Replicable SaaS sales are the best way to produce consistent revenues and results. This ultimate guide will teach you all of the metrics you can use to measure where your firm stands and how you can improve.
What is a Replicable Sales Model?
The replicable sales model strategy focuses on processes that can be completed over and over again. In other words, the tactics that have been proven to succeed can be replicated across the company to obtain the maximum benefit.
Think about it this way – in smaller firms, sales reps may have their selling styles and follow independent methods daily. Larger, successful firms, however, have tried and tested processes that they share with everyone. They can use their veterans’ success to show new hires how it's done, without making them go through the normal trial and error.
To boost your revenues and make it to the big leagues, you need to create replicable sales models!
If you want to improve something, you need to measure it first. Let’s review general sales metrics that can help you do this, as well as advanced metrics that can take your replicable SaaS sales to the next level.
General Sales Metrics
To start, let’s review general sales metrics, also known as KPIs – or key performance indicators – that apply to any organization that relies on sales. These metrics include customer acquisition cost, closing rate, ARPA, MRR, new leads, number of calls, and forecasted deals.
Customer Acquisition Cost
Customer acquisition cost, or CAC, is always an important metric to monitor when you run a SaaS organization. This calculation tells you how much you need to spend to acquire a new user, and you can use it on every campaign to determine what is effective.
Here is how you can calculate it:
For example, if you spent $5,000 on a campaign and you were able to onboard 500 new users, your customer acquisition cost is $10. In other words, for every $10 you spend on marketing & sales, you can expect to acquire one new customer.
Use this valuable information to determine what marketing works for your target audience and make the most out of your ad dollars.
It is easy to underestimate the acquisition costs and it’s important to note that the Customer Acquisition Cost includes both marketing and sales expenses. This includes everything from the ad budget to personnel salaries and up to the tools and equipment they use to acquire customers (i.e phone bills, lead tools, CRMs, etc.). To avoid unexpected costs, a bottoms-up approach is recommended.
The next general sales metric on our list is the closing rate. This one is pretty intuitive, and it describes how many deals you won in comparison to the total number of opportunities.
To determine this measurement, divide the number of deals you won in a certain timeframe by the total number of opportunities:
If you were able to close 50 sales out of 120 opportunities last month, you had a closing rate of 42%!
Part of developing a replicable SaaS sales strategy involves understanding your closing rate and what drives it. Once you identify the key factors that help you close deals, you can replicate them throughout your organization to boost your win percentage.
MRR & MRR Growth
MRR is another valuable metric for replicable SaaS sales. MRR, or monthly recurring revenue, is often considered the most essential KPI for SaaS companies. This figure tells you how much revenue you can expect to generate each month based on your total number of users – it indicates how healthy your business is and allows you to improve forecasting and strategic decision making.
The MRR can be calculated by simply adding up all the recurring monthly revenue streams.
Once you can calculate MRR, you should determine the growth rate of your monthly recurring revenue. The MRR growth that occurs each month shows your company's forward momentum and upward trajectory.
According to venture capital firms, your SaaS startup should aim for an MRR growth rate of at least 15% to 20%. However, the benchmarks will vary depending on which stage of growth your business is in.
A dropping MRR metric is an indicator that you are losing users at an unsustainable rate, or they are downgrading. Your MRR can decrease if you have unhappy customers not using the product anymore, or simply switching to a cheaper plan. That is why you can dive deeper into MRR and analyze the
New MRR - The monthly value of all the new customers acquired in that month
Expansion MRR - The monthly value of existing customers buying more or more expensive products or reactivating their license
Churn MRR - The monthly lost value of all the customers that downgraded, paused or canceled their license
ARPA stands for average revenue per account, and this metric can be very useful for tracking success and driving a replicable sales process. This KPI is sometimes called ARPU, average revenue per user - or ARPC, average revenue per customer.
Regardless of what you call it, calculating ARPA tells you how much revenue you generate for every customer you have. So, if you have a total revenue target, you can estimate how many users you need to onboard if you want to reach it!
This is the formula for ARPA:
It is important to note that this metric should be viewed in the scope of pricing tiers since averaging out high-paying premium accounts with a large number of lower plan users can skew your results. You can also calculate the ARPA from new customers by taking the new MRR / new accounts over the same time frame.
What’s particularly insightful is that this can give you an idea of how the ARPA develops (as older accounts might have different pricing etc.). However, one should be aware that if you sign only a few new accounts within the time frame, you might get a skewed view.
New Leads – Found and Qualified
This next metric involves analyzing how many new leads you have found and qualified. The most vital aspect of this KPI is determining what a qualified lead means for your SaaS business.
A qualified lead typically refers to a potential customer that meets your target audience’s parameters and seems like a good fit for your product. Taking the time to qualify leads can help you reduce the amount of time – and money – that you spend pursuing a prospect that doesn’t have the means or ability to invest in your products.
You can qualify a lead by asking questions during an initial cold call or a sales presentation. This metric focuses on counting how many leads you were able to find – and qualify – during a specific time frame.
