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To measure sales efficiency, SaaS startups should use the 4×2 – TechCrunch

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Once you’ve found product/market fit, scaling a SaaS business is all about honing go-to-market efficiency.

Many extremely helpful metrics and analytics have been developed to provide instrumentation for this journey: LTV (lifetime value of a customer), CAC (customer acquisition cost), Magic Number and SaaS Quick Ratio are all very valuable tools. But the challenge in using derived metrics such as these is that there are often many assumptions, simplifications and sampling choices that need to go into these calculations, thus leaving the door open to skewed results.

For example, when your company has only been selling for a year or two, it is extremely hard to know your true lifetime customer value. For starters, how do you know the right length of a “lifetime?”

Taking one divided by your annual dollar churn rate is quite imperfect, especially if all or most of your customers have not yet reached their first renewal decision. How much account expansion is reasonable to assume if you only have limited evidence?

LTV is most helpful if based on gross margin, not revenue, but gross margins are often skewed initially. When there are only a few customers to service, cost of goods sold (COGS) can appear artificially low because the true costs to serve have not yet been tracked as distinct cost centers as most of your team members wear multiple hats and pitch in ad hoc.

Likewise, metrics derived from sales and marketing costs, such as CAC and Magic Number, can also require many subjective assumptions. When it’s just founders selling, how much of their time and overhead do you put into sales costs? Did you include all sales-related travel, event marketing and PR costs? I can’t tell you the number of times entrepreneurs have touted having a near-zero CAC when they are just starting out and have only handfuls of customers — which were mostly sold by the founder or are “friendly” relationships.

Even if you think you have nearly zero CAC today, you should expect dramatically rising sales costs once professional sellers, marketers, managers, and programs are put in place as you scale.

One alternative to using derived metrics is to examine raw data, which is less prone to assumptions and subjectivity. The problem is how to do this efficiently and without losing the forest for the trees. The best tool I have encountered for measuring sales efficiency is called the 4×2 (that’s “four by two”) which I credit to Steve Walske, one of the master strategists of software sales, and the former CEO of PTC, a company renowned for its sales effectiveness and sales culture. [Here’s a podcast I did with Steve on How to Build a Sales Team.]

The 4×2 is a color-coded chart where each row is an individual seller on your team and the columns are their quarterly performance shown as dollars sold. [See a 4×2 chart example below].

Sales are usually measured as net new ARR, which includes new accounts and existing account expansions net of contraction, but you can also use new TCV (total contract value), depending on which number your team most focuses. In addition to sales dollars, the percentage of quarterly quota attainment is shown. The name 4×2 comes from the time frame shown: trailing four quarters, the current quarter, and the next quarter.

Color-coding the cells turns this tool from a dense table of numbers into a powerful data visualization. Thresholds for the heatmap can be determined according to your own needs and culture. For example, green can be 80% of quota attainment or above, yellow can be 60% to 79% of quota, and red can be anything below 60%.

Examining individual seller performance in every board meeting or deck is a terrific way to quickly answer many important questions, especially early on as you try to figure out your true position on the Sales Learning Curve. Publishing such leaderboards for your Board to see also tends to motivate your sales people, who are usually highly competitive and appreciate public recognition for a job well done, and likewise loathe to fall short of their targets in a public setting.

A sample 4×2 chart.

Some questions the 4×2 can answer:

Overall performance and quota targets

How are you doing against your sales plan? Lots of red is obviously bad, while lots of green is good. But all green may mean that quotas are being set too low. Raising quotas even by a small increment for each seller quickly compounds to yield big difference as you scale, so having evidence to help you adjust your targets can be powerful. A reasonable assumption would be annual quota for a given rep set at 4 to 5 times their on-target earnings potential.



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Google TV app to include deprecated Android TV Remote app

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Just like with its messaging platforms, Google hasn’t exactly been consistent about its digital media ecosystems. Google News was once Google Play Newsstand which was once Google Play Magazines and Google Currents combined. Google Play Music was supplanted by YouTube Music and now the Google Play Movies & TV app has been renamed Google TV, which is different from the Google TV “skin” based on Android TV. To be fair, Google does try to consolidate things, like retiring an obsolete Android TV remote control app and shoving it into the new Google TV app.

It probably won’t be long before Google consolidates its video-on-demand platforms and branding into a single “Google TV”. Whether that will replace Android TV, just as Wear OS replaced Android Wear, is still an open question but, at least for now, Google TV seems to be focused on the user interface, viewing experience, and, of course, its digital content store.

