Saas Metrics Canvas — A Space-Like, Visual, Advanced and Detailed Approach to Track Saas Metrics

Saas Metrics Canvas — Visual Approach to Track Saas Metrics

“Startup Metrics Canvas”

After going through most of the startup and scaleup metrics posts from experienced VCs and Entrepreneurs, I’ve created a visual summary (with some additions of mine own) for the way Startups and Scaleups should track their metrics in an advanced and detailed approach.

This is a Metrics Canvas, so here, the company is assumed to be already in operations, and it has gone through the Customer Development Model (Lean Launchpad), and has already created it’s Value Proposition Canvas and it’s Business Model Canvas. The company is assumed to have a product and a product-market fit. The Metrics Canvas comes after all that. Having said that, the Metrics Canvas can still help in product and customer development by adapting to what the metrics are continuously telling us.

This post explains my visual canvas for Sass Metrics, the “Saas Metrics Canvas”. I will start with the basics by introducing the Canvas components and then explain the advanced overall canvas as I go deeper.

I am starting with Saas for now because there has been a lot of resources from fellow VCs and Founders who have enriched the community with detailed explanations of Saas metrics. I hope that soon I will be able to add more posts on other types of companies such as eCommerce, Mobile Apps, Hardware, etc…

In this post, I assume that you are familiar with all Saas Metrics. If not, please read SaaS Metrics 2.0 for David Skok before you continue ready.

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“Saas Metrics Canvas”

For a Saas company, it all goes down to 3 main activities in any step on the “Customer Path” (more on customer path later on in this post):

• Acquire
• Retain
• Convert

It’s what I call the “ARC Cycle”. A Saas company has many (if not endless) ARC Cycles during its “Customer Path”.

This can be expressed visually by the following Sphere:

Dots:

Every Dot inside the Sphere is a Customer.

Sphere Size:

The Sphere Size is a function of customer volume, i.e.,

• More customers -> Bigger Sphere, or
• Less customers -> Smaller Sphere.

Arrow Size:

The Arrow Size is a function of moving volume in any given point in time, i.e.,

• More customers moving -> Bigger Arrow, or
• Less customers moving -> Smaller Arrow.

Sphere Inputs:

The input to the sphere is the “Acquire” activity, which is mainly the marketing and advertising functions in the company, in addition to referrals.

• When you acquire a new customer, you add him to the sphere of the first ARC Cycle

Inside The Sphere:

Once in, the “Retain” activity is basically the content, customer service and product development functions in the company.

• When you retain a customer, you keep working on making him happy and ready to convert.

Sphere Outputs:

The output of the sphere is the “Convert” activity, which is mainly the sales (pre-sales, sales, and post-sales) function in the company.

• When you convert a customer, you move him from the first ARC Cycle to the next one.

Sphere Drainage:

Churned customers drain out of the sphere when the company loses them.

Types of Customers to Track Inside Every ARC Cycle:

• Dark Red Dot: Hot customers, who are ready to convert (you need to figure out how to help them convert)
• They create hot referrals
• Light Red Dot: Regular retained Customers (you need to figure out how to make them happier)
• They create cold referrals
• Gray Dot: Cold customers, who are about to churn (you need to figure out what is upsetting them before they leave)
• They create deferrals!

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Simplified Canvas

If we assume that the company has:

• Only one market to operate in
• Only one customer segment
• Only one product
• Free trial period (or free version)
• Only one pricing plan

Then the diagram below represents the simple Saas Metrics Canvas.

FOAM: (Fetch, Obtain, Activate, Monetize)

Fetch ARC Cycle: (Marketing Team)

It all starts with fetching customers (inbound and outbound marketing). You want them to notice your marketing efforts, you want them to see your ads, ask an existing customer, read a review about your product on other websites, read a comment or an answer by your team for a post or a question someone asked, somewhere, about a problem you’re solving, or maybe an interview with the founder. This is how you Acquire them in this cycle, by just noticing you.

After you get them in your fetch zone, you Retain them in this cycle by having them come back to read your team’s comments, answers, or more reviews or videos about your product. They might come see your ad, or your review, but if it’s not good enough to convince them to click, they will churn, and you will lose whatever you spent so far (in the Fetch Cycle).

