ARISE GTM | ARISE GTM BLOG

How A Product Performance Audit Powers SaaS & Fintech Growth

Written by Digital BIAS | Jun 22, 2024 2:44:32 PM

As a vital aspect of the ARISE™ Go-to-Market framework (Assess, Research, Ideate, Strategise, and Execute), the Assess stage holds a series of performance audits, many of which have been covered in recent blog posts.

Today, we conclude our audit series by focusing on a crucial aspect—a company performance audit, specifically examining product service and revenue performance. In this article, we delve into the significant strategic benefits of a regular performance audit and how it can reduce costs and drive your business's forward GTM motion, underlining the importance of your role in this process.

As a consultant, I’m used to running these sorts of plays, and I’m sitting here thinking about who would own this internally, maybe your CFO, COO or CRO. If you’re a smaller business, it might have to be the founders, so this article is designed to empower all those people to take charge of their business's performance audits.

How to Audit Your Marketing Sales and Customer Success Teams

When auditing marketing, sales, and customer success teams focusing on lead generation, Customer Acquisition Cost (CAC), marketing spend, technology, sales pipeline, retention rates, and upsell and cross-sell revenue drivers, it is essential to collect comprehensive and detailed data from each department. 

For marketing, gather data on lead generation campaigns, including the number and quality of leads, conversion rates, and cost per lead (CPL). Additionally, collect information on total marketing spend, budget allocation across channels, and the ROI of different marketing initiatives. 

For sales, obtain data on the sales pipeline, including the number of leads at each stage, average sales cycle length, deal values, and conversion rates. Also, gather information on the technology stack used for sales processes and its integration with other systems. 

For customer success, collect data on customer retention rates, churn rates, customer satisfaction scores, and feedback. Additionally, gather information on upsell and cross-sell activities, including revenue generated from these efforts and the effectiveness of related campaigns. 

This top line breakdown of data collection will provide a holistic view of the revenue generation process and identify areas for optimisation and improvement. Now, let’s get a little more granular on this.

How to Run a Revenue Audit on Your Revenue Operations Teams

To run a comprehensive revenue audit across marketing, sales, and customer success with a focus on lead generation, Customer Acquisition Cost (CAC), marketing spend, technology, sales pipeline, retention rates, and upsell and cross-sell revenue drivers, follow these steps:

1. Define Objectives and Scope

Clearly outline the objectives of the revenue audit. The main goal is to identify areas for improvement in revenue generation activities across marketing, sales, and customer success. Define the scope to include lead generation, CAC, marketing spend, technology utilisation, sales pipeline efficiency, retention rates, and upsell and cross-sell opportunities.

2. Data Collection

Gather comprehensive data from relevant departments:

  • Marketing: Collect data on lead generation campaigns, marketing spend, CAC, and technology tools used.
  • Sales: Gather information on the sales pipeline, average sales cycle length, deal values, and conversion rates.
  • Customer Success: Obtain data on customer retention rates, churn rates, upsell and cross-sell revenue, and customer satisfaction metrics.

3. Lead Generation Analysis

Evaluate the effectiveness of lead generation efforts:

  • Lead Quality and Quantity: Assess the number and quality of leads generated from various marketing channels. Use lead scoring models to evaluate the potential value of leads.
  • Cost per Lead (CPL): Calculate the cost of acquiring leads from different channels to identify the most cost-effective sources.
  • Conversion Rates: Analyse the conversion rates of leads to customers to determine the efficiency of lead nurturing processes.

4. Customer Acquisition Cost (CAC) Analysis

Calculate and analyse CAC:

  • CAC Calculation: Use the formula {CAC} = {Total Marketing and Sales Expenses} / {Number of Customers Acquired} to determine the cost of acquiring new customers.
  • CAC by Channel: Break down CAC by marketing channel to identify the most and least efficient channels.
  • LTV to CAC Ratio: Compare Customers' Lifetime Value (LTV) to CAC to ensure that acquisition costs are justified by Customer Revenue.

