by One Vision | Nov 16, 2023 | Blog
Surviving and thriving in business regardless of external financial conditions might sound too good to be true. SaaS is a highly competitive industry, and even the top players in the market can have their good fortune reversed if they aren’t constantly vigilant.
Developing a hawk-like focus on your metrics–and just as importantly, knowing which SaaS metrics to watch–can help you weather virtually any economic storm. Metrics are vital tools that help you understand:
- Where you’ve been: In business as in life, it’s critical to take an honest assessment of your past performance. Metrics give you objective signposts about your day-to-day effectiveness or lack thereof.
- Where you are: Knowing your present performance helps you stay realistic about timelines and trajectories. It’s essential to manage your expectations without losing your ambition.
- Where you’d like to go: The most valuable thing about SaaS metrics is their ability to jumpstart your progress toward your goals. Whether your quarterly or annual plans involve growing subscribers or revenue, lowering churn rates, or something else, metrics can help them become realities.
Which particular metrics should you be watching, and why?
Voluntary and Involuntary Churn
During an economic rough patch, your churn rates should be one of the first places you look to get your bearings. As a SaaS CFO, we doubt you’re new to the overall concept of churn. You’re probably aware of its enormous impact on your net revenue.
But you might not know that there are two distinct kinds, and each has its own management strategies. The two types you should be monitoring are:
- Voluntary Churn: Voluntary churn is what it sounds like: users have voluntarily decided to unsubscribe from your service. Sometimes the reasons for this are apparent and quickly correctible, and you can win back lost business. But in other instances, you might consider directly reaching out to your customers and asking them about changes or service upgrades they’d like to see.
- Involuntary Churn: Involuntary churn occurs when a problem arises with payment processing. The user’s payment failed to go through, so they were unsubscribed involuntarily. Often, the issue is on the user’s side (expired or canceled card, and so on), and they’ll correct it and resubscribe. But there’s always the potential that the error is on your end, so be sure to stay on top of your payment processing.
Our next recession metric is just as crucial as your churn rates. But unlike churn, which is more about managing external negatives, this one puts a bit more direct control back in your hands.
Is Your Cash Burning Up?
Although that’s a great question for everyone to ask themselves during a recession, it looms even larger in the minds of SaaS CFOs.
Your cash burn rate (CBR) shows how quickly you’re burning through your financial resources. The equation used to find your CBR is:
CBR = Cash / Monthly Operating Expenses
Your CBR is measured in months. For instance, if you have $2,500,000 cash on hand and your monthly operating expenses are $250,000, your CBR would be ten months.
Your CBR is all about maximizing and stretching your dollars and cents as far as they’ll go. Be sure to take a thorough look at every aspect of your daily operations to see where you might be able to trim the fat.
A great way to do that is to automate every aspect of your department that you can. Board members and investors will want to know that you’re doing everything possible to cut costs during hard times.
Take It Month By Month
When the economic seas start to get rough, it helps to narrow your time horizon. Slowing down and taking everything one month at a time can help your entire team operate more optimistically and effectively.
Your monthly recurring revenue (MRR) is the foundation of your annual recurring revenue (ARR). So it pays, literally and figuratively, to preserve your MRR in any way you can.
A few effective strategies for doing that include:
- Catering to the committed: Your most committed customers form the backbone of your ongoing revenue. Showing a bit of direct gratitude can go a very long way. Consider special offers or perks for members who stay with you for specific periods of time and tactics of that nature. Everyone loves feeling appreciated.
- Offering intro discounts: If your potential customers get the recession jitters and new signups start to drop, don’t despair. It’s human nature to perk up at a great deal: offer some.
- Sway the fence-sitters: Have someone on your team comb through reviews and other user-generated content related to your brand. See what you find in common about features or benefits your service might be lacking in the minds of your customers. Address their concerns and proactively make it known that you are.
Choose and use one of these strategies (or combine them), and you should see an uptick in your MRR relatively soon.
Hard Times Call For Smart Teams
In the world of SaaS accounting, there’s no smarter long-term choice than opting for automation. We can help you optimize practically every facet of your department to thrive for years to come.
by One Vision | Nov 16, 2023 | Blog
If you’re using Salesforce, congratulations, you’re in good company. They bill themselves as the world’s number-one CRM platform and rightfully so. I’ve been both a Salesforce user and administrator for more than 20 years, though the latter is not part of my current role. I’ve met and spoken with Mark Benioff, and he is a true mensch.
Now, if you’re using Salesforce along with QuickBooks or are considering this, we need to talk. Some of us recall the Salesforce tagline “No Software” as it’s a cloud-based software-as-a-service offering. Unlike Salesforce, QuickBooks started out as desktop software and indeed many of its users are on the desktop version while others use QuickBooks Online. Besides where the platform resides, there are other major differences as QuickBooks Online delivers less functionality than the desktop version. And if you want to connect QuickBooks to Salesforce, your options are confusing at best.
QuickBooks offers its own Salesforce connector for QuickBooks Online Advanced. Look at its current customer ratings, which as of this writing scores a 2.6 out of 5, with comments such as:
- “It doesn’t work at all. Unable to import enough data, seems can’t even import more than 5. A waste of money.”
- “Randomly misses certain fields for some customers and sometimes doesnt (sic) even import the opportunity no matter what you do.”