The old Google Play Movies & TV Android app that Google TV replaced mostly focused on those as well but it seems it’s being primed to do more soon. 9to5Google found traces of functionality that refers to a directional pad as well as enter and back buttons. There’s also mention of pairing the phone to an Android TV.

These operations are already found on the standalone Android TV Remote Control. Although the app still exists on the Google Play Store, it hasn’t seen an update since 2017. Considering Google may be moving to put all its Android TV and videos in one basket, it makes sense to retire such a standalone app and just incorporate its pretty basic features into a single Google TV app.

At the moment, these new features don’t work at all but it does hint at the direction Google might be heading for Google TV. While it might be nice to have everything under a single Google TV banner, there is also the overlap with YouTube and YouTube TV that could make some wary of another Google Play Music scenario in the near future.

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ASUS ROG Phone 5 might have more RAM you’ll ever need for now

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How much RAM do you need for a smartphone? Disregarded the old joke about 640KB of RAM for PCs in the late 80s, smartphone memory seems to have stalled at 12GB in the past year or so with very few exceptions. That said, it seems that high-end smartphones are ready to push the envelope again with the ROG PHone 5 going beyond the 16GB that you’d find on the Galaxy S21 Ultra 5G this year.

Just for a quick refresher, RAM is that volatile (meaning it loses data when power goes out) memory space that’s used not for holding data you want to keep but for programs to stay while running. To keep it overly simple, the more RAM you have, the more programs you can have running at the same time before the operating system starts killing unused programs to make room for more. This is why phones with less RAM often have problems multi-tasking, forcing apps to be restarted when you switch back to them because they were killed in the background.

That is true for normal apps but is even more true for games that have large pieces of code and data that need to be kept in memory to run fast and smoothly. It’s really no surprise, then, that the first smartphones that boasted 16GB of RAM were gaming phones like the Lenovo Legion Duel (or Pro) and the ASUS ROG Phone 3. According to a Geekbench sighting, the ASUS ROG Phone 5 will be taking that to the next level even.

The benchmark notes a RAM size of 16.97GB which, given how these numbers work, suggests that the phone could actually have 18GB of RAM. That is quite a large amount of RAM that, even with today’s demanding mobile games, might sound almost too much. Then again, ASUS offers various configurations for its ROG Phones so this could simply be the top-end variant.

The entry doesn’t have other details to offer but we can already piece some of those together. The phone will undoubtedly take advantage of all the power that the Snapdragon 888 has to offer, for example, and DxOMark’s recent audio benchmark revealed not just the return of the 3.5mm headphone jack but also what seems to be a display on its back purely for branding purposes. The ASUS ROG Phone 5 is slated to debut on March 10 so Android gamers won’t have too long to wait for confirmation.

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NVIDIA SHIELD TV SmartThings Link will become unusable in July

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A smart home hub is only as useful as the number of languages it can speak. Given the number of disparate smart home platforms available today, it pays to either understand all those or at least have the ability to learn to communicate with other smart home products. That was practically what the SmartThings Link USB dongle did for the NVIDIA SHIELD TV but that dongle itself will lose its ability to speak the SmartThings language when Samsung upgrades its ecosystem in June.

The SmartThings Link dongle goes way back in 2017 when Google, NVIDIA, and Samsung seemingly sang in unison to bring their smart home ecosystems to a single device. The NVIDIA SHIELD TV, which ran Android TV, not only got support for Google Assistant but also Samsung SmartThings via that USB stick. It may not have exploded as the companies would have hoped but this recent news shows that there will be quite a number of disenfranchised users who banked on that setup.

Janko Roettgers on Twitter shared an email from Samsung detailing the end of times for the SmartThings Link. Starting June 30, 2021, the device will be rendered useless and the NVIDIA SHIELD TV and SmartThings devices will no longer be able to communicate with each other. Additionally, NVIDIA’s Android TV console will also lose control of any other Zigbee or Z-Wave product previously connected via the SmartThings app.

Although disappointing, the writing has been on the wall since June last year when Samsung announced that it would be moving to a new SmartThings platform. A lot of devices won’t be able to make the transition, not just the SmartThings Link, as the change will require completely new hardware more than just a software update. Samsung is taking a very big risk in promising a more flexible ecosystem while potentially hanging hundreds out to dry.

Samsung seems to be offering refunds for some or discounts for its new SmartThings Hub but this still means that SHIELD TV owners won’t be able to use their device as a central smart home hub anymore. Whether Samsung takes steps to bridge the gap again is still unknown but it seems to be cozying up to Google lately so that might still happen, one way or another.

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