5. Marketing Spend Analysis

Evaluate the allocation and effectiveness of marketing spend:

  • Budget Allocation: Review how the marketing budget is allocated across different channels and campaigns.
  • ROI Analysis: Calculate the return on investment (ROI) for each marketing channel to identify high-performing and underperforming investments.
  • Optimisation Opportunities: Identify areas where marketing spend can be optimised to improve efficiency and effectiveness.

6. Technology Utilisation

Assess the use of technology in revenue operations:

  • Technology Stack: Review the tools and platforms used across marketing, sales, and customer success. Ensure they are integrated and provide a unified view of the customer journey.
  • Data Quality and Integration: Evaluate the quality and integration of data across systems to ensure accurate and actionable insights.
  • Automation and Efficiency: Identify opportunities to leverage automation tools to streamline processes and improve productivity.

7. Sales Pipeline Analysis

Analyse the efficiency and effectiveness of the sales pipeline:

  • Pipeline Stages: Map out the sales pipeline stages and evaluate the average time spent in each stage.
  • Conversion Rates: Assess the conversion rates at each stage of the pipeline to identify bottlenecks and areas for improvement.
  • Deal Value and Velocity: Analyse the average deal value and sales cycle length to understand the revenue potential and efficiency of the sales process.

8. Retention Rates and Churn Analysis

Evaluate customer retention and churn rates:

  • Retention Metrics: Calculate customer retention rates and identify trends over time.
  • Churn Analysis: Analyse churn rates to identify common reasons for customer attrition and develop strategies to address them.
  • Customer Feedback: Gather and analyse customer feedback to understand satisfaction levels and areas for improvement.

9. Upsell and Cross-Sell Revenue Drivers

Assess the effectiveness of upsell and cross-sell strategies:

  • Revenue Contribution: Calculate the revenue generated from upsell and cross-sell activities.
  • Customer Segmentation: Identify customer segments with the highest potential for upsell and cross-sell opportunities.
  • Campaign Effectiveness: Evaluate the success of upsell and cross-sell campaigns and identify best practices.

10. Reporting and Recommendations

Compile the findings into a comprehensive report:

  • Executive Summary: Provide a high-level overview of key findings and recommendations.
  • Detailed Analysis: Present detailed insights and data visualisations for each focus area.
  • Actionable Recommendations: Offer specific, actionable recommendations to address identified issues and optimise revenue generation activities.

By following these steps, you can conduct a thorough revenue audit that provides valuable insights into the performance of marketing, sales, and customer success functions and identify areas for improvement to drive sustainable revenue growth.

What Revenue Metrics Should You be Tracking?

Measuring revenue performance in SaaS or Fintech involves tracking several key metrics that provide insights into the business's financial health and growth potential. Here are the most critical metrics:

Revenue Growth: This metric measures the revenue increase rate over a specific period. It is essential to understand how well the company is expanding its customer base and market share. Revenue growth is calculated by comparing current revenue to past revenue and is a strong indicator of business success and investor interest.

Monthly Recurring Revenue (MRR): MRR represents the monthly predictable and recurring revenue generated from customers. It is crucial for subscription-based fintech models as it provides a clear picture of the company's revenue stability and growth potential.

Annual Recurring Revenue (ARR): Similar to MRR, ARR measures the recurring revenue annually. It helps in long-term financial planning and assessing the business's overall health. ARR is particularly important for understanding the impact of long-term contracts and customer retention.

Customer Acquisition Cost (CAC): This metric calculates the cost of acquiring a new customer, including marketing and sales expenses. Understanding CAC is vital for evaluating the efficiency of customer acquisition strategies and ensuring that the cost of acquiring customers is less than the revenue they generate.

Customer Lifetime Value (LTV): LTV estimates the total revenue a business can expect from a single customer account over the entire duration of their relationship. It helps assess the long-term value of customers and make informed decisions about marketing spend and customer retention strategies.

Churn Rate: The rate measures the percentage of customers who stop using the fintech service over a specific period. A high churn rate can indicate customer satisfaction or product fit issues, directly impacting revenue performance. Reducing churn is essential for maintaining a stable revenue base.

