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Total contracted annual recurring revenue is the single best metric for the health of a business. It encapsulates new logo growth, expansion, and churn in a single number. Shows the money that comes in every year for the life of a subscription (or contract).
Some board members prefer LARR to CARR because it can take a long time to implement a deal. And some never make it.
Includes $ from new logos booked and expansion net of churn and downsells. This is the best leading indicator of market pull.
Lately the economics of B2B companies are more driven by expansion than up front ACV (annual contract value). This is the best indicator of that motion.
Gross retention reflects your churn and downsell and is often an indicator of how mission critical your product is.
Tracking annual contract value of new logos and % growth over time helps you manage your GTM strategy. This is particularly important if you’re trying to move upmarket.
If you have a couple quarters of sales data, measuring CAC (customer acquisition costs) payback gives you a read on sales efficiency. The typical calculation is (sales + marketing) / (net new ARR x % gross margins). The average startup has a CAC payback of 12-18 mos. If you sell to large enterprises, 18-24 mos; and SMBs, 6-12 mo
Early sales really takes an entire company, so I’d rather see total burn than trying to break out GTM unit economics. Ultimately, I like to look at cumulative burn and compare it to how many dollars it’s generated
Pipeline generated in the previous period less pipeline removed (sold or lost) is a good indicator of market pull, and a leading indicator for scaling sales. Generally a bogus number early on, but good discipline to be in the habit of reporting.
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in Tech👩🏻💻 with a passion for Business🦁 and Product Management📚
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