Building a successful SaaS channel can mean the difference between success or failure of your company. A great example of finding channel success out of multiple mergers and acquisitions is Recovery as a Service company, Axcient.
In this episode, Angus Robertson, Axcient’s Chief Revenue Officer and Vice-Chair of the CompTIA Business Applications Advisory Council, shares how they consolidated multiple strategies into a winning strategy of going 100% through MSPs. Angus tells how Axcient redeveloped and executed their SaaS channel strategy to create a friction-less experience for partners and customers. And he shares the key performance indicators he uses to measure their SaaS channel success.
Four Key Performance Indicators (KPIs) of a successful SaaS channel strategy are the LTV to CAC ratio, demand waterfall, sales velocity, and net promoter score.
1. LTV to CAC
LTV to CAC compares the Lifetime Value of your customers to your Customer Acquisition Cost. Investors look at this ratio to see if you have product market fit and how smart you are with your marketing spend.
- LTV is impacted by three variables; gross margin, churn, and how much your customers spend on your service
- CAC is how much are you spend on sales and marketing divided by the number of new customers you acquire in a given period of time
- A benchmark LTV to CAC ratio is 3:1
2. Demand Waterfall
The Demand Waterfall is your sales funnel that traces a buyer from inquiry to close. It looks at both the quantity of leads that you can bring in and the quality of those leads.
- Look at impressions on social media. Impressions can be how many people see your ad or look at a post on one of your social media channels, and then how that translates into visits to your website and into leads.
- Categorize your leads in two different ways; a thought leadership awareness, nurture type lead, and a lead that is already in a buyer cycle or has a funded project.
- Build a dashboard pulling data from your marketing and sales automation tools to see the whole demand waterfall and measure your lead conversion ratios.
3. Sales Velocity
Sales velocity looks at how quickly leads are moving through your pipeline and how much value new customers are providing. It’s a key sales measurement as it tells you how quickly you are making money.
- To calculate your sales velocity, look at your number of sales opportunities you’re working in each period, multiplied by the average deal size, and then multiply it again by the win rate, and divide that number by the length of your sales cycle.
- Compare your sales velocity in different sales territories, from different campaigns, or even different channels. From that you can determine which territories, campaigns, or channels are doing better than others.
4. Net Promoter Score
NPS, or Net Promoter Score is used to measure customer satisfaction and loyalty. It also measures your ability to create advocates or champions in your customer base or in your channel.
- NPS comes from the question “On a scale of 0 to 10, how likely is it that you would recommend our organization to a friend or colleague?”
- Based on the number your customers or partners choose, they are classified into “Detractors,” “Passives,” and “Promoters.”
- At NPS above 50 is excellent. Above 70 is world-class.