Net Promoter Score (NPS): NPS gauges customer satisfaction and loyalty by measuring the likelihood of customers recommending the service to others. A high NPS is often correlated with higher customer retention and revenue growth, as satisfied customers are likelier to continue using the service and refer new customers.

Average Revenue Per User (ARPU): ARPU measures the average revenue generated per user or customer. It provides insights into the business's revenue efficiency and helps identify opportunities for upselling and cross-selling.

Cash Flow: Cash flow tracks the cash moving in and out of the business. Positive cash flow is crucial for sustaining operations, investing in growth, and ensuring financial stability. It also helps identify potential liquidity issues before they become critical.

By regularly monitoring these metrics, fintech leaders can comprehensively understand their revenue performance, identify areas for improvement, and make data-driven decisions to drive growth and profitability.

What Best Practice Should I Apply to My Company Performance Audit?

Here are some best practices for conducting a product and service audit during the Assess stage of the ARISE Framework:

  1. Define clear objectives and scope for the audit. Determine what aspects of products/services will be reviewed and what the goals are.

  2. Gather comprehensive data on key metrics like:
    - Customer retention rates
    - Average lifetime value
    - Average sales cycle length
    - Average deal value
    - Monthly customer attrition
    - Revenue (ARR, MRR)

  3. Use a systematic and objective approach. Follow a predefined structure tailored to the audit scope.

  4. Involve stakeholders across the organisation, not just product/marketing teams. Get input from sales, customer support, quality assurance, etc.

  5. Review relevant documentation like product specifications, pricing information, sales materials, etc.

  6. Conduct interviews with key staff members to gather qualitative insights.

  7. Analyse the data collected to identify trends, patterns, strengths, weaknesses and areas for improvement.

  8. Use data analytics tools to process large datasets and uncover insights.

  9. Assess product quality metrics like:
    - Number of support tickets/escalations
    - Outcome success rates
    - Renewals

  10. Evaluate customer feedback and satisfaction metrics.

  11. Benchmark performance against industry standards and competitors.

  12. Prepare a comprehensive audit report with key findings and recommendations.

  13. Present results to leadership and develop action plans to address issues identified.

  14. Plan for follow-up audits to track progress and improvements.

  15. Consider using specialised audit management software to streamline the process.

The key is to take a holistic, data-driven approach that examines products/services from multiple angles - financial performance, quality, customer satisfaction, etc. The audit should provide actionable insights to drive improvements.

But what happens when your business hasn’t undertaken these before, and you need to convince your leadership of the value?

Pitching a Performance Audit to Your Leadership Team

SaaS and FinTech leaders should focus on revenue performance because it is the most direct measure of a company's financial health and growth trajectory. Key revenue metrics such as Annual Recurring Revenue (ARR) and Monthly Recurring Revenue (MRR) provide insights into the stability and predictability of income streams, which are crucial for strategic planning and investment decisions. 

By closely monitoring revenue performance, leaders can identify trends, assess the effectiveness of sales and marketing strategies, and make data-driven decisions to optimise pricing, product offerings, and customer acquisition efforts. 

Strong revenue performance enhances a company's valuation, attracts investors, and provides the financial resources needed to innovate and scale operations. In competitive industries like SaaS and FinTech, where rapid growth and market share are paramount, maintaining a keen focus on revenue performance ensures that the business remains agile, competitive, and poised for long-term success.

Convincing your leadership to allow you to perform an audit should be a no-brainer. However, you must understand how to present your findings. Let’s break that down into actionable steps.

To present the findings from a product and service audit in a compelling way, especially when the main goals are to identify areas for improvement, track performance over time, and evaluate the effectiveness of specific strategies, follow these best practices:

Presenting the Performance Audit of a SaaS or FinTech Product

1. Executive Summary

Start with a concise executive summary highlighting key findings, insights, and recommendations. This section should provide a snapshot of the most critical information for stakeholders who may need more time to review the entire report.

