B2B SaaS Metrics Evolution and Usage - with Clayton Whitfield, Founder SaaSOptics

**Ray Rike** (0:00)
Hello, I'm Ray Reich, Founder and CEO of RevOp Squared, and your host of the Metrics that Measure Up podcast. We talked to a wide variety of B2B, SaaS, and Cloud thought leaders, executives, investors, and people just like you to discuss the metrics and benchmarks they use to make metrics-informed decisions. Now on to today's show. Welcome to today's episode of the Metrics It Measure Up podcast. Today, we are joined by Clayton Whitfield, founder and chief customer officer at SaaSOptics. Today, we'll be covering four key topics with Clayton. Number one, how have SaaS metrics evolved over the last 10 to 12 years? How will they evolve in the future? The top decision-making metrics for customer acquisition, expansion, and retention, and the difference between B2B SaaS metrics as leading versus lagging indicators. Clayton, please take a moment to give a brief background of your journey to becoming a guest on the Metrics that Measure Up podcast.

**Clayton Whitfield** (1:16)
Hey, Ray. Thanks. It's a pleasure to join you today. We started SaaSOptics back in 2009, so as much as we'll get into a little bit later today, I'm sure much as the market has evolved, the metrics have evolved as well, and it's something we've done from the very beginning, from the very first iteration of our software. Metrics has been a key part of that, so I guess that's kind of what's led me here today, is we've seen a lot evolve over the last few years, and we see it all the time with prospects and customers, so we have a fairly well-rounded view of the B2B SaaS world and the metrics that show up there.

**Ray Rike** (1:45)
Well, let's dive right into that because that's what our listening audience loves. We have all these metrics, and I don't really believe they've evolved that much over the last 10 years. The rule of 40, gross dollar retention, CAC ratio, magic number, CAC payback period, gross margin, customer lifetime value to CAC ratio. So my first question to you is, have you seen B2B SaaS metrics evolve much over the last 10 to 12 years since you founded SaaSOptics?

**Clayton Whitfield** (2:13)
So you raise a great point. I don't think the metrics have evolved very much. What has evolved is the markets. You get my bias here because we see this a lot. What has evolved is the market's level of comfort with it or level of understanding of those various metrics.
The metrics themselves, the ones that are named like you just called out, may not have really changed too much. But what has changed in my observation is people's level of comfort with it and their understanding of how they might be used. When we first started SaaSOptics, it was very, very rare to run into people that had their hands around through any more than maybe a couple of metrics, couple of the ones that you mentioned. They might have even been aware of some of those at the time, but they weren't very well educated on them at the time. So I'd say that's the biggest evolution is the market's level of comfort. And as you've probably discussed in the past, there's no governing body for SaaS metrics, right? Unlike accounting where those rules are pretty clear and they're pretty well published, there's no real governing body for metrics. So the market has had to kind of sort of agree on what it is over the years. So the fact that the market's a little bit more educated on those things now has sort of shown some progress in that area.

**Ray Rike** (3:15)
Wow. You just fed a bone to a dog with that comment, Clayton. That is, you said you think the understanding of these SaaS metrics has evolved over the last 10 to 12 years. And what I've found is, you know, in 2009, we had less than 5,000 B2B SaaS companies on a global basis. Today, depending on what numbers you look at, we have 40, maybe 50,000 B2B SaaS companies around the world. And so many of those are from first time SaaS founders. And what I've found is a lot of people still don't really understand the key metrics or even people who do understand the mathematical calculation. There was many different interpretations of how you do things. Are you not seeing that out there in the marketplace?

**Clayton Whitfield** (4:02)
No, that is true. You're absolutely right. You raise a great point here. I should say the understanding of the metrics seems to have evolved over time. That doesn't mean people use them well, right? You can go to Home Depot and buy a hammer, but doesn't mean you're qualified to swing it. So that doesn't mean that everybody does a very good job of using them or that they understand that they really understand the operational insight that can be derived from good deployment of their metrics. That tends to take experience. So to your point about first time founders, that is very much something we see there. They maybe have seized on something they read recently or heard from someone recently, especially if they recently raised funds and have investors pushing them one way or the other. They may have something they're focused on, but that doesn't necessarily mean that they're grasping it completely or getting their arms around how to use it very well. Yeah, so we definitely do see that. Just because the market has evolved doesn't necessarily mean that the metrics are getting properly utilized.