Subscribed NYC 2017: Driving Cross-Functional Accountability - Growth Metrics That Really Matter

“When it comes to

tracking metrics for

subscription businesses,

traditional systems just

can’t account for the

whole picture”

Metrics That Really Matter

How To Drive Cross Functional Accountability?

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Bart Hacking

CFO, BetterCloud

Parveen Nandal

VP Finance, Zuora

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Bart HackingChief Financial Officer

BetterCloud

BetterCloud is the first

Management & Security

Platform for SaaS applications

A single application for IT

to manage all applications,

users, groups, files, privileges,

and more.

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Raised $47 million from leading investors such as:

Founded in 2011, 150 employees in NYC and Atlanta

3,000+ customers representing 4 million+ users

About BetterCloud

The rapid growth of enterprise

SaaS technologies

over last 15 years

presents opportunity for

increased productivity & output

But it also creates growing web

of interconnectedness &

complexity for IT departments

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We are now in the age of the SaaS-Powered Workplace

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EMPLOYEE

SaaS is now the system of record.

LEGACY TECHNOLOGY SaaS APPLICATION

CUSTOMER

IDENTITY

FINANCE

INTERNAL COMMUNICATION

EMAIL

CODE

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From a management perspective IT is still at a loss

● Minimal transparency

● No direct access to OS or database

● Only the control features natively available

● Complex, dynamic, and distributed

“Gartner, The State of Cloud Security, June 2017

Gartner recently described SaaS management as having:

View user’s activity, files, and privileges across applications

Take action across SaaS applications from a single hub

Build custom, cross-application roles for every administrator

Build custom sequences that match existing cross-application processes

B2B, 100% recurring revenue business

Land & Expand GTM Strategy

Sales & Marketing Org Structure

(Marketing, Sales Dev, New Sales, Customer Success)

Heavy Continued R&D Investment

our businessmodel

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Where GAAP accounting inherently backward looking, SaaS model

predicated on future expected returns

• ARR & ARR Growth (vs GAAP revenue)

• Unit Economics (vs Profit & Loss)

Average revenue per account (ARPA)

Gross profit margin

Payback period

LTV:CAC

Magic number

Retention rates (logo, ARR, layers of cake)

key metrics

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Find Retain & Grow

framework To Measure and Drive Growth

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Acquire

• Framework aligns to the customer journey

• Following metrics are how we break down, measure, and optimize the

sales & marketing funnel into microsteps

● Newsletter sub add, losses, net change

● Email open rates, click through rates

● MQL generation

● SDR activities & conversion rates

(calls > connections > meetings set >

meetings held)

● AE prospecting activities &

conversion rates

Identify, engage with potential prospects

Find

● How do we educate the market?

● How do we create awareness?

● How do we fill top of the funnel?

Metrics

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Questions

Create opportunities, move prospects through the sales funnel

● Opportunity creation ($, #)

● Pipeline coverage (as multiple of ARR goal)

● Pipeline concentration (by size segment)

● AE activities

● Sales cycle

● Avg & median pipeline days-in-stage

● Count of close-date pushes

Acquire

Metrics

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● Are we creating enough pipeline to meet

sales goals?

● What is the health of our pipeline? How

“clean” is our pipeline?

Questions

● Quota and quota attainment

● Conversion rates (deals & dollars)

● AE earnings as % of attainment

● New ARPA

● Closed lost by reason ($, #)

Convert prospects into new customers

Acquire (cont’d)

● How efficient is our sales funnel?

● What are the outcomes? How efficient are

those outcomes?

● How & where can we improve?

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MetricsQuestions

● Engagement . . .

○ w/ the application: logins, feature use,

actions run, power users vs least engaged

○ w/ Customer Success: HV activities, QBRs

○ w/ Support team: tickets (open, resolved),

bugs (open, resolved), response time

○ w/ Product team: feature requests

○ w/ BetterCloud: surveys, event attendance

● Customer happiness

○ Customer satisfaction

Retain . . .

● How engaged are we with our customers?

● How engaged are customers with us?

● Which customers are at risk to churn?

Metrics

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Engage with customers, identify and mitigate churn risk

Questions

● Feature usage data

● Domain (logo) retention

● ARR retention (net of churn, upsell)

● Layers of cake (cohort analysis)

Identify upsell opportunities, net ARR expansion

. . . and Grow

Metrics

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● In addition to engagement, which

customers fit our ICP?

● Is ARR for a given cohort expanding

over time?

