topic Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert in 📅 Events

[Now Closed] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

maggiebutler — Mon, 28 Sep 2020 00:09:14 GMT

This AMA is now closed. However, the resources live on! See below for the presentation and check out the Q&A in the thread for more.

Resources: Click here for the live webinar recording and click here for the separate slide deck.

Big news: Our in-house expert on SaaS economics is taking our for-employees-only training on the unit economics of our business public for the first time ever! During the event, Isabelle Bensimon will explain the unit economics of a SaaS business model and how these fundamental metrics feed into setting HubSpot’s annual plan.

Resources: Click here for the live webinar recording and click here for the separate slide deck.

During September, you can upvote questions you want answered below or leave your own. Here are some topics you can ask Isabelle about:

SaaS business models
LTV
CAC
NNMRR
PPR
Churn
C$R
RR
Install base metrics
Annual Planning

Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

jeyso10 — Tue, 18 Aug 2020 21:33:48 GMT

Thanks Isabelle for taking the time. Of all of the metrics you will cover, which one do you think is the "most important" or the one we should focus on the most?

Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

walterw — Tue, 18 Aug 2020 21:35:21 GMT

I know of at least four ways to measure Churn...interested to see HubSpot's way

Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

RafiPN — Wed, 19 Aug 2020 02:13:34 GMT

I'd love to see CAC cost for channels that don't directly have a cost associated like organic, direct, and referral traffic.

Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

SalesIsScience — Wed, 19 Aug 2020 13:14:35 GMT

Using Hubspot as our CRM we struggle to easily surface many of these data points. Can you help us see where to add data so that we can report within Hubspot on things as simple as CAC, LTV, etc.

Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

LynetteRadio — Wed, 19 Aug 2020 14:11:28 GMT

Thank you SO much for hosting this! There is so little info online or otherwise about SaaS financial structures. I'd like to hear more about churn rates and averages in different industries.

Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

ParkerShort — Wed, 19 Aug 2020 17:14:54 GMT

I'm excited to learn more about these. My question is one we run into with a lot of SaaS clients - when people upgrade, do you try to capture that in the CRM, to help with LTV calculations? Or is that purely a finance function and shows up in an accounting/ERP system? Especially with smaller SaaS firms, we're often trying to figure out how to track accounts that grow on their own. Maybe you do this via the recurring revenue module?

Thanks!

Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

MonikaS — Wed, 19 Aug 2020 17:21:04 GMT

I am curious about how do you handle the free plans and do you set up some goals to upgrade them into paid customers.

Re: [Registration Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

MichalSchreiber — Thu, 20 Aug 2020 07:18:34 GMT

I would love to know which function within the company is responsible to present and go over these metrics and what's the cadence (monthly/ quarterly/ yearly) and why.

Re: [Registration Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

AndyCampbell — Thu, 20 Aug 2020 12:42:59 GMT

What methods do you use to determing pricing for SaaS, especially when doing an initial launch?

Re: [Registration Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

artruojain — Thu, 20 Aug 2020 17:56:59 GMT

When are this unit economics a relevant metric for an early stage startup? First day? When should we consider them as a truth instead of a first guess?

Re: [Registration Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

GeorgeGabriel — Fri, 21 Aug 2020 13:54:59 GMT

Hi! Would it be possible to have all of the jargon defined? Maybe even a little glossary of terms:

LTV
CAC
NNMRR
PPR
Churn
C$R
RR

Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

GeorgeGabriel — Fri, 21 Aug 2020 13:58:34 GMT

...or the top 2-3, if that gives a more nuanced answer.

Re: [Registration Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

sharonlicari — Wed, 02 Sep 2020 16:36:00 GMT

Hey guys I want to bring this event to your attention! I think you have so much to add here 🙂

@JCSalesOps @jessewragg @JoeAvsource @Jonno_Price @MichaelEstep1 @doyleslayton @s-stringa @MAoperations @duanek @MMarky

Thank you

Sharon

Re: [Registration Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

ibensimon — Tue, 08 Sep 2020 11:57:19 GMT

@GeorgeGabriel wrote:
Hi! Would it be possible to have all of the jargon defined? Maybe even a little glossary of terms:
LTV
CAC
NNMRR
PPR
Churn
C$R
RR

@GeorgeGabriel Yes, check these out below - we'll also cover them next week. Hope to see you there.

- LTV = Lifetime Value= the total dollars that you expect to receive from a Customer over its entire "lifetime" as a paying Customer.
- CAC = Cost of Acquiring a Customer=Total Sales and Marketing cost to acquire one customer.
- NNMRR =Net New MRR= total amount by which the install base increases each month (netting our New/Upgrade MRR against our Downgrade/Cancellation MRR).
-PPR = Productivity per Rep=Average amount of MRR that each sales rep generates each month (more on this next week... we calculate this in a specific way at HubSpot)
- Churn = Lost MRR from customers who cancel (or downgrade, depending on how inclusive you are with your definition).
- C$R = Customer $ Retention = a metric you can use to measure churn. C$R tells you what percent of the install base retains each month (doesn't cancel). This rate is annualized (hence the 12 power). A C$R rate of 50% means that, for every $100 in our install base, we will retain $50 of those dollars at the end of one year.
- RR = Revenue Retention = Rate to evaluate whether or not MRR from existing customers has increased or decreased, if you compare the upgrades we received to the downgrades and cancels. If this rate is greater than 100%, it means that the MRR from our existing customers is increasing, on average.

Any questions about these metrics in particular? Let me know...

Re: [Now Open] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

ibensimon — Tue, 08 Sep 2020 11:58:30 GMT

@walterw wrote:
I know of at least four ways to measure Churn...interested to see HubSpot's way

@walterw Great, we're going to talk about how HubSpot does this next week. Come with questions! See you there

Re: [This Week] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

jpalarcon — Tue, 15 Sep 2020 14:51:50 GMT

Hi @maggiebutler

The easy question

In your consideration, what are the best strategies or most important KPIs / points to make a good annual planning and forecasting?

The hard question

To calculate the Customer Lifetime, LTV (and consequently the LTV: CAC Ratio) we experimented with different ways of calculating the churn, because due to the economic reality of our country (Argentina), we must make price adjustments for inflation at least 2 times per year.

1. Net MRR Churn Rate
Considering all expansion and contraction of revenue. So the price adjustments generate negative churn for us, and break our other metrics.

2. Net MRR Churn Rate (whitout princing)
Considering all expansion and contraction of revenue without the adjustments to try to have a more stable metric.

3. Gross MRR Churn Rate
Considering only the revenue contraction.

4. Customer Churn
It would be the most viable option but we lose sight of the revenue for the LTV.

So,

To calculate the Customer Lifetime, we use the Customer Churn and to calculate the LTV we use the Gross MRR Churn Rate, since when using the Customer Churn, we see that the LTV grows significantly and we are not sure that it is a realistic value.

(We perform these calculations in both USD and local currency, and we continue to have the same issues)

Could you give us any suggestions on this?

Re: [This Week] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

kevingiorgis — Thu, 17 Sep 2020 16:36:39 GMT

Is there a way to automatically track Units and Economics on Hubspot?

Re: [This Week] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

msibnseddik — Thu, 17 Sep 2020 16:41:49 GMT

For a startup that has a yearly subscription, what proxy to use instead of waiting years?

Re: [This Week] Ask Isabelle Anything: HubSpot's SaaS unit economics expert

EverettBrady — Thu, 17 Sep 2020 16:45:48 GMT

Are there recommended tools or methodologies for gathering these metrics?