Number of Calls
This general sales metric is simple: how many calls are your sales representatives making?
The number of calls made during a month or quarter can help you understand why some sales reps are making their quotas while others aren't. Measure their revenue-driving activities, such as cold calls, emails, or other proactive sales presentations.
You cannot control how many deals your sales team closes, but you can control how many daily activities your team is doing to drive revenues!
The last general metric in our guide to developing a replicable SaaS sales strategy is forecasted deals.
Think of your sales forecast as the foundation of your business plan. This KPI will be used for everything from measuring your growth to set the standard for profits and expenses. The first thing you need to track in terms of plan vs. actual is forecasted deals!
Have a method for developing your sales forecast and ensure that it matches your accounting structure. Organize the forecast in a way that lines up with your financial statements so you will have an easier time tracking and analyzing them each reporting period.
Now that you understand some of the general sales metrics, let's move on to some more advanced calculations. We can break up these advanced metrics into the following categories: sales team performance, sales pipeline, ramp-up time, quota attainment, pipeline velocity, and sales cycle time.
Sales Team Performance Metrics
Sales team performance metrics are advanced KPIs that can help you determine how successful your sales representatives are. We will review SQLs per SDR per week, MRR per salesperson, and new APR per lead in this category.
SQLs / SDR / Week
SDR is the abbreviation for sales development representatives. These key individuals are the first ones to interact with a potential customer. Their job is to qualify the lead and decide whether the information should be passed along to an account executive.
SQL stands for sales-qualified lead. If we put these two terms together, this KPI measures the sales-qualified leads, per SDR, per week. In simple terms, this gives you an idea of how many quality leads your SDRs are passing on to the rest of the sales team each week.
To accurately calculate this metric, you must have a clear definition of what constitutes a sales-qualified lead. Consider characteristics like their total budget, whether they have decision-making authority, if their needs align with your SaaS products, and the timeframe.
MRR / Salesperson
Another way to measure the success of your sales representatives is to measure the MRR per salesperson. As we mentioned earlier, MRR refers to monthly recurring revenue – so this metric seeks to calculate how much of your monthly recurring revenues can be attributed to a specific salesperson.
You may be wondering, why is this KPI so valuable? For starters, it allows your sales representatives to see the size of the accounts they are managing. This may impact their commissions, so it could be a very motivating metric to share.
Similarly, if a sales representative is having a hard time hitting their quotas each month, try analyzing their specific MRR. It could be that their accounts are smaller in size, and this report can help them focus on higher-MRR deals. At the same time, you can analyze the value of the newly attracted MRR, the increased upsell MRR and the decrease brought by the churning of MRR in a month. This can help you drill down in the data and find the best performers when it comes to bringing in new clients or upselling to the old ones. At the same time, you can use the churned MRR to analyze the leads, potentially discover issues, or improve the approach.
Remember that different members of your sales team should have specific benchmarks based on their roles. This means that account executives, customer success managers, and sales development representatives cannot be measured in the same way!
New ARR / Lead
The next KPI you can use to measure the performance of your sales team is the new ARR per lead. In this scenario, ARR refers to annual recurring revenue.
You can calculate ARR by multiplying your monthly recurring revenue by 12 months. Once you have determined this annual figure, divide it by the total number of leads:
As you can see, this metric provides you with insights on how much annual recurring revenues, on average, you can expect for every lead that your sales team qualifies.
Sales Pipeline Metrics
Sales pipeline metrics are unique KPIs that help you evaluate your sales funnel and applicable conversion rates. Understanding this information will allow your organizations to close deals at a higher rate and have a deeper understanding of sales forecasts and projections.
Funnel Conversion Rates
The sales funnel refers to how you move the leads in your pipeline to the final deal.
Generally, someone starts as a lead and, if they meet the right criteria, they become a sales-qualified lead. At this point, your SDRs will pass along their details to an account executive for further qualification.
If they determine that your SaaS product is a good fit, and there is a chance to close a deal, they become an SQO (sales-qualified opportunity). Next, your account executive will present them with a proposal, that will result in a won deal or a closed opportunity.
Your funnel conversion rate is a calculation that identifies how many prospects you were able to move through the funnel and convert into a paying customer.
This is how you calculate the funnel conversion rate:
Assuming you had 1,000 leads enter your sales funnel in a given month and were able to convert 20 of them into customers, your funnel conversion rate would equal 2%.
The win rate is a common metric used in replicable SaaS sales to measure how efficient your representatives are. While the basic win rate calculation can be quite simple, several variations become increasingly complex.
Here is the basic formula:
For instance, if you closed 50 deals this month but had 200 opportunities to make a sale, your winning ratio is 25%. In other words, you win 25% of the deals you attempt you close.
Simple enough, right? Like we mentioned, you can adapt this formula to measure everything from win rate on sales-qualified leads to the ratio of deals won to lost.
Using the same example above, you won 50 deals but lost 150 – leaving you with a won to lost ratio of 1:3. This information can help you assume that if you are given four opportunities to make a sale, you will win one and lose three.
