HubSpot Metrics Deck

Question 1

Lifetime Value (LTV)

Answer 1

Average Spend per customer (per month/year) * Customer Lifetime (months or years)

or

Average Monthly Recurring Revenue * Customer Lifetime (months)

Question 2

Customer Lifetime

Answer 2

1/Churn Rate

Question 3

Churn Rate

Answer 3

MRR Cancelled During the Month/Total MRR at Beginning of Month

Total MRR at Beginning of Month aka “BOM Install Base”

Question 4

Customer Acquisition Cost (CAC)

Answer 4

Total Sales & Marketing Spend (in a period)/New Customers Acquired (in a period)

Question 5

What is a good and bad LTV:CAC ratio?

Answer 5

Bad = <1
Good = >3

Question 6

How do you improve LTV:CAC?

Answer 6

LTV
1. Increase average spend
- Variable pricing axes for power users
- Create room to upgrade
2. Decrease churn
- Understand and address reasons for churn

CAC
1. Hello inbound
2. Segment your customers
3. Create a low-touch or touchless buying experience
4. Increase sales rep efficiency

Question 7

Net New MRR

Answer 7

Incremental dollars added to BOM Install Base each month

New MRR (aka New Customers)
+
Upgrade MRR (aka Existing Customers)
-
Downgrade MRR (aka Existing Customers)
-
Cancellation MRR (aka Lost Customers)

Question 8

Customer Dollar Retention (C$R) Churn

Answer 8

In a given month, what percent of the current customer install base has not cancelled?

(1+(Cancels/BOM Install Base))^12

Question 9

Revenue Retention (RR) Churn

Answer 9

In a given month, how has the MRR from current customers expanded or contracted?
>100%, grown; <100% contracted

(1+[(Upgrades-Downgrades-Cancels)/BOM Install Base])^12

Question 10

Positive MRR levers of growth

Answer 10

1. Rep Headcount Growth
2. Productivity per Rep (PPR)

Question 11

Productivity Per Rep

Answer 11

(New MRR+ Upgrade MRR)/Number of Sales Reps

How to increase:
(New MRR+ Upgrade MRR) = Increasing MRR without increasing sales headcount
Number of Sales Reps = Slowing headcount growth without slowing MRR growth

Question 12

How to slow headcount growth without slowing MRR growth?

Answer 12

Making sales reps more efficient (e.g., better lead qualification)

Question 13

How to increase MRR without increasing sales headcount?

Answer 13

1. Increasing the value of each deal (bigger deals)
2. Driving new revenue streams without headcount

Question 14

Net New MRR per GTM Employee (a “bonus” metric)

Answer 14

Net New MRR/(Marketing+Sales+Customer Success)

Question 15

Negative MRR levers of growth

Answer 15

1. Downgrades
2. Cancel Rate (C$R)

Question 16

Setting Annual Targets : The HubSpot Process Simplified

Answer 16

1. Establish high-level guardrails for Net New MRR growth and operating profit
2. Create a “base case” for (1) Sales headcount growth based on budget and demand, (2) PPR, (3) C$R, and (4) downgrades
3. Collect known changes for next year, and model how those will impact these 4 levers (e.g., new products? pricing changes? customer mix trends?)
4. Iterate on the balance of these 4 levers to achieve target growth; change growth target if no feasible mix can be achieved