in the funnel and say hey we have this feature that is better than everyone else yeah you do is it going well yeah it sounds like it's going well that's cool yeah yep cool so that's a really good approach that's a

28:13really good approach to go to the whole market I think would be challenging right it's less probably why you haven't done it is say like close and pipe drive and Salesforce all this basically do the same thing right so then coming into folks that are just product aware and trying to sell them on your thing versus everyone else's thing is is tough skating so so I think what steli has done again it's a really savvy guy is he's kind of gone up the the ladder if you will from here and this is the die this is kind of where we'll leave things a little bit is there's not an answer to

28:47where you should talk to your customers you should talk to them all the way through this spectrum but you should talk to them to place that's the easiest and best for you and maybe the place where your metrics tell you that they you can provide the most value and so steli is down here right and so like the only way he can provide a moveable incentive for people is to lower his price or something that I know he would never do and so what he's chosen to do is to be a leader in the space and go all the way up here or maybe even here I

29:19would I would argue right and so steli and a lot of the really best friends we know play all the way up and the problem aware or the unaware side of the spectrums and then follow their customers or their customers follow them all the way through until they're ready to buy I think this is kind of the classic content marketing inbound approach that we see a lot of folks do and I bring this up not that like I think content marketing is the only way to go or the way you should go because I think they're definitely people that can only focus further down in the customer

29:49journey stage of things and talking about like old email like you can be pulled email and just sell people like like the together do it and that's cool and if you can do that like a lot of us are envious right because you have a relatively straightforward not simple but a relatively straightforward thing to do like you have a tool you can let folks know about it and convert them to the trialing and paying customers hopefully but if you think that is too hard to do or you think you can't do that effectively at scale then you have to move up the up the spectrum here to

30:21get folks earlier on and their their journey as as you know someone who's evaluating you at you as a solution or your market on hopefully becoming a customer in the end this cool buddy yeah right on cool thank you and so yeah I think this is this is kind of like where we wrap up and saying like we should let our metrics guide where we focus our energy and then I think for the most folks in this room and myself included like you've built a good product and so like to to as as much as you can how to devote yourself to to marketing and understanding this

30:56customer journey and approaching and talking to people at the appropriate point in their and their journey as a buyer so yeah that's that's that's everything for me if folks want to grab the slides from this you can do it at this bitly link I'm sure Mike and Rob listen this stuff out later would love to answer any questions anybody has [Music] [Applause] [Music]