David Skok, a General Partner at Matrix, provides key insights into how a SAAS company should look for success by using its metrics and smartly managing the most important ones amongst them. SAAS economics is a pretty complicated business, and in this talk for Saastr, David helps break down many vital concepts.
Key Takeaways:
- 3 most important outputs from your SAAS business to ensure success: a. Growth b. Profitability c. Cash.
- Your LTV should be three times greater than your CAC.
- Try and achieve ‘expansion revenue’ by upselling. Have multiple versions on offer or charge on usage eg. Dropbox with storage and Hubspot with leads.
- ‘Months to recover CAC’ is one of the most important metrics you need to focus on.
- High CAC is fine if you have high LTV, especially with sales processes that are complex.
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