SAAS-Specific Financial Reports for a Tech Company to Improve Business Performance
SUMMARY
By implementing a comprehensive report that tracks key SaaS metrics, the small tech company could gain insights into their financial performance, identify key drivers of subscription revenue, and identify areas for improvement.
The report was particularly useful in updating product portfolio strategies and optimizing the subscription renewal process. By tracking user churn and CAC/CLTV metrics, the company could also assess the overall health of their SaaS business and set measurable business objectives. This case study is a good illustration of the importance of data-driven decision-making in the SaaS industry.
Challenge
The management of a small tech company sought to establish a SAAS-specific financial report encompassing historical and current data. Given the diverse revenue streams, the company emphasized subscription revenue from SAAS products. However, the existing CRM needed a dedicated subscription revenue report, and historical sales data was marred by ambiguities and inconsistencies, stemming mainly from lax CRM procedures and incomplete customizations.
Solution
Tools
Given the constraints of time and resources, Excel and the existing CRM (Microsoft Dynamics) were chosen as tools.
Approach
The consultant inspected the CRM data for integrity and accuracy, subsequently refining it. Necessary views were crafted in the CRM by the consultant. The report was generated in Excel via a dynamic spreadsheet that interfaced directly with multiple CRM views, facilitating an instantaneous report update and amalgamating data from various tables. To safeguard data validity, tools for cross-validation were designed.
Metrics
The report yielded pivotal SAAS metrics for any historical or current duration, including:- Annual Recurring Revenue
- New subscription revenue
- Subscription renewal revenue
- Customer Acquisition Cost
- Customer Lifetime Value
- User churn
- Upcoming subscription renewals
Data Presentation
Data was presented summarily and broken down by product or customer segment. A combination of pivot tables, regular tables, and graphical representations was employed for clarity. Further, several Dynamics CRM dashboards were established for real-time data analysis.
Results and outcome
- Present financial performance
- Past financial performance
- Product and customer segment contributions to subscription revenue
In particular, the last one was used to update product portfolio strategies.
The report's data was pivotal in routinely analyzing the causes behind subscription cancellations and user churn. This analysis led to recommendations: - To introduce and monitor new metrics related to product usage, downtime, and support requests
- To initiate a routine practice of monitoring customer satisfaction
The "upcoming subscription renewals" data aided in: - Refining efforts toward the subscription renewal process
- Stabilizing and forecasting renewal revenue
Consistent tracking of User churn and CAC/CLTV metrics was instrumental in assessing the overall health of the SAAS business and defining tangible business objectives.