Don't Over Complicate SaaS Metrics

Jul 11, 2024
Don't Over Complicate SaaS Metrics

Don't over complicate SaaS metrics. 

It's great to measure everything. 

But if you want to quickly assess a company. 

Ask how many demos they run each month. 

Ask how many deals they win each month. 

Calculate the win rate from total demos. 

This metric will tell you almost everything. 

100 demos at 20% win rate = 20 sales
50 demos at 40% win rate = 20 sales
25 demos at 80% win rate = 20 sales

The outcomes may appear the same. 

But 100 demos costs 3x more than 25.

Optimize win rate before scaling sales. 

It's much harder (or impossible) to do later. 

The difference is everything.

Be careful not to confuse this metric with win rate against qualified opportunities, which is different from total demos. 

It's too easy to fabricate a high win rate by qualifying out the bad demos.

It's ok to measure that as well, but to measure efficiency we must factor all demos/pitches into the equation. 

Faking the numbers is only hiding a problem that will compound and eventually become the greatest growth barrier. 

If I were a VC this would be the first question I would ask when assessing a company and if the win rate wasn't high enough it would tell me everything I needed to know.

Happy Selling,

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