You can take this metric a step further and calculate the winning rate per sales representative or account executive. This can help you determine which employees have the highest closing rates so that you can learn what they are doing right – then share it with the rest of your team!
Ramp-up time involves calculating how long it takes a new hire on your sales team to reach full productivity. Any time that you onboard a new employee, there will be some downtime associated with training, learning systems, and getting accustomed to your SaaS products. Understanding these metrics will help you plan your timeline accordingly, and working to reduce the ramp-up time will boost your sales team's productivity.
Time to Hit the First Quota
Time to the first quota is a KPI that identifies the time it takes for a new sales rep to reach their first target. This metric is viewed in terms of your product sales cycle, so it might look something like your total sales cycle plus 45 days.
Always consider the difference between various types of sales personnel when calculating this. Your SDRs and account executives will have different quotas and perform unique activities, so their timelines will vary accordingly.
The next segment on our guide for replicable SaaS sales is quota attainment. These KPIs indicate how well your salespeople are meeting their targets on both the individual and company-wide level. As always, when you evaluate these metrics, be sure to differentiate between account executives and SDRs.
Percent of Sales Reps Meeting Quota
The percentage of sales reps meeting their quota is just what it sounds like. You can utilize this calculation to evaluate how well your sales team is performing and which individuals are doing so more than others. This metric also provides you with an opportunity to see if your quotas are reasonable. If even your hardest-working employees can never hit their targets, it is clear that something needs to be adjusted.
Statistically speaking, it is harder for SDRs to hit their quotas than it is for account executives. If you think about it, an SDR must comb through hundreds of opportunities before passing on the best-qualified leads to the account executive – giving the AEs a clear advantage from the beginning!
Percent of Months Quotas were Met
Another way to look at this metric is to analyze how many months out of the year the quotas were met by your sales team. This can give you a birds-eye view of how well your SDRs and AEs are meeting their targets, and how consistently they are doing so.
Sales Cycle Time
The sales cycle is how long it takes from the first time you interact with a potential customer to finalizing the sale. The average sales cycle is a metric that can help you develop sales forecasts, improve efficiencies, and create replicable SaaS sales.
When you thoroughly understand your sales cycle and buyer journey, you can pinpoint areas where prospects tend to stall out and improve them in the future. It is a valuable KPI for predicting future revenues and making strategic decisions.
Time per Stage
As you analyze the sales cycle, it is necessary to consider each stage as an individual component.
Start by measuring the time it takes for a lead to become a sales-qualified lead. Then determine how long it takes to go from a SQL to a sales-qualified opportunity. The proposal stage is considered its segment, and the last piece involves quantifying the time between the proposal and closing the deal.
Here is a sample timeline:
Lead to SQL: 3 Days
SQL to SQO: 7 Days
SQO to Proposal: 4 Days
Proposal to Closing: 10 Days
These details should let you see which areas take the longest and require enhancements or improvements.
Total Sales Cycle Time
The total sales cycle time takes the entire process into account. You can calculate this KPI by adding up all the individual segments discussed above.
If you use the same figures, your total sales cycle time is 24 days. This number means that it takes 24 days to take a new prospect through your sales funnel and enroll them in your SaaS program.
Note that shortening the sales cycle can help you improve revenues and enhance the customer onboarding experience! It is also a measure of how effectively your sales representatives can convert leads.
Pipeline velocity refers to how quickly your leads move through your pipeline – whether you win or lose the deals. This metric is most helpful when measured over time since you want your pipeline velocity to increase continuously.
This calculation is a bit complex, but you can compute it with this formula:
The easiest way to understand this metric is by looking at an example. For this purpose, assume the following parameters:
50 total opportunities
Win rate of 30%
The average revenue per account of $5,000
30-day sales cycle
Pipeline Velocity = (50 x 30% x $5,000) ÷ 30 days = $2,500
In this example, your pipeline velocity is $2,500 per day. This figure can be used to create sales forecasts and projections since you can estimate that about $2,500 will come through your pipeline every day. Likewise, your goal should be to always improve this figure. The greater the pipeline velocity, the better the health of your SaaS organization. Likewise, the formula implies that there are several ways in which a business can improve their pipeline velocity. By just increasing the ARPA, or by reducing the sales cycle a sales person can already make a large impact on velocity by just changing a single metric
Total ARPA Pipeline Deals
Total ARPA pipeline deals are an additional KPI that you can use to evaluate your sales funnel. It takes into account the average revenue per account and looks at how many deals you need in the pipeline to hit your business goals. Don’t forget to include the account win rate into this, because if you need 30 successful deals to hit your yearly target, but your win rate is 50%, then you'd need 60 deals in the yearly pipeline to achieve your goal.
These are the best metrics you can use to begin developing replicable SaaS sales. Use this guide to complete a thorough analysis of your existing business so that you can identify areas that need improvement. Also, remember that you must monitor these KPIs regularly for them to be useful!