Once they click on that link or that ad, you Convert them. You take them to your own landing page on your own website, which starts the next ARC cycle. You’ve just created qualified leads for the Content Team.

Obtain ARC Cycle: (Content Team)

Once your customers land on your website, your job becomes to obtain their data. You offer them good convincing content on their problem and your solution (text, pictures, videos) for them to give you their data! You try to get everything you can starting from email addresses, to names, phone numbers, locations, etc… This is how you Acquire them in this Cycle.

You try to Retain them by working hard on engaging with them via an email news letter, a YouTube channel, notifications, etc… You work on having them keep coming back for as long as it needs for them to be ready to click on the next call-to-action. If nothing works and they leave, you try again with retargeting. If nothing works, they churn, and you lose what you’ve spent so far on acquiring them (in both cycles: Fetch and Obtain)

The call-to-action could be: See a live demo or Try it now for free. Once they click, you Convert them to the next ARC cycle, i.e., you create qualified leads for the pre-sales team.

Activate ARC Cycle: (Pre-Sales Team)

You get the leads from the content team, but now to Acquire those customers into this cycle, you need to make it easy for them to sign up and access the free version of the product, or easy to get an appointment for the demo, etc..

Then to Retain them in this cycle, you have to make sure to manage their expectations and that they get a happy experience. You also try to make them more active in using the product and discovering the best of it. Use tips, guided product tours, tutorials, etc… Otherwise they churn and you lose what you’ve spent so far (in all 3 cycles: Fetch, Obtain, and Activate)

To Convert them to the next step in the customer path, you need to encourage them to take the next action, which could be talking with a chat agent, or attending a webinar, or asking for a price quote.

Monetize ARC Cycle: (Sales Team)

You take the leads from the pre-sales team and Convert them into paying customers. The sales magic should happen here.

Then to Retain them in this cycle, you have to make sure to manage their expectations and that they get a happy experience. You also try t make them more active in using the product and discovering the best of it. Use tips, guided product tours, tutorials, etc… Otherwise they churn and you lose what you you’ve spent so far (in all 3 cycles: Fetch, Obtain, Activate, and Monetize)

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Advanced Canvas

The Expanded Monetize ARC Cycle: (Post-Sales Team / Up Selling)

In the previous case, the Monetize cycle ended by selling the product. But here, you need to Convert existing paying customers to the Up Sell ARC cycle and have them upgrade to the next pricing plan.

Let’s assume that the company has:

• One market
• One customer segment
• One product (A)
• Free trial period (or free version)
• Four pricing plans

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Customer Path Probabilities:

An important note here regarding tracking where the customers go next in their own paths within the customer journey. You need to include in your Metrics Canvas all the probable paths a customer may take.Below is an example of this for the previous case.

For example, a customer may buy the first plan first, then jump to the fourth directly without passing by the second or third pricing plans/packages.

This will be even more important later on when the company has more product lines with multiple pricing plans for each product.

In such a visual model, you can still collapse all the sell and up-sell ARC cycles to view them all as one Monetize cycle and create the sales metrics for this particular product:

The Expanded Monetize ARC Cycle: (Post-Sales Team / Cross Selling)

The in the previous case, the Monetize cycle ended by up-selling. But here, you need to Convert existing paying customers to the Cross Sell ARC cycle and have them buy another related product, and then up-sell them more in this new product line as well.

Let’s assume that the company has:

• One market
• One customer segment
• Two products (A and B)
• For the core/main product (A), there is a free trial period (or free version)
• For each product, there is Four pricing plans

You can still collapse all the sell, up-sell, and cross-sell ARC cycles to view them all as one Monetize cycle and create the overall sales metrics for all products:

I guess you get it now, the cycles might never end if you keep adding more features to existing products, or creating new related products, then more features, etc…

More Than One Customer Segment:

Let’s assume that the company has:

• One market
• Two customer segments
• Two products (A and B) per segment
• For the core/main product, there is a free trial period (or free version)
• For each product, there is Four pricing plans

In such a visual model, you can also collapse all the segments together in one market, and create the metrics for this market:

More Than One Market:

Let’s assume that the company has:

• Two markets
• Two customer segments per market
• Two products (A and B) per segment
• For the core/main product, there is a free trial period (or free version)
• For each product, there is Four pricing plans

Is this complicated enough for you? If not, I guess you got the point. It is easy to create even much more complicated scenarios with this Saas Metrics Canvas! But let’s stop here and get into more nasty details about the metrics themselves.

