Metrics that Matter to a CRO - with Bill Binch, Operating Partner at Battery Ventures
Metrics that Measure Up
The Importance of Conversion Metrics
Marketers should be held accountable to the entire pipeline number. Salespeople, when they're selling a deal, don't sign their own orders and get their own commissions paid. The commonality of those worlds where they come together is in one thing and it's in pipeline.
Bill Binch has led revenue teams at highly successful B2B SaaS category creators, including Marketo and Pendo.
Having real-life, applied experience and success at scaling high-growth companies, while also having broad insights into several Battery Ventures portfolio companies provides Bill with a unique perspective on how Chief Revenue Officers use metrics to inform their journey.
Bill's journey over 29 years has informed how his use of metrics to lead a revenue team has evolved, alongside the advancement of revenue technology options. Though Sales has always been the ultimate function to be measured by metrics (quota achievement), today's CRO can have much better insight into the "signals" or "leading indicators" that directly impact quota achievement.
Today's Sales leaders are reviewing and asking deep conversations about pipeline trends, which sources are delivering the most, and highest quality leads that result in Closed-Won revenue. But what metrics does Bill think are most important for each stage of a B2B SaaS company's growth:
$𝟬 - $𝟭𝟬𝗠 𝗔𝗥𝗥:
- Customer logo count which provides Sales team confidence and future customer confidence
- Average Contract Value
- Average Sales Cycle
> $ 𝟭𝟬𝗠 𝗔𝗥𝗥
- Net Revenue Retention (NRR) measures how much ARR a current customer delivers year over year. Example if $50K ARR this year and $60K ARR next year = 120% NRR
- Predictive metrics that forecast future revenue performance including Pipeline Performance and Quota Capacity
How does Bill define the CRO's responsibility? Bill's perspective is the word "REVENUE" defines the CRO's responsiblity to including: 1) New Revenue; 2) Expansion Revenue; 3) Retention Revenue. Bill does not believe that the CRO should include the Marketing function.
Bill firmly believes that Sales and Marketing should co-own the qualified pipeline goal, not just leads, Marketing Qualified Leads, or other Marketing centric objectives that do not directly impact the pipeline. The "intersection" of Marketing and Sales is PIPELINE. Far too often in board meetings, Bill sees Marketing and Sales present data, metrics, and reports that have little to no direct correlation and definitely no causation.
What are the "pipeline metrics" Bill thinks are most important? Bill likes "Pipeline Coverage Ratio" which calculates how much qualified pipeline is required to achieve $X in revenue. Bill also introduced his pipeline "MOJO" dashboard which includes a dashboard that tracks daily pipeline trends including:
1. Deals created
2. Deals lost
3. Deals expanded
4. Deals decreased
5. Deals pulled forward
6. Deals pushed back
Bill shared that since the CRO should own all revenue inputs, including acquisition, retention and expansion they should also be responsible for the Customer Success function. However, once a company scales to greater than $50M - $100M the role of the Chief Customer Officer should report directly to the CEO and not the CRO.
I also asked Bill if the CRO should own revenue efficiency metrics, such as CAC Payback Period or Customer Lifetime Value? Bill's perspective is that the CRO should be aware of how their performance metrics impact company level metrics that the CFO should own, including CAC Payback Period, Customer Lifetime Value and Rule o 40 (as examples).
Lastly, I asked Bill what are the core metrics that the CRO should report to the board. They include: 1) ARR Growth - trend over 5 quarters; 2) ACV - 5 Qtr trend; 3) Average Sales Cycle - 5 Qtr trend; 4) New vs expansion split - 5 Qtr trend; 5) Average Revenue Per Account - 5 Qtr trends; 6) Logo adds - 5 Qtr trend; 7) Segmented based metrics as a company scales
Bill's experience as the CRO that led growth at two incredibly successful and market creating SaaS companies and now as an Operating Partner at Battery Ventures makes this a must listen con
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