RevOps/Sales // Metric, formula measures Flashcards
(32 cards)
How is… Customer Acquisition Cost (CAC) calculated?
CAC=
(New Customer Count period 1 - period 0) /
Sales & Marketing Expense period 0
The Customer Acquisition Cost is the average cost to acquire a new customer and is calculated as the Sales & Marketing expense in a given period divided by New Customers acquired in the same period.
What is…
CAC (Customer Acquisition Cost) Payback Period
And how is it calculated?
CAC Payback Period =
CAC / Average Monthy Gross Profit
The CAC Payback Period is the number of months required to pay back the associated customer acquisition costs and is calculated as the CAC divided by the Average Monthly Gross Profit.
What is…
SaaS Magic Number
And how is it calculated?
Magic Number=
(ARR Period 1-APP Period 0) / Sale Marketing Expense
A SaaS metric is used to measure a company’s sales efficiency using a ratio of New Subscription Revenue to Sales & Marketing (S&M) expense. Put another way, the Magic Number shows how much it costs to acquire $1.00 of subscription revenue. Any ratio above 1.0x means that your company generates more New Subscription Bookings than it spends to acquire the customer.
The most accepted formula is to use a ratio of the increase in ARR in the current period to the S&M expense in the prior period. The difference between the two periods should correspond to the length of the sale cycle. This is especially true for high growth, i.e. 3x annual ARR growth, companies. Investors’ expectations are that the Magic Number should fall within a narrow range around 1.0x with any ratio above 3.0x indicating a phenomenal operational leverage
What is…
Sales Efficiency
And how is it calculated?
Sales Efficiency=
New Subscription Bookings Period 0 /
Annual Sales and Marketing Expense Period 0
An adaptation of the Magic Number for Enterprise SaaS companies. Long sales cycles and the variance in time of the sales cycles make defining the “prior period” S&M expense difficult. Therefore, in such cases, we use the Sales & Marketing expense in the same period as the New Subscription Bookings, whether actual or forecasted. For example, if you project $20M in New Subscription Bookings for a given fiscal year, then your Sales & Marketing expense should, in theory, be ~$20M to achieve a 1.0x ratio. Keep in mind the fact that ratios calculated in this manner will be lower than a Magic Number calculation exactly because you are using current period S&M expense. It would be very rare to see an Enterprise SaaS company achieve a 3.0x multiple
What is…
Win Rate
And how is it calculated?
Win Rate=
Won Opportunities / Won Opportunites + Lost Opportunities
The ratio of Opportunities Won over the total opportunities in the sales pipeline.
of churned Customers
Formula:
Count churned Customers
Measures:
If you are losing customers
of new Customers
Formula:
Count new Customers
Measures:
If you are gaining customers
of Ramped Sales reps
Formula:
IC that hit ramping quarterly #
Measures: # of productive reps
of Sales reps
Formula:
Count sales reps
Measures:
FTE = Full Time Equivalent (equivalent # of fully productive reps)
% ARR Churn
Formula:
Churned ARR / Last Q’s Ending ARR
Measures:
Churn trend
% ARR Expansion
Formula:
Expansion ARR / Last Q’s Ending ARR
Measures:
Expansion trend
% Customer Churn
Formula: # of churned Customers / Total # of Customers (from last Q)
Measures:
Customer Churn
% Net ARR Churn
Formula: # of churned Customers / Total # of Customers (from last Q)
Measures:
Lost revenue trend
ACV Bookings
Formula:
Sum of ACV Amounts
Measures:
Value of ACV closed during a period (Yr, Q, Month)
ARPA (Average Revenue Per Account) - (existing)
Formula:
($) Total monthly recurring revenue / (#) existing accounts
Measures:
Average ARR across the installed base
ARPA (Average Revenue Per Account) - (new custs)
Formula:
($) Total monthly recurring revenue / (#) new accounts
Measures:
Average Revenue per Account - Avg ARR (for the new customers)
ARR (Anual Recurring Revenue)
Formula:
The $$$ (annualized payments) of your contracts / number of years
Measures:
Value of recurring revenue of term subscriptions normalized to a single calendar year. To put it another way, the total amount of contracted recurring revenue the company has
MRR (Monthly Recurring Revenue)
Formula:
The $$$ (monthly payments) of your contracts / number of months
Measures:
Value of recurring revenue of term subscriptions normalized to a single calendar month. To put it another way, the total amount of contracted recurring revenue the company has
% Monthly Churn
Formula:
Churned MRR / Last Q’s Ending MRR
Measures:
Monthly Churn trend
% MRR Expansion
Formula:
Expansion MRR / Last Q’s Ending MRR
Measures:
Monthly Expansion trend
% Net MRR Churn
Formula:
(Churned MRR - Expansion MRR)/Last Q’s Ending MRR
Measures:
Monthly Lost revenue trend
ARR Churn, or Gross Churn Rate
Formula:
GCR (Gross Churn Rate) =
Lost annual recurring revenue / Total ARR @ start of the period
Measures:
% of recurring revenue lost from customers that didn’t renew
MRR Churn, or Gross Churn Rate
Formula:
GCR (Gross Churn Rate) =
Lost monthly recurring revenue / Total MRR @ start of the period
Measures:
% of recurring revenue lost from customers that didn’t renew
ARR YoY Growth
Formula:
ARR current yr less ARR previous yr / ARR previous yr
Measures:
ARR growth from previous year
