By Chris Price, Head Of SaaS Vertical, AcctTwo
Monitoring your metrics isn’t enough. The key SaaS metrics you measure must be actionable to help you move the needle on healthy CMRR and ARR growth. This requires granularity and immediacy of information you can’t get from QuickBooks or Excel spreadsheets at scale. Your ability to keep a pulse on customer trends, as they are happening in real-time, and then respond quickly, enables you to transition from the historian to the pioneer – guiding the business into the future.
The Old Ways Are Holding You Back
If you’re like most SaaS and subscription finance leaders, you’re ready to chuck those Excel-based methods currently being used for tracking your growth metrics, unit economics, and other key performance indicators (KPIs). Those legacy processes can lag weeks behind, tend to be entirely manual, and lack the ability to clearly display your growth levers.
What’s worse is studies show that nearly 90% of all spreadsheets contain “significant” errors. Using Excel as your “database” for SaaS metrics tracking can lead to errant business decisions based on erroneous data, or confidence loss and subsequent valuation hit from investors during due diligence.
You may be like many other SaaS and subscription leaders still settling for generic “Expansion” and “Contraction” CMRR/ARR tracking. Intuitively, we all know that “Expansion”, as a concept, comprises many subscription activities that result in the increase of a customer’s subscription value such as: Add-ons, Cross-Sells, Upgrades, Upsells, Price Uplift, and Foreign Exchange gains on multi-currency subscriptions. Similarly, generic tracking of “Contraction” obfuscates the events that led to a decrease in a customer’s subscription value such as: Downgrades, Downsells, Debooks, Price Markdowns, and Foreign Exchange losses.