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Inner Referrals:

Some existing cross-sold customers (who purchased two or more products from your company) might interact with other existing customers who use only one product of yours, say by writing a review or answering a question, which might encourage the 1-product customers to buy the second product or just upgrade to the next pricing plan. You need to encourage and track this among your customers. This could be done by creating an internal community for your customers to interact with each other. With such an open canvas, you can easily track such inner referrals by showing soft-links between customers on the canvas. It will help you better understand the customer paths and behaviors.

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Let’s combine all the nested paths into one Sphere that represents the overall company with it’s markets, segments, products, and customers:

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Sales Capacity

Sphere Size Limit is basically the Cycle’s Capacity.

• For the Fetch cycle, Capacity will be the traffic or bandwidth that your servers can handle, and the marketing capacity may be the reach you can get given the limited marketing budget you have.
• For the Obtain cycle, it’s the content team capacity.
• For the Activate cycle, it’s the pre-sales team capacity,
• For the Monetize cycle, it’s the sales team capacity,
• Here you can track the Saas metrics measured for sales such as:
• No. of FTE Sales Reps
• Sales Capacity
• Productivity per FTE Sales Rep
• and finally, For the up-sell and cross-sell, it’s the post-sales team capacity (same as sales team capacity metrics)

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The Most Important Part: The Detailed Metrics

• Per Customer Metrics:

Every Dot (a customer) inside a sphere, is actually a sphere on its self containing that particular Customer’s Profile. That includes customer data: Contacts, behavior, history with the company, customer lead source (were did he come from), Customer Path (previous ARC Cycles he went went through, and expected ARC Cycles he will go through during his Lifetime with the company), how much time is he retained in this ARC Cycle, this particular customer metrics (his CAC, his MMR/ARR, his LTV, his NPT, his CES, his Months upfront, etc…), and other data.

All the above metrics and others can be easily now tracked on a totally new level and as detailed as you want to go:

• Per ARC Cycle Metrics: you can get all the capacity metrics for each cycle and sub-cycle separately and/or combined.
• Per Pricing Plan/Package Metrics: Inside the monetize ARC cycle, it’s already split into Sell Cycle, Up-Sell1, Up-Sell2 etc… For any given Sell Cycle you can get the package’s MMR/ARR, avg. CAC, avg. LT, avg. LTV, avg. CES, NPT, customer churn (& rate), revenue churn (& rate), etc…, in addition to lead sources, most used functions, and many other.
• Per Product Metrics: You can combine all inner up-sell cycles into one monetize cycle for a specific product and get the weighted averages of all metrics to come with that product’s metrics.
• Cross-Sell Metrics: You can do that by tracking the cross-paths of customers and get a weighted average of all cross-sells.
• Per Segment Metrics: by combining all that segment’s inner metrics together
• Per Market Segment:by combining all that market’s inner metrics together

And of course, the grand total of all combined together would be:

• Company Overall Metrics: which is basically the metrics we all used to calculate traditionally. But now you get them as a result of weighted avg. of all inside metrics!

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Why A Visual Detailed Metrics Canvas?

With such a canvas that tracks all activities in the company and represent them visually as a function of their metrics-numbers, you can point out the most active (the reddest) and the least active (the grayest) parts of your product/price matrix, and focus more on it. You can also point out the most problematic conversions to work on them, or maybe work on product features related to them. All visually.

It’s like watching the space live in real time, and noticing at any given point of time what is happening in the the company, where is more light and movement and where is less, where are the bottle necks and how big of a problem they are. You can click on any sphere to expand it and look inside at each component’s metrics, or you can collapse any group of sphere to have the bigger picture.

As a quick example, if you “see” more movement coming to the second product, you will know exactly when to increase your sales capacity for that product, and by how much!

You can also automate notifications whenever a pre-defined event happens, or even better, automate actions whenever a certain milestone is met.

I will leave the rest for your imagination!

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Help Build An Open-Sourced Tool For The Saas Metrics Canvas

If you’ve continued to read all this, and you’re a software engineer, a data scientist, a metrics analysts or a VC who’s obsessed with numbers, I could use your help to build this tool as a free open-sourced platform for everyone to use. Let me know.

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