Questions

• for Entrepreneurs / Pacific Crest Private SaaS Company survey

• Bridge Group 2017 SaaS AE Metrics Report

• Zuora’s annual CFO Survey

Build portfolio of sources for benchmarks, measure, & optimize

Benchmark, Benchmark, Benchmark!

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Parveen Nandal

Vice President, Finance

Zuora

The Changing Business Model

the customer is at the center of everything

finance needs to be laser focused on a new set of metrics

the new business model is much more complex

what it means to own this new business model

our businessmodel

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0%

100%

50%

ARR

Break

Even

Invest in Field & Grow

FasterOR

Recurring Expense Growth Expense

Sales,

Marketing, Customer Success

Sales,

Marketing, Customer Success

COGS, G&A,

R&D

ARR

Growth Expenses

• Incurred to maximize ARR

• Sales, Marketing and Customer

Success

Recurring Expenses Margin

• Incurred to support existing install

base and organization

• COGs, R&D, G&A

key metrics

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• ARR

• Growth Efficiency Index

Growth Costs / increase in ARR

• Recurring Expenses Margin

1- Annualized Recurring Expenses / ARR

framework To Measure and Drive Growth

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Pipeline

Metrics

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● How do you drive pipeline?

● How do you measure it?

● What does the funnel look like?

● Do you have enough coverage?

● Pipeline by stage

● Conversion rate

● Coverage ratios

● Demand gen efficiency

● Cost per opportunity created

● Sales cycle

● Quota attainment

● Ratios by various functions (per rep)

● Overall cost per rep

● How do you structure and model your

sales org?

● How do you measure productivity?

● How do you build predictability?

● How do you incentivize behavior?

● Is the org operationally efficient

Acquire

Metrics

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● Time to Go-Live

● Implementation churn

● Margins

● Ticket volume and resolution time

● Transaction volume

● CSAT score

● How do you on-board a customers

successfully?

● What is the measure of successful

implementation?

● What are the SLAs for support?

Deploy / Run

Metrics

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● Who owns renewals?

● How do you minimize churn?

● What causes churn?

● What is your upsell strategy (land and

expand)?

● Net Revenue Retention

● Cohorts analysis

Expand

Metrics

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thank you.

The effects of a security or insider breach are detrimental

81%

80% of companies over a month to contain insider-related incidents

Ponemon institute

It took

$2.3million annually on negligent and careless employee or contractor incidents - an average of $207K/incident

Ponemon institute

90% of the total business impact on an organization, and will most likely be experienced two years or more after the event.

Deloitte

of IT professionals say they experience a significant challenge managing SaaS apps

BetterCloud’s 2017 State of the SaaS-Powered Workplace

Orgs spend

“Hidden” costs can amount to

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2007 Shadow IT emerges; NetSuite IPOs“SaaS Apps Being Deployed by Business Units, Not IT”- TechTarget

We’ve come full circle.

2009SaaS creates problems for IT”The Challenges of Managing SaaS

Projects” -CIO

1990 IT controls on-prem software

2016IT changes its approach

“Parthenon-EY’s research indicates that CIOs are feeling a loss of control, but are beginning to find ways to take that control back.” -CIOs and

Their Shifting Relationship with SaaS

2011 IT starts losing control“Is SaaS a Threat to CIO Control?” -Information Age

2002 IT regains control“CIOs Take Back Control of Enterprise Projects from Consultants” -CIO

2017IT starts to control SaaS

“The CIO Must Take Charge of the

Organization’s Application Portfolio” -IBM Security Intelligence

1998-1999NetSuite and Salesforce

are founded

2004Salesforce IPOs

2001Consultants, not IT, lead software implementation“How to Install ERP Without IT” -TechRepublic

2014 IT increasingly loses control”Business Users Bypass IT and Go Rogue to the Cloud” -ComputerWorld

2015 IT admits hard truths“CIOs Admit They Are Concerned About SaaS Management”-Computer Weekly

CUSTOMERS

3000 customers of all industries and sizes

60+ countries

BetterCloud By The Numbers

PRODUCT

5billiondata objects managed

12M+actions taken

900MAPI calls made a day

COMMUNITY

Daily IT Newsletter with 100,000 subscribers

A Slack Community of 1400+ IT professionals

Customer Customer

Acquisition

framework To Measure and Drive Growth

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Lead

Generation

Pipeline

Creation

Customer

Success

GAAP accounting inherently backward looking (lagging)

why new metrics?

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