2. Clear Objectives and Scope

Outline the objectives and scope of the audit. Explain that the audit aims to identify areas for improvement, track performance over time, and evaluate the effectiveness of specific strategies. This sets the context for the findings and recommendations.

3. Data Visualisation

Use data visualisation to make complex data more accessible and engaging. Charts, graphs, and infographics can help illustrate key metrics and trends. For example:

  • Retention Rates: Use a line graph to show customer retention trends over time.
  • Average Lifetime Value (LTV): Present a bar chart comparing LTV across different customer segments.
  • Sales Cycle Length: Use a funnel chart to depict the sales cycle stages and the average time spent in each stage.
  • Average Deal Value: Show a histogram of deal values to highlight the distribution and identify outliers.
  • Monthly Attrition: Use a pie chart to represent the proportion of customers lost each month.
  • Revenue (ARR, MRR): Use a combination of line and bar charts to show monthly and annual recurring revenue trends.

4. Key Findings

Organise the key findings into thematic sections. Provide a brief data analysis highlighting significant trends, patterns, and anomalies for each section. For example:

Customer Retention and Attrition

  • Finding: Retention rates have declined by 5% over the past year.
  • Analysis: This decline is primarily due to increased competition and customer dissatisfaction with recent product changes.
  • Visualisation: Line graph showing retention rates over the past 12 months.

Revenue Metrics

  • Finding: MRR has increased by 10% quarter-over-quarter, while ARR has grown by 15% year-over-year.
  • Analysis: The growth in MRR and ARR is driven by successful upsell and cross-sell strategies.
  • Visualisation: Bar chart comparing MRR and ARR growth over the past four quarters.

Sales Performance

  • Finding: The average sales cycle length has decreased from 90 to 75 days.
  • Analysis: The reduction in sales cycle length is attributed to improved lead qualification processes and enhanced sales training.
  • Visualisation: The funnel chart shows the average time spent at each sales cycle stage.

5. Actionable Recommendations

Provide clear, actionable recommendations based on the findings. Each recommendation should be specific, measurable, achievable, relevant, and time-bound (SMART). For example:

  • Recommendation: Implement a customer feedback loop to address dissatisfaction and improve retention rates.
    • Action Plan: Conduct quarterly customer satisfaction surveys and implement a follow-up process for addressing negative feedback.
    • Timeline: Start within the next quarter and review progress bi-annually.

  • Recommendation: Enhance upsell and cross-sell strategies to boost MRR and ARR further.
    • Action Plan: Develop targeted marketing campaigns for existing customers and provide additional training for the sales team.
    • Timeline: Implement within the next six months and monitor results quarterly.

6. Benchmarking

Compare the audit findings against industry benchmarks and previous performance metrics. This helps contextualise the data and provides a reference point for evaluating progress. For example:

  • Benchmarking: Compare the current retention rate with the industry average to highlight areas for improvement.
  • Visualisation: Use a bar chart to show how the company's metrics stack up against industry standards.

7. Conclusion and Next Steps

Summarise the key takeaways and outline the next steps. This section should reinforce the importance of the findings and recommendations and provide a clear path forward. For example:

  • Conclusion: The audit has identified critical areas for improvement in customer retention and sales performance. By implementing the recommended actions, the company can enhance its competitive position and drive sustainable growth.
  • Next Steps: Assign responsibility for each recommendation, set deadlines, and schedule follow-up audits to track progress.

8. Appendices

The appendices should include detailed data tables, additional charts, and any other supporting documentation. This allows stakeholders to delve deeper into the data if needed without cluttering the main report.

By following these best practices, you can present the product and service audit findings in a compelling and actionable way, ensuring that stakeholders understand the key insights and are motivated to take the necessary steps to drive improvement.

At BIAS, we believe in a comprehensive approach to building a winning go-to-market strategy. There is no cutting corners, no light-touch approach. We are all in or not in at all. 

If you are revisiting your company's GTM, then talk to our team. Complete the form in the footer, and we will be back to you as soon as possible, typically within an hour or two.