RevOps/Sales // Metric, formula measures Flashcards

1
Q

How is… Customer Acquisition Cost (CAC) calculated?

A

CAC=

(New Customer Count period 1 - period 0) /
Sales & Marketing Expense period 0

The Customer Acquisition Cost is the average cost to acquire a new customer and is calculated as the Sales & Marketing expense in a given period divided by New Customers acquired in the same period.

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2
Q

What is…
CAC (Customer Acquisition Cost) Payback Period
And how is it calculated?

A

CAC Payback Period =

CAC / Average Monthy Gross Profit

The CAC Payback Period is the number of months required to pay back the associated customer acquisition costs and is calculated as the CAC divided by the Average Monthly Gross Profit.

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3
Q

What is…
SaaS Magic Number
And how is it calculated?

A

Magic Number=

(ARR Period 1-APP Period 0) / Sale Marketing Expense

A SaaS metric is used to measure a company’s sales efficiency using a ratio of New Subscription Revenue to Sales & Marketing (S&M) expense. Put another way, the Magic Number shows how much it costs to acquire $1.00 of subscription revenue. Any ratio above 1.0x means that your company generates more New Subscription Bookings than it spends to acquire the customer.

The most accepted formula is to use a ratio of the increase in ARR in the current period to the S&M expense in the prior period. The difference between the two periods should correspond to the length of the sale cycle. This is especially true for high growth, i.e. 3x annual ARR growth, companies. Investors’ expectations are that the Magic Number should fall within a narrow range around 1.0x with any ratio above 3.0x indicating a phenomenal operational leverage

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4
Q

What is…
Sales Efficiency
And how is it calculated?

A

Sales Efficiency=

New Subscription Bookings Period 0 /
Annual Sales and Marketing Expense Period 0

An adaptation of the Magic Number for Enterprise SaaS companies. Long sales cycles and the variance in time of the sales cycles make defining the “prior period” S&M expense difficult. Therefore, in such cases, we use the Sales & Marketing expense in the same period as the New Subscription Bookings, whether actual or forecasted. For example, if you project $20M in New Subscription Bookings for a given fiscal year, then your Sales & Marketing expense should, in theory, be ~$20M to achieve a 1.0x ratio. Keep in mind the fact that ratios calculated in this manner will be lower than a Magic Number calculation exactly because you are using current period S&M expense. It would be very rare to see an Enterprise SaaS company achieve a 3.0x multiple

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5
Q

What is…
Win Rate
And how is it calculated?

A

Win Rate=

Won Opportunities / Won Opportunites + Lost Opportunities

The ratio of Opportunities Won over the total opportunities in the sales pipeline.

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6
Q

of churned Customers

A

Formula:
Count churned Customers

Measures:
If you are losing customers

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7
Q

of new Customers

A

Formula:
Count new Customers

Measures:
If you are gaining customers

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8
Q

of Ramped Sales reps

A

Formula:
IC that hit ramping quarterly #

Measures:
# of productive reps
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9
Q

of Sales reps

A

Formula:
Count sales reps

Measures:
FTE = Full Time Equivalent (equivalent # of fully productive reps)

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10
Q

% ARR Churn

A

Formula:
Churned ARR / Last Q’s Ending ARR

Measures:
Churn trend

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11
Q

% ARR Expansion

A

Formula:
Expansion ARR / Last Q’s Ending ARR

Measures:
Expansion trend

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12
Q

% Customer Churn

A
Formula:
# of churned Customers / Total # of Customers (from last Q)

Measures:
Customer Churn

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13
Q

% Net ARR Churn

A
Formula:
# of churned Customers / Total # of Customers (from last Q)

Measures:
Lost revenue trend

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14
Q

ACV Bookings

A

Formula:
Sum of ACV Amounts

Measures:
Value of ACV closed during a period (Yr, Q, Month)

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15
Q

ARPA (Average Revenue Per Account) - (existing)

A

Formula:
($) Total monthly recurring revenue / (#) existing accounts

Measures:
Average ARR across the installed base

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16
Q

ARPA (Average Revenue Per Account) - (new custs)

A

Formula:
($) Total monthly recurring revenue / (#) new accounts

Measures:
Average Revenue per Account - Avg ARR (for the new customers)

17
Q

ARR (Anual Recurring Revenue)

A

Formula:
The $$$ (annualized payments) of your contracts / number of years

Measures:
Value of recurring revenue of term subscriptions normalized to a single calendar year. To put it another way, the total amount of contracted recurring revenue the company has

18
Q

MRR (Monthly Recurring Revenue)

A

Formula:
The $$$ (monthly payments) of your contracts / number of months

Measures:
Value of recurring revenue of term subscriptions normalized to a single calendar month. To put it another way, the total amount of contracted recurring revenue the company has

19
Q

% Monthly Churn

A

Formula:
Churned MRR / Last Q’s Ending MRR

Measures:
Monthly Churn trend

20
Q

% MRR Expansion

A

Formula:
Expansion MRR / Last Q’s Ending MRR

Measures:
Monthly Expansion trend

21
Q

% Net MRR Churn

A

Formula:
(Churned MRR - Expansion MRR)/Last Q’s Ending MRR

Measures:
Monthly Lost revenue trend

22
Q

ARR Churn, or Gross Churn Rate

A

Formula:
GCR (Gross Churn Rate) =
Lost annual recurring revenue / Total ARR @ start of the period

Measures:
% of recurring revenue lost from customers that didn’t renew

23
Q

MRR Churn, or Gross Churn Rate

A

Formula:
GCR (Gross Churn Rate) =
Lost monthly recurring revenue / Total MRR @ start of the period

Measures:
% of recurring revenue lost from customers that didn’t renew

24
Q

ARR YoY Growth

A

Formula:
ARR current yr less ARR previous yr / ARR previous yr

Measures:
ARR growth from previous year

25
Q

Average ACV (new contracts or bookings)

A

Formula:
Sum of new ACV / # of new contracts

Measures:
Average ACV for new customers

26
Q

Average Contract Term (months)

A

Formula:
Sum of new contract term months / # of new contracts

Measures:
Average ACV for new customers

27
Q

Average Months Paid Upfront

A

Formula:
Sum of upfront months / # of new contracts

Measures:
Average number of months paid upfront by new customers

28
Q

Billings

A

Formula:
Count of billing or invoicing $$$ amount

Measures:
What was invoiced this month/quarter/year

29
Q

Bookings

A

Formula:
$ value of contracts signed within a given period of time

Measures:
Customer $ commitments for products and services

30
Q

Bookings per Ramped Rep

A

Formula:
$ value of contracts signed within a given period of time per Ramped Rep

Measures:
Customer $ commitments for products and services per Ramped Rep

31
Q

CAC (Customer Acquisition Cost)

A

Formula:
Sales & Marketing expense / # of new Customers

Measures:
The average expense of gaining a single customer

32
Q

Gross Margin (GM)

A

Formula:
GM = (Revenue – COGS) / Revenue

Measures:
How much gross profit do you get over the cost to produce each unit sold?