Is SaaS Data or Metrics Driven?

We’re in SaaS, we love metrics! 

Speak to anyone in SaaS and they can explain and define ARR, MRR, NPS, LTV, CAC, ARPA, CLTV, and NRR… we do enjoy our acronyms!

So, it’s easy to assume SaaS companies are driven by metrics and data

Well, sort of. It’s true metrics form part of everyday life within SaaS, but how much does data drive the direction of the company

An issue we often see at SaaSili is a SaaS business instantly scaling a functional area (or two, three.. more!) when there’s been a successful round. Is that decision based on data? Quite often not.

For example, a company can jump at the chance of scaling up its AE team. They may have two BDRs, then ramp to six or eight. Have they proven the AE model? Are the current AEs delivering at least on target, if not above? Is the sales process proven? Is the sales framework demonstrable?

Again, quite often it's not.

This leads to ‘SaaS-hiring’... in every other industry, it's known as ‘over-hiring’

Scaling without a proven foundation only leads the business down a single path, one of hiring, onboarding, ramping, non-delivery, friction, and firing… then the process starts again. 

It's a lengthy process too, as recruitment can take 2-3 months or more, onboarding 1-2 months, time to ramp/deliver 3-6 months, trying to work out why it's not working for 2 months, internal finger pointing for a month, then firing. You have just wasted a minimum of 9 months of time, money, and growth. Your investors are questioning why you’re behind the forecast, and why you recruited and scaled when it clearly wasn’t ready. They will question the business, and more importantly, they will question further investment.

Use data, real data, to prove each functional area of the business objectively. If the DATA shows that the area is delivering to plan, and the team is coherent and stable, then scale it.

Scaling, in its most fundamental (and successful) meaning, is taking something that's proven to be successful and replicating it.

Remember, if the model is weak, you are replicating the weakness

If you can’t prove the model (yet), you always have the option to outsource it, especially with BDR and Marketing activities … it’s also possible with Sales

If you outsource the function, you can minimize your investment and risk. 

The commitment is less, the investment is lower, and you can take advantage of their framework when they’re successful, by replicating in-house and starting your own teams, then scaling them … as the foundations have been proven… by data!