SaaS Numbers that Actually Matter

Continuing with 12 Key Levers of SaaS Success from David Skok at SaaStr, Mamoon Hamid gave an excellent presentation Numbers that Actually Matter. Finding Your North Star.

Here are a few notes from the presentation:

  • Quick Ratio (QR) = New MRR + Expansion MRR / Churned MRR + Contraction MRR
  • Goal is a Quick Ratio greater than 4
  • Product-market fit happens one customer at a time one month at a time
    • Mostly ignored any product-market fit metrics
  • Churn/Expansion/Contraction MRR is a lagging indicator of product-market fit
  • MRR is the price that the customer pays, the North Star is the value that they get
  • Focus on a leading indicator of the MRR decision
  • Your North Star measures the value you deliver
  • Bad: Mostly measuring price paid as opposed to value delivered
    • MRR, paid seats
  • Good: Measures value delivered in bulk
    • MAU, DAU, messages sent
  • Better: Unquestionably indicates Product Market fit has been reached with the customer
    • Number of users with L28 >= 16
    • Messages sent w/in 30 days in signup

Read the presentation Numbers that Actually Matter. Finding Your North Star. and figure out the North Star for your product.

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