- “The integration is extremely poor, it doesn’t work properly. It creates sales drafts for every opportunity that gets edited, even though the settings are configured to only bring in an opportunity once it is closed. It creates drafts for old opportunity records every time you edit an old opportunity, or merge an account with old opportunities.”
- “Terrible documentation, no support (not only that – they purposely obfuscate), a complete mystery to make it work properly. Look elsewhere.”
Those are direct quotes from QuickBooks customers using its connector to Salesforce. Of course, using the QuickBooks built-for-purpose connector from Intuit isn’t the only option as there are dozens of third parties offering much higher-rated connectors to Salesforce. This begs the question: Why doesn’t Intuit offer a solid connector to Salesforce? Why force customers to add yet another solution to their financial tech stack, instead of making it easy?
Part of the problem goes back to the very nature of Salesforce and QuickBooks. One is a true cloud platform, the other is software retrofitted for the cloud. When it was released, QuickBooks wasn’t designed for use with an application programming interface (API), since it was single-instance desktop software.
Speaking of instances, let’s consider that QuickBooks can’t handle multiple entities. Each entity needs its own instance of QuickBooks. As it is, multiple-entity consolidations can take hours to days to complete because the data from each entity must be exported and manually combined in spreadsheets regardless of any automation within a unique instance. Now it gets more problematic when you consider connecting multiple instances of QuickBooks to a single instance of Salesforce. What a mess, and you’re not going to go there.
Connecting QuickBooks to Salesforce – Why?
At this point, you might be thinking “is it even worth connecting QuickBooks to Salesforce?”
Let’s think about the negative consequences lacking an integration, primarily driven by cash constraints and missed revenue opportunities. Without a tight integration between the accounting system and Salesforce, it makes it harder to scale due to inefficiencies. When cash flow is tight, you can’t fund as many growth initiatives as you’d like and grow slows down. As a result, you might end up looking for additional funding to fuel growth. As well, you might find that you’re:
- Not hitting quotas/growth targets
- Experiencing flat or declining sales
- Missing customer commitments
- Unable to grow and react to market changes and opportunities
- Lacking visibility into costs, profit and loss
- Unable to maximize revenue
- Unable to optimize pricing and have ineffective discounting programs
All this creates unpleasant outcomes. Since your CRM isn’t connected to your accounting platform, you could end up losing market share, fail to meet customer needs, weaken your competitive position, miss revenue and growth opportunities, and make less informed decisions, leading to lower margins.
Instead, what if you could accelerate cash flow by 20% or more? How about saving scores of hours each month by not rekeying contracts, orders and projects, as well as eliminating manual billing? Or scaling billing 100% to 400% without increasing headcount?
This requires application integration that gives you and other stakeholders visibility and access to information at the right time. It also requires business-process automation and a modern, scalable integration platform.
With the right integration, you can streamline and automate the entire quote-to-cash process. Salesforce quotes can be turned into orders with a single click. This automatically triggers invoicing, ASC 606 revenue recognition and expense amortization for subscription-based services such as health clubs, internet service, phone contracts and SaaS. An immediate bidirectional synchronization between Salesforce and your financials allows you to maintain billing, revenue recognition and receivables in your financial platform while maintaining orders, contracts, projects, changes, and renewals in Salesforce. Pricing, billing and payments are easily visible to salespeople. Everyone stays up to date—without time-consuming rekeying of information, phone calls or emails, or jumping between systems.
Automating quote-to-cash increases sales and services productivity with:
- Creation and modification or orders, projects and contracts within Salesforce
- One-click conversion
- Email templates and notifications for renewals
- Automatic generation of renewal sales opportunities
- Increased visibility
- Support of reseller workflows
With Salesforce Chatter integration, collaboration should improve. A common view of contacts, accounts, products, prices, orders and contacts will improve efficiency. This will help you meet or exceed business-plan objectives; exceed customer expectations; improve communication, visibility and collaboration; and create a positive company culture.
You can track success with metrics that include:
- Time to market
- Net promoter score and percentage of repeat customers
- Average revenue per account
- Percentage of increased sales per customer
- Days sales outstanding
- Time to cash
- Quarter-over-quarter and year-over-year revenue increases
Of course, you can’t do any of this with a clunky integration between QuickBooks and Salesforce. First, you need to be on a single instance of QuickBooks, then choose the right one of dozens of the connectors out there (since QuickBooks’ own connector doesn’t work), and then more than likely engage with their professional services teams to map everything out so the connector works for your environment.
Fortunately, there’s a better solution than trying to connect QuickBooks to Salesforce. Here at Sage Intacct, we’ve built a hardened integration that allows our cloud-native financial management platform to connect directly into Salesforce. It’s as simple as point-click-connect. Our customers report 30% to 75% shorter order and quote-to-cash cycles, DSO improvement and some report millions of dollars in accelerated cash flow. Our Integration is prebuilt on the Salesforce platform, so there’s no need for expensive third-party integration, IT support, upgrades or custom consulting. It comes with our “Buy with Confidence” guarantee. So, instead of playing go-between with vendors, you can stay focused on your business.
Not sure what to do? Review the advantages of connecting your financial system with Salesforce as I’ve outlined here. Your path will be clear after that.
