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.
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.
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:
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.
Gather comprehensive data from relevant departments:
Evaluate the effectiveness of lead generation efforts:
Calculate and analyse CAC:
Evaluate the allocation and effectiveness of marketing spend:
Assess the use of technology in revenue operations:
Analyse the efficiency and effectiveness of the sales pipeline:
Evaluate customer retention and churn rates:
Assess the effectiveness of upsell and cross-sell strategies:
Compile the findings into a comprehensive report:
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.
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.
Here are some best practices for conducting a product and service audit during the Assess stage of the ARISE Framework:
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?
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:
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.
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.
Use data visualisation to make complex data more accessible and engaging. Charts, graphs, and infographics can help illustrate key metrics and trends. For example:
Organise the key findings into thematic sections. Provide a brief data analysis highlighting significant trends, patterns, and anomalies for each section. For example:
Provide clear, actionable recommendations based on the findings. Each recommendation should be specific, measurable, achievable, relevant, and time-bound (SMART). For example:
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:
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:
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.